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BC govt approves exploration adit at Seabridge’s growing KSM mine

12th October 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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VANCOUVER (miningweekly.com) –  The Toronto-based developer of one of the world’s largest gold/copper mines Seabridge Gold has been given the go-ahead by the British Columbia provincial government to proceed with an exploration adit into the Deep Kerr gold/copper deposit at the KSM project, 65 km north-west of Stewart.

The proposed adit will be 2 100 m long and will facilitate cost-effective underground exploration drilling at depth. It is to be collared in the Sulphurets Valley at the base of Kerr Mountain, declining with a 12% grade parallel to the footwall of the Kerr deposit.

Seabridge advised Tuesday that this would be the first opportunity to drill Deep Kerr from underground, since all previous drilling occurred from surface, resulting in cumbersome exploration with certain holes reaching 1 800 m in length.

According to Seabridge, the permits include Ministry of Environment discharge authorisations for the operation of a water treatment facility to remove suspended sediments, pH, metals and ammonia from underground effluent; a mining permit from the Ministry of Energy and Mines authorising the construction of the exploration adit and associated infrastructure, including a rock storage facility; and a water licence from the Ministry of Forests, Lands and Natural Resource Operations approving the surface water management system associated with the adit infrastructure.

The permits include requirements for posting reclamation securities with the provincial government to cover full reclamation and closure costs associated with the proposed exploration activities.

EXPANDED PROJECT
Seabridge last week announced that it had completed a preliminary economic assessment (PEA) for its KSM project, outlining a different approach toward development of the massive deposits than the preliminary feasibility study (PFS) announced last month.

Prepared by Amec Foster Wheeler, the PEA incorporated the Deep Kerr zone and the Iron Cap Lower zone into a conceptual project design, improving economics and reducing environmental risk for the project.

The PEA evaluated lower-cost block caving and reducing the number and size of the openpits, significantly reducing surface disturbance.

According to the PEA, openpits would account for only 22% of total output, compared with 70% in the September PFS. In the PEA, both the Kerr and Deep Kerr deposits would be mined exclusively by block caving. The PEA mine plans in total would reduce the amount of waste rock by 81% (about 2.4-billion tonnes) compared with the PFS, substantially shrinking the project’s footprint and its environmental impact and reducing water treatment costs.

By including Deep Kerr, the yearly average maximum throughput of 130 000 t/d envisioned in the PFS has been lifted to 170 000 t/d in the PEA without the significant redesign of facilities. Seabridge stated that increased throughput would increase metal output, reducing payback periods and improving estimated projected internal rates of returns and net present values.

Further, the PEA estimated base case initial capital costs, including preproduction mining costs, to be about 9.7% higher than the PFS, mainly owing to the increased throughput. The base case total cost per ounce of gold produced in the PEA is estimated at $358/oz, compared with $673/oz in the PFS. The change in total cost is owing to higher by-product credits from significantly higher copper production, more than offsetting higher sustaining capital for expanded underground development in the PEA.

As a result of about 77% more copper output over the expected mine life, the base case life-of-mine operating costs in the PEA are estimated at a negative $179/oz, compared with the positive $277/oz in the PFS.

The PEA visualises a 51-year life for the project requiring preproduction capital expenditure of $5.5-billion.

Seabridge noted that the PFS could not include the higher-grade resources delineated at Deep Kerr and the Iron Cap Lower zone as they are in the inferred resources category, which cannot be considered as reserves for mine plan purposes in the PFS. The same resource models were used in both mine studies.

Measured and indicated resources stand at 2.9-billion tonnes grading 0.54 g/t gold, 0.21% copper and 2.7 g/t silver, containing 49.8-million ounces of gold, 13.6-billion pounds of copper and 253-million ounces of silver. The inferred category comprises a further 2.7-billion tonnes grading 0.35 g/t gold, 0.32% copper and 2 g/t silver, containing 30.8-million ounces of gold, 19.2-billion pounds of copper and 178-million ounces of silver.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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