This alternate scenario does not impact the current Preliminary Feasibility Study (the '2016 PFS') which remains in effect and will be included with the 2020 PEA in an updated NI 43-101 Technical Report to be filed on SEDAR within 45 days.
KSM is located in mining friendly
Chairman and CEO
'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,' Fronk continued.
2020 PEA Highlights
After Tax NPV at a 5% discount rate of
Average annual pre-tax Free Cash Flow of
Life of mine average operating cost of negative
Life of mine total cost of
57% reduction in mine waste rock compared to the approved EA;
33% reduction in greenhouse gas emissions from mine operations compared to the approved EA.
'These PEA economic projections, if achieved, would rank KSM among the best large-scale producing mines in the world,' Fronk concluded.
The 2020 PEA evaluates an alternate development approach to KSM and validates the 2017-2018 investment in Iron Cap exploration drilling that resulted in a significantly larger Iron Cap Mineral Resource with improved grade (
The 2020 PEA assesses the potential impacts of incorporating Inferred Mineral Resources into project design, capital and operating cost estimates and projected economics. The 2019 Mineral Resource estimate is the current and only resource estimate used in this study. The results of the 2016 PFS remain valid and represent a viable option for developing the KSM project while the 2020 PEA assesses an alternative development option at a scoping level. The 2020 PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the results of the 2020 PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
The 2020 PEA envisages a combined open pit and underground block cave mining operation planned to operate for 44 years. Over this mine life, mill feed delivered to the process plant is planned principally for gold and copper extraction with silver produced as a by-product. The mill would produce a flotation copper concentrate containing precious metals for transport by truck to a nearby seaport at
The NI 43-101 Technical Report summarizing the results of the 2020 PEA in Chapter 24, as well as the 2016 PFS, will be filed at www.sedar.com with a Report Effective Date of
Initial mill feed is mined exclusively from
An improved mining sequence has been achieved by deferring the Sulphurets pit and initiating earlier development of Iron Cap and
Electrification of the Iron Cap block cave mine equipment with partial automation results in significant diesel consumption reduction replaced by lower cost green power supplied by BC Hydro. The electrified mine design has an 11% higher capital cost versus a conventionally developed and operated mine design but these costs are offset by much lower operating costs, leveraging savings on diesel consumption, ventilation, equipment maintenance and labor, yielding an approximately 11% lower total cost per tonne mined.
In the 2020 PEA, large footprints of the Iron Cap and
Mine site water tunnel alignments are revised in the 2020 PEA to incorporate recent field data, avoid mineralized deposits and reflect the mine development plan, resulting in improved constructability and reliability over the 2016 PEA design. One dual bore tunnel has been changed to a single bore, concrete lining was added to multiple tunnels and tunnel system expansions were removed as a result of the reduction in the size of the Rock Storage Facility (RSF). Commensurate with these design changes and life of mine plan requirements, the cumulative length of water diversion mine site tunnels has been reduced from 51 km to 20 km.
In the 2020 PEA, estimated initial capital costs including pre-production mining are 6% improved over the 2016 PEA (from
As a result of mine plan extraction from the larger Iron Cap block cave mine, the life of mine copper grade in the 2020 PEA increased 16% (from 0.32% to 0.37%), delivering 2.5 B lb more copper to the mill (from 16.7 to 19.2 B lb) versus the 2016 PEA.
Base Case operating cost and total cost per ounce of gold produced (net of copper and silver by-products) dramatically improve in the 2020 PEA. The life of mine estimated average operating cost is reduced from negative
For a primary copper producer reporting costs per pound of copper produced (net of gold and silver by-products) the Base Case total life of mine average operating cost is negative
For a diversified mining company reporting costs on a co-product basis, the Base Case total life of mine average operating costs are
Attached to this news release is an addendum providing additional details relating to the 2020 PEA's mineral resources, mine design, production plan, capital costs, operating costs and economic projections.
KSM 2016 PFS Remains Current
Seabridge engaged independent consultants to conduct an extensive data verification exercise on the 2016 PFS to determine whether there had been any material changes to the information used in the 2016 PFS and whether the study could be considered current. The results of the exercise verified that if the 2016 PFS were to be updated using the 2020 information, there would be no material change to outcomes of the 2016 PFS, its capital and operating costs, mineral reserves, or financial analysis, and therefore the 2016 PFS remains current and is suitable to be used unchanged in the 2020 Technical Report.
The data verification checks used updated resource models with updated process recoveries and escalated cost assumptions and estimated that variances in total mill feed would be limited to +1.3% on mill feed tonnes, no change on gold grade, and +2.4% on copper grade. These overall differences are not material to the 2016 PFS Mineral Reserves. The financial results using the 2016 PFS mine plan with updates to capital and operating costs, 3-year average metal prices and tax code revisions are also not materially different from the 2016 PFS financial results.
The 2016 PFS was designed to align with regulatory approvals for project construction and operation included in federal and provincial Environmental Assessments. The scope of the 2016 PFS mine design included open pits and underground mines to extract ore from the
All reserve and resource estimates reported by the Corporation were calculated in accordance with the Canadian National Instrument 43-101 and the
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 estimated amount and grade of mineral reserves and mineral resources and the potential to upgrade inferred resources to higher resource categories; (ii) estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods; (iii) the estimated amount of future production, both ore processed and metal recovered and (iv) estimates of operating costs, life of mine costs, net cash flow, net present value (NPV) and economic returns from an operating mine. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives 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. The most significant assumptions are set forth above, but generally these assumptions include: (i) the presence of and continuity of metals at the Project at estimated grades; (ii) the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining operations; (iii) the capacities and durability of various machinery and equipment; (iv) the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times; (v) currency exchange rates; (vi) metals sales prices; (vii) appropriate discount rates applied to the cash flows in the economic analysis; (viii) tax rates and royalty rates applicable to the proposed mining operation; (ix) the availability of acceptable financing under assumed structure and costs; (ix) anticipated mining losses and dilution; (x) metallurgical performance; (xi) reasonable contingency requirements; (xii) success in realizing proposed operations; (xiii) receipt of permits and other regulatory approvals on acceptable terms and (xiv) the successful conclusion of consultation with impacted Treaty and 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 as forecast, 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; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; 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 the conclusion of successful consultation with impacted First Nations groups; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Seabridge operates; operational and infrastructure risks and the additional risks described in Seabridge's Annual Information Form filed with SEDAR in
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.
Contact:
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Email: info@seabridgegold.net
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