PFS outlines 53-year mine at KSM

Seabridge Gold Inc. Sept. 19 provided results of an updated preliminary feasibility study for its KSM copper-gold project in northwestern British Columbia.

The 2016 PFS incorporates many design improvements over the 2012 PFS and the updated financial projections confirm that KSM is an economic project at current metal prices.

The PFS envisions a combined open-pit/underground block caving operation with a 53-year mine life. During the first 33 years, the majority of ore would be derived from open-pit mines with the tail end of this period supplemented by the initial development of underground block cave mines. Ore delivery to the mill during years two to 35 is expected to average 30,000 metric tons per day.

After depletion of open pits, the mill processing rate would be reduced to 95,000 tpd for 10 additional years before ramping down to just over 60,000 tpd for the balance of the operation envisioned.

Over the entire 53-year mine life, ore would be fed to a flotation and gold extraction mill that would produce a gold-copper-silver concentrate that would be transported to nearby Stewart for shipment to Pacific Rim smelters.

Metallurgical testing demonstrates that KSM can produce a clean concentrate with an average copper grade of 25 percent and a high gold and silver content, making it readily saleable.

A separate molybdenum concentrate and gold-silver doré would be produced at the KSM processing facility.

This operation is expected to average 540,000 ounces of gold, 156 million pounds of copper, 2.2 million oz. silver and 1.2 million lbs. of molybdenum per year.

Initial capital cost to develop the mine, including contingency of US$671 million and preproduction mining costs, is estimated at US$5 billion, about 12 percent lower than the initial capital estimate in the 2012 PFS. Sustaining capital over the 53-year mine life is estimated at US$5.5 billion and is dominated by capitalizing the underground mine expansions midway through the mine life for the Mitchell and Iron Cap block cave.

Using base case assumptions - US$1,230/oz. gold, US$2.75/lb. copper, US$17.75/oz. silver, US$8.49/lb. molybdenum and a US80 cents per Canadian dollar - this operation produces a post-tax net present value (5 percent discount) of US$1.5 billion and an internal rate of return of 8 percent.

"Base case estimated total cost, at US$673 per ounce of gold produced, remains well below the industry average for operating mines," said Seabridge Gold Chairman and CEO Rudi Fronk. "The base case after tax payback period is approximately 6.8 years, a remarkably low 13 percent of the 53-year mine life and a key benefit to large producers. Overall, the 2016 PFS confirms that KSM is an economic project with an unusually long life in a low-risk jurisdiction."

This PFS does not include material from recent higher-grade discoveries at Deep Kerr and Iron Cap Lower Zone deposits, which are expected to have a positive impact on project economics.

An analysis of the integration of these deposits into the proposed project design will be included as a preliminary economic assessment which is expected to be finalized and released shortly.

-SHANE LASLEY