Seabridge Gold completes updated PFS for KSM Project

The 2022 PFS was prepared by Tetra Tech, Inc., the firm that had also authored the 2016 PFS. The 2022 PFS results released herein propose mining only 25% of the KSM resource inventory and do not include material from the copper-rich Kerr and Iron Cap deposits. An analysis of a stand-alone development of these deposits will be included as a preliminary economic assessment (PEA) forming a separate part of the NI 43-101 Technical Report to be filed within the next 45 days.

Seabridge Gold Chairman and CEO, Rudi Fronk, noted: “We have redesigned KSM for an inflationary environment. The themes for this PFS are capital and energy efficiency. The mine plan is simplified to bring total capital down below 2016 estimates despite inflation by reducing sustaining capital. We have accomplished this by eliminating underground mine development which is deferred to future years. Important steps have also been taken to make the project less dependent on oil, especially diesel fuel, which is an inflationary hot spot and likely to remain so. We have done this by maximising the use of low cost, green hydroelectric energy.”

Notable improvements in the Base Case 2022 PFS compared to the Base Case 2016 PFS include:

• Proven and probable gold reserves increase 22%, from 38.8 million oz to 47.3 million oz, due to higher gold grades added from the East Mitchell deposit.
• Mill throughput expands from 130 000 tpd to 195 000 tpd.
• Waste to ore strip ratio reduced by 23% to approximately 1:1.
• A 90% increase in average annual gold production, 22% increase in annual copper production, 36%increase in annual silver production, and a 363% increase in annual molybdenum production.
• Total capital of US$10.5 billion is reduced to US$9.6 billion, with increases from inflation and mill expansion being wholly offset by the elimination of block cave mining from the PFS plan.
• Initial capital increases from US$5 billion to US$6.4 billion, primarily due to inflation.
• A 20 year reduction in mine life from 53 years to 33 years due to the increased mill throughput supplied by higher open pit production.
• Total after tax net cash flow increases from US$10 billion to US$23.9 billion.
• After tax NPV(5%) increases from US$1.5 billion to US$7.9 billion.
• After tax IRR increases from 8% to 16.1%.
• Payback period drops from 6.8 years to 3.7 years.

The 2022 PFS envisages an open pit mine operation that is scheduled to operate for 33 years. Ore delivery to the mill is increased from an initial 130 000 tpd to 195 000 tpd in year three. Over the entire 33-year mine life, ore will be fed to a flotation and gold extraction mill. The flotation plant will produce a gold/copper/silver concentrate for transport by truck to a nearby seaport at Stewart, British Columbia for shipment to Pacific Rim smelters. Metallurgical projections supported by extensive metallurgical testing project a copper concentrate with an average copper grade of 24% and a high gold (64 g/t) and silver (177 g/t) content, making it readily saleable. A separate molybdenum concentrate and gold-silver doré will be produced at the KSM processing facility.

Mineral resources

The 2022 PFS uses previously disclosed resource estimates that are based on US$1300/oz gold (Au), US$3/lbs copper (Cu), US$20/oz silver (Ag) and US$9.70/lb molybdenum (Mo). In addition, the resources are constrained by conceptual mining shapes.

Measured and indicated mineral resources at KSM are estimated at 5.4 billion t grading 0.51 h/t Au, 0.16% Cu, 2.4 g/t Ag, and 63 ppm Mo (88.3 million oz Au,19.4 billion lbs Cu, 414 million oz Ag, and 742 million lbs Mo). An additional 5.7 billion t are estimated in the inferred mineral resource category grading 0.36 g/t Au, 0.28% Cu, 2.2 g/t Ag, and 33 ppm Mo (65.6 million oz Au, 35.1 billion lbs Cu, 406 million oz Ag, and 415 million lbs Mo).

Mineral reserves

Updated mineral reserves for the project are based on open pit mining of the Mitchell, East Mitchell and Sulphurets deposits. Waste to ore cut-offs were determined using a net smelter return (NSR) for each block in the model. NSR is calculated using prices and process recoveries for each metal accounting for all off-site losses, transportation, smelting and refining charges. Metal prices of US$1300/oz Au, US$3/lb Cu, US$20/oz Ag and US$9.70/lb Mo.

Lerchs-Grossman (LG) pit shell optimisations were used to define opencast mine pit limits in the 2022 PFS. Opencast designed phases use updated geotechnical design criteria based on recent site investigation programmes. Mineral reserves have been estimated using the updated pit designs. The opencast minimum NSR cut-off grade is varied between CAN$11/t to CAN$25/t and considers the estimated process operating cost of CAN$10/t. Process operating costs include plant processing (including crushing/conveying costs where applicable), G&A, surface service, tailings, and water treatment costs. A premium cut-off grade of CAN$25/t is used until the end of year five to maximise the NPV and minimise the time to payback of initial capital.

Production

The opencast only mine production plan using ultra class mining starts in the higher grade Mitchell pit. Production from the high grade upper East Mitchell zone is introduced in the third year. Waste mined from the Sulphurets, East Mitchell and Mitchell pit is placed in the Mitchell rock storage facility (RSF) until Mitchell pit is mined out by year 25. Final waste from East Mitchell is backfilled into the mined out Mitchell pit from year 25 onward, along with some waste re handled from the Mitchell RSF.

The updated mine plan reduces overall footprint by not using the McTagg RSF as required in the 2016 PFS and by utilising mined out pits for backfilling waste rock.

Autonomous mine operations where applicable and an integrated remote operations centre reduce on-site personnel.

Electrification of the haul truck fleet with trolley assist reduces carbon emissions and overall mine energy costs by replacing diesel with low cost energy from electricity.

Mill feed ramps up to 130 000 tpd by year two, followed by a 50% increase to 195 000 tpd from year three onwards. Average annual mill feed throughput for the 33 years of mine life is estimated at 69.5 million t.

At Mitchell, a near-surface higher grade gold zone crops out allowing for gold production in the first seven years that is substantially above the mine life average. The mine plan is specifically designed for mining highest gold grade first to facilitate a quick capital investment payback. The project’s post-tax payback period is approximately 3.7 years for the Base Case or 11% of mine life.

Read the article online at: https://www.globalminingreview.com/exploration-development/29062022/seabridge-gold-completes-updated-pfs-for-ksm-project/