Updated PEA enhances Seabridge Gold’s KSM Project
An updated preliminary economic assessment (PEA) for the 100%-owned Seabridge Gold Inc. [SEA-TSX; SA-NYSE] KSM Project has confirmed the potential for a dramatic improvement in project economics by incorporating the recently expanded, higher-grade Iron Cap deposit into mine plans.
This alternative scenario does not impact the current preliminary feasibility study, which remains in effect and will be included with the 2020 PEA in an updated NI 43-101 technical report to be filed on SEDAR within 45 days.
KSM is located in northwest British Columbia, Canada, near existing and past producers as well as valuable transportation and energy infrastructure. KSM is the world’s largest undeveloped gold/copper project measured by mineral reserves, which do not include a sizable inferred mineral resource at the project’s four deposits. The project has both federal and provincial environmental assessment (EA) certificates and the company is maintaining a strong social licence, having signed impact benefit agreements with the Nisg’a’a and Tahltan First Nations, an environmental agreement with the Gitanyow Nation and receiving letters of support from the Gitxsan Nation.
Chairman and CEO Rudi Fronk noted that the 2020 PEA was undertaken to assess an alternative approach to developing KSM by incorporating a much larger Iron Cap block cave mine into the production schedule accompanied by smaller open pits compared with prior studies and developing this opportunity much earlier in the project’s mine life.
“The benefits of incorporating Iron Cap into mine plans at an early stage have exceeded the upper end of our expectations, not only for the improvements in projected economics but also for the reduction in environmental impact. The PEA is based on Iron Cap’s inferred resource estimate but we are very confident these resources will upgrade to higher categories with further drilling as they have in the past at the project’s other deposits. We therefore think the new technical report gives investors a compelling view of the project’s potential,” Fronk said.
After-tax NPV (net present value) at a 5% discount rate of US$6.0-billion using base case three-year average price assumptions of US$1,340/oz gold, US$2.80 per pound copper and foreign exchange rate of 76 U.S. cents per $1.
The 44-year mine production plan captures 19.6 million ounces of gold and 5.4 billion pounds of copper from the measured and indicated categories plus an additional 20.8 million ounces of gold and 13.8 billion pounds of copper from the inferred category.
Life-of-mine recovered production would be 27.6 million ounces gold and 17.0 billion pounds copper.
A 170,000 tonne-per-day processing rate would capture 2.4 billion tonnes of mill feed, or only 30% of the total mineral resource. There would be a four-year payback on US$5.2-billion initial capital.
Average annual pretax free cash flow would be US $1.45-billion from 1.3 million ounces gold and 265 million pounds copper produced per year during the initial five years of production.
Life-of-mine average operating cost would be a negative US$472/oz of gold produced, net of copper and silver byproduct revenues with a life-of-mine total cost of US$4/oz of gold produced, inclusive of all project capital and net of copper and silver byproduct revenues.
There would be a 57% reduction in mine waste rock compared with the approved EA and a 33% reduction in greenhouse gas emissions from mine operations compared with the approved EA.
“These PEA economic projections, if achieved, would rank KSM among the best large-scale producing mines in the world,” Fronk concluded.
Seabridge Gold holds a 100-per-cent interest in several North American gold resource projects. The company’s principal assets are the KSM and Iskut properties located near Stewart, B.C., and the Courageous Lake gold project located in Canada’s Northwest Territories.