Preliminary Feasibility Study Completed for Seabridge Gold’s KSM Project
Preliminary Feasibility Study Completed for Seabridge Gold’s KSM Project
Wednesday, 31st March 2010
Study Reports Reserves of 30.2 Million Ounces of Gold, 7.0 Billion Pounds of Copper, 133 Million Ounces of Silver and 210 Million Pounds of Molybdenum
Base Case Life of Mine Cash Operating Costs Estimated at $144 per Ounce of Gold Produced (Net of Base Metal Credits)
Toronto, Canada – Seabridge Gold Inc. announced today results from a National Instrument 43-101 compliant Preliminary Feasibility Study (“PFS”) of its 100% owned KSM project located in northern British Columbia, Canada. The PFS was prepared by Wardrop, a Tetra Tech Company (Wardrop). The Executive Summary from the PFS can be found at www.seabridgegold.net/KSM-PFS.pdf. The complete PFS will be filed on SEDAR at www.sedar.com within 45 days.
Seabridge President and CEO Rudi Fronk stated that “the PFS confirms that the KSM project now hosts the largest gold reserve in Canada and one of the largest in the world. KSM is projected to provide an extraordinary mine life of more than 35 years with estimated cash operating costs well below the current average of the major gold producers. Estimated capital costs are in line with those of comparable, large-scale, undeveloped gold-copper projects and KSM has the advantage of being located in a low-risk jurisdiction.”
The PFS envisages a large tonnage open-pit mining operation at 120,000 metric tonnes per day of ore fed to a flotation mill which would produce a combined gold/copper/silver concentrate for transport by truck to the nearby deep-water sea port at Stewart, B.C. A separate molybdenum concentrate and gold-silver dore would be produced at the processing facility.
Reserves
Lerchs-Grossman pit shell optimizations were used to define the mine plans in the PFS which were designed to maximize net present value using a 5% discount rate which is the current industry standard. Mineral Reserves for the KSM project were estimated using a gold price of US$850 per ounce, a copper price of US$2.25 per pound and are stated as follows:
Estimated proven and probable reserves of 30.2 million ounces of gold (1.60 billion tonnes at 0.59 grams of gold per tonne) are derived from estimated total measured and indicated resources of 38.9 million ounces of gold (2.1 billion tonnes at 0.57 grams of gold per tonne) including allowances for mining losses and dilution (see www.seabridgegold.net/KSM-PFS.pdf for details).
Production
At 120,000 tonnes per day, annual throughput for the mill is estimated at 43.8 million tonnes. With 1.60 billion tonnes of proven and probable reserves, KSM’s mine life is estimated at approximately 37 years. Production is scheduled to commence at the Mitchell deposit, to be augmented by Kerr and then Sulphurets. The PFS mining plan is significantly improved over the 2009 KSM Preliminary Assessment; the mill feed is increased by approximately 25% and US$160 million in pre-production stripping expenses have been eliminated.
At Mitchell, there is a near-surface higher grade gold zone that would allow for gold production in the first five years substantially above the mine life average. This higher grade gold zone would significantly reduce the project’s payback period to approximately 6.9 years for the Base Case. A payback period representing less than 20% of mine life is considered highly favorable. Metal production for the first five years compared to life of mine average production is estimated as follows:
Capital Costs
Start-up capital costs (including contingencies of US$394 million) are estimated at US$3.37 billion, approximately 9% above the start-up capital cost estimate from the July 2009 KSM Preliminary Assessment. Start-up capital costs are higher due to the increase in mine size which requires additional mine waste rock placement and storage as well as associated water diversions, storage dams and water treatment facilities. Additional capital has also been allocated for on-site energy recovery plants to generate power from planned water diversions, process solutions and slurries. A total of five on-site small energy recovery plants would provide green power to the site and the B.C. Hydro grid. Increased capital has also been allocated for offsite concentrate storage and handling facilities. A breakdown of estimated start-up capital costs is as follows:
Operating Costs
Average mine, process and G&A operating costs over the project’s life (including waste mining and on-site power credits) are estimated at US$11.66 per tonne milled (before base metal credits). Estimated unit operating costs are up approximately 10% from the 2009 Preliminary Assessment due primarily to the higher strip ratio required to accommodate the 25% increase in tonnes of ore mined over the project life. A breakdown of estimated unit operating costs is as follows:
Economic Analysis
A Base Case economic evaluation was undertaken incorporating historical three-year trailing averages for metal prices as of March 15, 2010. This approach is consistent with the guidance of the United States Securities and Exchange Commission, is accepted by the Ontario Securities Commission and is industry standard. An Alternate Case was also constructed using more conservative copper and silver metal prices and a slightly higher gold price. Finally, a Spot Price Case was prepared using recent spot metal prices. The pre-tax economic results in U.S. dollars for all three cases are as follows:
Note: Operating and total costs per ounce of gold are after base metal credits. Total costs per ounce include all start-up capital, sustaining capital and reclamation/closure costs.
National Instrument 43-101 Disclosure
The KSM PFS was prepared by Wardrop, and incorporates the work of a number of industry-leading consulting firms. These firms and their Qualified Persons (as defined under National Instrument 43-101) are independent of Seabridge and have reviewed and approved this news release. The consultants and their QPs are listed below with their responsibilities:
- Wardrop, under the direction of Frank Grills (overall report preparation, process and infrastructure capital costs, infrastructure, and financial analysis) and John Huang (metallurgical testing review, mineral processing and process operating costs)
- Moose Mountain Technical Services under the direction of Jim Gray (mine planning, rock storage facilities, mine capital and mine operating costs)
- W.N. Brazier Associates Inc. under the direction of W.N. Brazier (power supply, energy recovery plants and associated costs)
- Rescan Environmental Services Ltd. under the direction of Greg McKillop (environment and permitting)
- Bosche Ventures Ltd. under the direction of Harold Bosche (rope conveying, slurry, tailings delivery and return water pumping and piping and associated capital costs)
- Klohn Crippen Berger Ltd. under the direction of Graham Parkinson (diversion and seepage collection ponds, tailings dam, water treatment dam, water treatment plant, water diversions and capital, operating and closure costs)
- Allnorth Consultants Ltd. Under the direction of Mr. Darby Kreitz (storage dam and tailings starter dam construction cost estimates)
- Resource Modeling Inc. under the direction of Michael Lechner (mineral resources)
- McElhanney Consulting Services Ltd. under the direction of Robert Parolin (main and temporary access roads and associated capital costs)
- BGC Engineering Inc. under the direction of Warren Newcomen (rock mechanics and mining pit slopes)
- EBA Engineering Consultants Ltd. (EBA) under the direction of Kevin Jones (winter access roads and associated capital costs)
- Thyssen Mining Construction of Canada Ltd. under the direction of Adrian Bodolan (tunnel design and capital costs).
Seabridge holds a 100% interest in several North American gold resource projects. The Company’s principal assets are the KSM property located near Stewart, British Columbia, Canada and the Courageous Lake gold project located in Canada’s Northwest Territories. For a breakdown of Seabridge’s mineral resources by project and resource category please visit the Company’s website at http://www.seabridgegold.net/resources.php.
