Seabridge PEA outlines standalone underground mine opportunity at KSM with US$5.8B after-tax NPV

Seabridge Gold (TSX: SEA; NYSE: SA) has announced results of a preliminary economic assessment (PEA) for a potential copper-rich underground mine at its 100% owned KSM project located in northern British Columbia. The PEA represents a standalone mine plan that has been undertaken to evaluate a potential future expansion of the KSM mine to the copper-rich Iron Cap and Kerr deposits after its prefeasibility study mine plan was completed earlier this summer.

The PEA outlines primarily an underground block cave mining operation supplemented with a small open pit, and is planned to operate for 39 years with a peak mill feed production of 170,000 tonnes per day, demonstrating that KSM has “multi-generational long-life” mining project potential with flexibility to vary metal output.

The recently updated prefeasibility, meanwhile, contains only an open pit plan with a 33-year mine life limited to the Mitchell, East Mitchell and Sulphurets deposits. None of the mineral resources incorporated into the PEA were used in the prefeasibility mine plan.

The drill core processing area at Seabridge Gold’s KSM gold-copper project in British Columbia. Credit: Seabridge Gold

Seabridge chairman and CEO Rudi Fronk noted: “KSM is really an entire district hosting a nest of potentially economic porphyry deposits with different characteristics. In our updated [prefeasibility] we focused on the gold-rich deposits because of their faster payback and the relative simplicity of an open-pit only operation. However, we are very mindful that a deep deficit in mined copper is projected to be on the horizon as the world electrifies and moves towards a net zero carbon future.

“We therefore wanted to highlight KSM’s potential to contribute to addressing this need more fully than the mine plan contained in our updated preliminary feasibility study. We think this opportunity will be attractive to a prospective partner.”

The PEA envisages an underground-focused mine plan starting with the development of an Iron Cap block cave mine supplemented with a small open pit at Kerr. Development of a Kerr block cave mine begins when Iron Cap development tapers off. The Kerr block cave mill feed starts six years after the start of Iron Cap mill feed. Mill feed delivery to the process plant is ramped up to 170,000 tonnes per day by year 12.

Over the entire 39-year mine life, mill feed will be delivered to a flotation concentration mill circuit. The flotation plant will produce a gold/copper/silver concentrate and separate molybdenum concentrate for transport by truck to a nearby seaport at Stewart, B.C.

In total, about 4.3 billion lb. of copper, 14.3 million oz. of gold, 68.2 million oz. of silver and 13.8 million lb. of molybdenum from 1.7 billion tonnes of mill feed will be produced. Under the base-case scenario, the mine project has an estimated post-tax net present value (5% discount) of US$5.8 billion and an internal rate of return of 18.9%. Its total capital cost will be around US$14.25 billion, and the payback period is 6.2 years, based on US$18.5 billion of net cash flow generated.

Both the 2022 PEA and prefeasibility use previously disclosed KSM resource estimates, totalling 5.4 billion tonnes grading 0.51 gram gold per tonne, 0.16% copper, 2.4 grams silver, and 63 ppm molybdenum in the measured and indicated category, plus 5.7 billion tonnes grading 0.36 gram gold, 0.28% copper, 2.2 grams silver, and 33 ppm molybdenum in the inferred category.