Seabridge Gold Files Preliminary Feasibility Study for KSM Project
Toronto, Canada - Seabridge
Gold Inc. announced today that the National Instrument 43-101 compliant
Preliminary Feasibility Study ("PFS") for its 100% owned KSM project
located in northern British Columbia, Canada has been filed at www.sedar.com. The PFS was prepared by Wardrop,
A Tetra Tech Company (Wardrop).The report identifies
two different scenarios for expanding throughput, both of which would have a
substantial positive impact on project economics according to preliminary
estimates. Seabridge Gold President and CEO Rudi Fronk noted that there is a major opportunity to increase
KSM's Net Present Value and Internal Rate of Return by expanding the rate of
production after start-up. "We have continued to make significant
additions to reserves which have extended mine life beyond 50 years. The final
PFS report examines whether or not production in the later years can be brought
forward cost effectively. The conclusion is that it can, either by optimizing
the original planned capacity or expanding that capacity. We will be studying
these scenarios further in the coming months," Fronk
said.
Results of the PFS as announced on May 2, 2011 (see http://www.seabridgegold.net/news.php) included:
- Proven
and probable reserves of 38.5 million ounces of gold, 10.0 billion pounds
of copper, 214 million ounces of silver and 257 million pounds of
molybdenum.
- Projected
mine life of 52 years [2.2 billion tonnes of
reserves at a throughput of 120,000 tonnes per
day (tpd)].
- Estimated
base case cash operating cost of US$105 per ounce during first 7 years of
mine life.
- Base
case initial capital payback of 6.6 years or 13% of mine life.
- Base
case total net cash flow of US$16.2 billion and a NPV at 5% of US$2.6
billion
The PFS envisages an open-pit mining operation at
120,000 metric tonnes per day (tpd)
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. and shipment to a Pacific Rim smelter. Extensive metallurgical
testing confirms that KSM can produce a clean concentrate with an average
copper grade of 25%, making it readily saleable. A separate molybdenum
concentrate and gold-silver dore
would be produced at the KSM processing facility.
In the PFS, the independent consultants provided two
alternative production scenarios to the designed 120,000 tpd
throughput. The first alternative involves increasing the throughput rate by
50% to 180,000 tpd commencing in Year 9 through a
plant expansion funded by additional capital (Expanded Throughput Scenario).
The second alternative involves a 15% increase in throughput starting in Year 4
using existing plant equipment (Incremental Throughput Scenario).
Expanded Throughput Scenario
The designed throughput of 120,000 tpd
is the industry standard start-up capacity for large tonnage copper and
copper-gold projects (even when reserves are large enough to justify greater
rates of production) because it is the practical limit for developing the
necessary working space for sufficient ore production to feed the plant in the
early years of an open pit mine. Planned expansion comes later as mining
capacity increases, allowing the project economics to be improved with a higher
throughput. Examples of projects that were originally built at 100,000 to
140,000 tpd throughput and have been, or will be,
expanded include Escondida, Cerro Verde and Batu Hijau.
In the Expanded Throughput Scenario, the ore
production rate is increased by 50% (180,000 tpd)
starting in Year 9 through a plant expansion funded by additional capital of
US$982 million expended during Years 7 and 8 (i.e. after initial capital
recoupment). Additionally, operating costs were updated for the increased
throughput and timing of the sustaining capital was adjusted to reflect the
shorter mine life. The following table compares the results of the Increased
Throughput Scenario to the 120,000 tpd scenario at
the three different metal price scenarios used in the PFS:
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.
Incremental Throughput Scenario
Operating at a throughput rate above name-plate design
is normally achieved at large mining operations. These production increases
usually result from: (i) operator experience gained over time; (ii)
conservative design factors used by engineers during feasibility; and (iii)
grinding equipment sizes selected for the harderthan
average ore units expected as feed to the plant. At KSM, the grinding circuit
will accommodate the harderore which comes from the Sulphurets pit. The ore from the Mitchell, Kerr and Iron
Cap pits is softer.
In the Incremental Throughput Scenario, the ore
production rate is increased by 15% (to 138,000 tpd)
in Year 4 using the existing plant equipment. Additional capital of US$19
million was applied in Year 3 to prepare the plant for the additional
throughput. Additionally, operating costs were updated for the increased
throughput and timing of the sustaining capital was adjusted to reflect the
shorter mine life. The following table compares the projected economic results
of the Incremental Throughput Scenario to the 120,000 tpd
scenario at the three different metal price scenario used in the PFS:
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.
The 100% owned KSM project, located near Stewart,
British Columbia, Canada, is one of the world's largest undeveloped gold/copper
projects. Proven and probable reserves for the KSM project are as follows (see
news release dated May 2, 2011 for details):
National
Instrument 43-101 Disclosure
The KSM PFS was prepared by Wardrop,
a Tetra Tech Company, under the direction of John Huang, and included the work
of other consultants (see news release of May 2, 2011). Mr. Huang is a
Qualified Person under National Instrument 43-101 and has approved this news
release.
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 reserves and resources by project and category please visit the
Company's website at http://www.seabridgegold.net/resources.php
.
All reserve and resource estimates
reported by the Corporation were calculated in accordance with the Canadian
National Instrument 43-101 and the Canadian Institute of Mining and Metallurgy
Classification system. These standards differ significantly from the
requirements of the U.S. Securities and Exchange
Commission. Mineral resources which are not mineral reserves do not have
demonstrated economic viability
This document contains
"forward-looking information" within the meaning of Canadian
securities legislation and "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform Act of 1995.
This information and these statements, referred to herein as
"forward-looking statements", are made as of the date of this
document. Forward-looking statements relate to future events or future
performance and reflect current estimates, predictions, expectations or beliefs
regarding future events and include, but are not limited to, statements with
respect to: (i) the amount of mineral reserves and mineral resources; (ii) any
potential for the increase of mineral reserves and mineral resources, whether
in existing zones or new zones; (iii) the amount of future production; (iv)
further optimization of the PFS including capacity expansion; (v) completion
of, and submission of, the Environmental Assessment Application; and (vi)
potential for engineering improvements. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs, plans,
projections, objectives, assumptions or future events or performance (often,
but not always, using words or phrases such as "expects",
"anticipates", "plans", "projects", "estimates",
"envisages", "assumes", "intends",
"strategy", "goals", "objectives" or variations
thereof or stating that certain actions, events or results "may",
"could", "would", "might" or "will" be
taken, occur or be achieved, or the negative of any of these terms and similar
expressions) are not statements of historical fact and may be forward-looking
statements.
All forward-looking statements are based
on Seabridge's or its consultants' current beliefs as
well as various assumptions made by them and information currently available to
them. These assumptions include: (i) the presence of and continuity of metals
at the Project at modeled grades; (ii) the capacities of various machinery and
equipment; (iii) the availability of personnel, machinery and equipment at
estimated prices; (iv) exchange rates; (v) metals sales prices; (vi)
appropriate discount rates; (vii) tax rates and royalty rates applicable to the
proposed mining operation; (viii) financing structure and costs; (ix)
anticipated mining losses and dilution; (x) metallurgical performance; (xi)
reasonable contingency requirements; (xii) success in realizing further
optimizations and potential in exploration programs andproposed
operations; (xiii) receipt of regulatory approvals on acceptable terms, including
the necessary right of way for the proposed tunnels; and (xiv) the negotiation
of satisfactory terms with impacted First Nations groups. Although management
considers these assumptions to be reasonable based on information currently
available to it, they may prove to be incorrect. Many forward-looking
statements are made assuming the correctness of other forward looking
statements, such as statements of net present value and internal rates of
return, which are based on most of the other forward-looking statements and
assumptions herein. The cost information is also prepared using current values,
but the time for incurring the costs will be in the future and it is assumed
costs will remain stable over the relevant period.
By their very nature, forward-looking
statements involve inherent risks and uncertainties, both general and specific,
and risks exist that estimates, forecasts, projections and other
forward-looking statements will not be achieved or that assumptions do not
reflect future experience. We caution readers not to place undue reliance on
these forward-looking statements as a number of important factors could cause
the actual outcomes to differ materially from the beliefs, plans, objectives,
expectations, anticipations, estimates assumptions and intentions expressed in
such forward-looking statements. These risk factors may be generally stated as
the risk that the assumptions and estimates expressed above do not occur, but
specifically include, without limitation: risks relating to variations in the
mineral content within the material identified as mineral reserves or mineral
resources from that predicted; variations in rates of recovery and extraction;
developments in world metals markets; risks relating to fluctuations in the
Canadian dollar relative to the US dollar; increases in the estimated capital
and operating costs or unanticipated costs; difficulties attracting the
necessary work force; increases in financing costs or adverse changes to the
terms of available financing, if any; tax rates or royalties being greater than
assumed; changes in development or mining plans due to changes in logistical,
technical or other factors; changes in project parameters as plans continue to
be refined; risks relating to receipt of regulatory approvals or settlement of
an agreement with impacted First Nations groups; the effects of competition in
the markets in which Seabridge operates; operational
and infrastructure risks and the additional risks described in Seabridge's AnnualInformation Formfiled with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2010
and in the Corporation's Annual Report Form 40-F filed with the U.S. Securities
and Exchange Commission on EDGAR (available at www.sec.gov/edgar.shtml).Seabridge cautions that the foregoing list of
factors that may affect future results is not exhaustive.
When relying on our forward-looking
statements to make decisions with respect to Seabridge,
investors and others should carefully consider the foregoing factors and other
uncertainties and potential events. Seabridge does
not undertake to update any forward-looking statement, whether written or oral,
that may be made from time to time by Seabridge or on
our behalf, except as required by law.
ON BEHALF OF THE BOARD
"Rudi Fronk"
President & C.E.O.
For further information please contact:
Rudi P. Fronk, President and C.E.O.
Tel: (416) 367-9292 • Fax: (416) 367-2711
Email: info@seabridgegold.net