Seabridge Gold announced in late April that an updated preliminary economic assessment (2020 PEA) of its 100% owned KSM project in northwest British Columbia has confirmed the potential for a dramatic improvement in project economics by incorporating the recently expanded, higher-grade Iron Cap deposit into mine plans. The 2020 PEA considers a 44-year mine production plan capturing 19.6 million ounces (oz) of gold and 5.4 billion lb of copper from measured and indicated resources, plus an additional 20.8 million oz of gold and 13.8 billion lb of copper from inferred resources.
Life-of-mine recovered production is estimated at 27.6 million oz of gold and 17 billion lb of copper.
A 170,000-metric-ton-per-day (mt/d) processing rate would treat 2.4 billion mt of mill feed, or only 30% of the total mineral resource. Initial capital is estimated at $2.5 billion, with a four-year payback.
Average annual pretax free cash flow is estimated at $1.45 billion from 1.3 million ounces per year (oz/y) of gold and 265 million lb per year (lb/y) of copper produced during the initial five years of production. Life-of-mine average operating cost is estimated at negative $472/oz of gold produced, net of copper and silver byproduct revenues.
Life-of-mine total cost of is estimated at $4/oz of gold produced, inclusive of all project capital and net of copper and silver byproduct revenues.
Seabridge Chairman and CEO Rudi Fronk noted that the 2020 PEA was undertaken to assess an alternate approach to developing KSM by incorporating a much larger Iron Cap block cave mine into the production schedule accompanied by smaller open pits compared to 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.
“I would like to recognize the outstanding effort by our engineering team and our consultants for these results while working under the constraints imposed by COVID-19 and also the impressive success of our exploration team for their expansion of the Iron Cap resource.”
The 2020 PEA envisages a combined open-pit and underground block cave mining operation. Over the 44-year mine life, mill feed delivered to the process plant is planned principally for gold and copper extraction, with silver produced as a byproduct.
The mill would produce a flotation copper concentrate containing precious metals for transport by truck to a nearby seaport at Stewart, British Columbia, for shipment to Pacific Rim smelters and a gold-silver doré from carbon-in-leach processing of pyritic concentrates.
Metallurgical testing indicates that KSM can produce a clean copper concentrate at an average copper grade of 25% with relatively high gold and silver content, making it readily saleable.