The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Seabridge judiciously adds gold, seeks major KSM partner North of 60 Mining News – May 10, 2019
Seabridge Gold's 2018 exploration at Iskut provided evidence that a porphyry gold-copper deposit similar to those found at its nearby KSM project could be nearer to the surface than previously envisioned.
Drilling carried out at Courageous Lake last winter identified deposits that could add to the higher grade and free milling gold resources for this property in Northwest Territories.
Since its formation in 1999, Seabridge Gold Inc. has amassed very large gold resources and reserves while keeping a watchful eye on the number of shares it has issued. In its 2018 annual report, this Toronto-based exploration company said this has positioned the company well in a world of dwindling gold reserves.
"The simple truth is that the industry is not finding gold at the rate it needs to. We are," Seabridge Gold Chairman and CEO Rudi Fronk penned in the report.
Over the past two decades, exploration has expanded the amount of gold in Seabridge's resources (measured, indicated and inferred) to 122.8 million ounces. In addition, the exploration company has 46.4 billion pounds of copper, 627.3 million oz of silver and 607 million lb of molybdenum in the combined resource categories.
Building ounces of gold in resources at a faster rate than the issuance of shares has been a primary mandate of Seabridge since its formation in 1999.
Today, the company has roughly two ounces of gold in resource for every outstanding Seabridge share, compared to roughly one once to every two shares 15 years ago.
"Our belief was that if we were successful in our mandate, our share price would outperform the price of gold and other gold related investments," Fronk explained.
With Seabridge shares outperforming gold on a more than six-to-one basis, this strategy has worked out for the company and its shareholders.
The majority of Seabridge's gold and other metals are found within the Mitchell, Sulphurets, Kerr and Iron Cap deposits at the company's KSM project in northwestern British Columbia.
These four deposits at KSM host 2.98 billion metric tons of measured and indicated resources averaging 0.52 grams per metric ton (49.7 million oz) gold, 0.21 percent (13.9 billion lb) copper, 2.8 g/t (265.3 million oz) silver and 54 parts per million (312 million lb) molybdenum; plus 4.56 billion metric tons of inferred resource averaging 0.38 g/t (56.3 million oz) gold, 0.32 percent (32 billion lb) copper, 2.4 g/t (348.8 million oz) silver and 32 ppm (295 million lb) molybdenum.
A prefeasibility study completed in 2016 detailed a 53-year mine at KSM that would produce an average of 540,000 oz gold, 156 million lb copper, 2.2 million oz silver, and 1.2 million lb molybdenum annually.
This is the type of large and long-lived mining projects the largest global mining companies are looking for. And the resources at the project have expanded substantially since the PFS. For more details on this expansion, read: Iron Cap expansion mission accomplished published in the March 15 edition of North of 60 Mining News.
"We continue to believe that due to its size, location, economics and permit status, KSM represents one of the most compelling development opportunities on the planet," said Fronk.
While some of these companies has shown interest in KSM, Seabridge has yet to find a suitable partner.
"Potential partner interest in KSM continued throughout 2018 with Seabridge turning down another joint venture proposal that fell short of our expectations," said Seabridge Gold Senior Vice President of Exploration Bill Threlkeld.
The company's expectations include retaining a sizeable joint venture interest in a producing mine at KSM; minimize its capital exposure in the project; and development of a mine is requirement for a partner to retain its interest in KSM.
"We continue to believe that terms are far more important than timing and remain confident that our patience will eventually be rewarded," Fronk penned in the report.
The recent trend of major mining companies consolidating and shopping for large assets bodes well for Seabridge and KSM.
The recent large gold asset acquisitions include Newmont Mining (now Newmont Goldcorp) buying a 50 percent stake in Galore Creek US$275 and Newcrest Mining's pending deal to buy a 70 percent stake in Imperial Metals' Red Chris Mine for US$806.5 million. Both of these gold-copper assets, along with KSM, are within British Columbia's Golden Triangle.
While KSM is Seabridge's largest and most advanced gold property, it is not the only promising exploration project in the company's portfolio.
The company is also actively exploring the Iskut gold-copper property in northwestern British Columbia; the Courageous Lake gold property in Northwest Territories and the Snowstorm gold property in Nevada.
At Iskut, Seabridge is exploring for a potential porphyry copper-gold system similar to what it has been found at KSM, about 30 kilometers (19 miles) to the east.
Going into 2018, the company thought the porphyry target at Iskut's Quartz Rise target would be too deep, but exploration carried out last year indicates that a KSM-style target could be much shallower than previously envisioned.
This year, the company hopes to confirm this potential and define porphyry drill targets at Quartz Rise.
Located about 240 kilometers (150 miles) northeast of Yellowknife, NWT, Courageous Lake is the second largest gold project in Seabridge's portfolio.
Courageous Lake hosts 107.32 million metric tons of measured and indicated resources averaging 2.31 g/t (8 million oz) gold; plus 48.96 million metric tons of inferred resource averaging 2.18 g/t (3.4 million oz) gold (FAT deposit) and 4.62 million metric tons of inferred resource averaging 3.24 g/t (482,000 oz) gold (Walsh Lake deposit).
While FAT is larger, the gold there is refractory, making it more expensive to recover.
Seabridge sees the potential for making the Courageous Lake Project more economic at current gold prices by bringing in more higher-grade, free-milling satellite deposits like Walsh Lake into the mine plan.
Winter drilling carried out last year tested six targets similar to Walsh Lake. Four of the deposits show promise and two, Olsen and Marsh Pond, demonstrate the potential for near-term resource additions consistent with the Walsh Lake deposit.
This year, the company will continue to investigate options for improving the economics of mining the large gold resources identified at Courageous Lake.
Seabridge's Snowstorm property is found at the nexus of three exploration trends in Nevada – Getchell, Northern Nevada Rift and Carlin – that have produced more than 330 million oz of gold.
In 2019, the company plans to carry out its first ever drill program at this newly acquired gold property about 20 miles northeast of Turquoise Ridge, a 300,000 oz per year gold mine operated by a joint venture between Barrick Gold and Newmont Goldcorp.
Most of all, Seabridge plans to continue to grow the gold reserves and resources that major mining companies are running short on.
"(M)ajor gold companies are now required to purchase gold reserves if they want to replace what they mine each year. This is exactly the environment that Seabridge was created for," Fronk penned in Seabridge's annual report. "We have the gold, and the majors need it."
The full 2018 report "Finding Gold" can be read at: http://seabridgegold.net/pdf/18AR.pdf
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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