New PEA Expands Potential of Seabridge Gold’s KSM Project

Seabridge Gold has reported the results of a new preliminary economic assessment (PEA) of it KSM gold-copper-silver project in northern British Columbia that includes underground mining of inferred resources in the project’s Deep Kerr and Iron Cap Lower zones. The PEA identifies significant potential project improvements in comparison to an earlier 2016 preliminary feasibility study (PFS) that included only measured and indicated resources.

Seabridge Gold Chairman and CEO Rudi Fronk said, “Seabridge has had great success at KSM upgrading inferred resources to higher categories, and we therefore believe that the improvements suggested by the PEA could be realized.”

In the PEA mine plan, open pits would account for only 22% of life-of-mine KSM production, compared to 70% in the PFS. The Kerr deposit would be mined exclusively as a large underground block cave along with the Deep Kerr deposit. The PEA also reduces the amount of waste rock by 81% compared to the PFS, substantially shrinking the project’s footprint and its environmental impact and reducing water treatment costs.

By including Deep Kerr, the average maximum KSM throughput of 130,000 metric tons per day (mt/d) envisioned in the PFS is increased to 170,000 mt/d in the PEA without significant redesign of facilities. Increased throughput would increase metal production, reducing payback periods and improving estimated projected internal rates of return and net present values.

The PEA estimates initial capital costs to develop KSM at $5.5 billion, approximately 9.7% higher than the initial capital estimate in the PFS. Most of the capital cost increases are related to higher plant throughput, which will require a larger mining fleet at the start of production, larger equipment sizes in the mill, and a larger tailing management facility.

Base case total cost per ounce of gold produced in the PEA is estimated at $358 compared to $673 in the PFS. The lower total cost is due to higher byproduct credits from significantly higher copper production, which more than offsets higher sustaining capital required for expanded underground development in the PEA.

As a result of the approximately 77% more copper that would be produced over the projected mine life, base case life-ofmine operating costs in the PEA are estimated at negative $179/oz of gold produced, compared to the positive $277/oz in the PFS.

The PEA envisages a combined openpit/ underground block caving mining operation operating over a span of 51 years. Mineralized material would be fed to a processing plant to produce a gold-copper- silver flotation concentrate for transport by truck to Stewart, British Columbia, for shipment to Pacific Rim smelters. The KSM processing facility would also produce a separate gold-silver doré.

The mine production plan starts in lower-cost open-pit areas using conventional large-scale equipment before transitioning to block cave underground bulk mining later in the mine life.

Life-of-mine average annual metals production is estimated at 592,000 oz/y of gold, 286 million lb/y of copper and 2.8 million oz/y of silver.

Subsequent to reporting the results of the new KSM PEA, Seabridge announced it has received permits from the British Columbia government necessary to develop an exploration adit into the Deep Kerr deposit. The proposed 2,100-meter (m) adit is designed to facilitate underground exploration drilling of the Deep Kerr deposit at depth.

As featured in Womp 2016 Vol 11 -