Seabridge Gold Inc. (TSX: SEA)(NYSE Amex: SA) announced today
results from a National Instrument 43-101 compliant Preliminary
Feasibility Study ("PFS") of its 100% owned KSM project located in
northern British Columbia, Canada. The PFS was prepared by Wardrop,
a Tetra Tech Company (Wardrop). The Executive Summary from the PFS
can be found at www.seabridgegold.net/KSM-PFS.pdf. The complete PFS
will be filed on SEDAR at www.sedar.com within 45 days.
Seabridge President and CEO Rudi Fronk stated that "the PFS
confirms that the KSM project now hosts the largest gold reserve in
Canada and one of the largest in the world. KSM is projected to
provide an extraordinary mine life of more than 35 years with
estimated cash operating costs well below the current average of
the major gold producers. Estimated capital costs are in line with
those of comparable, large-scale, undeveloped gold-copper projects
and KSM has the advantage of being located in a low-risk
jurisdiction."
The PFS envisages a large tonnage open-pit mining operation at
120,000 metric tonnes per day 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. A separate molybdenum concentrate and gold-silver dore would
be produced at the processing facility.
Reserves
Lerchs-Grossman pit shell optimizations were used to define the
mine plans in the PFS which were designed to maximize net present
value using a 5% discount rate which is the current industry
standard. Mineral Reserves for the KSM project were estimated using
a gold price of US$850 per ounce, a copper price of US$2.25 per
pound and are stated as follows:
KSM Proven and Probable Reserves
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Reserve Tonnes
Zone Category (millions) Average Grades
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Gold Copper Silver Molybdenum
(gpt) (%) (gpt) (ppm)
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Mitchell Proven 570.6 0.64 0.17 2.95 58.0
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Probable 764.8 0.59 0.16 2.93 62.3
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Total 1,335.4 0.61 0.16 2.93 60.4
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Sulphurets Probable 142.2 0.61 0.28 0.44 101.8
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Kerr Probable 125.1 0.28 0.48 1.26 Nil
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Totals Proven 570.6 0.64 0.17 2.95 58.0
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Probable 1,032.1 0.56 0.22 2.38 60.2
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Total 1,602.7 0.59 0.20 2.58 59.4
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Zone Contained Metal
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Gold Copper Silver Moly
(million (million (million (million
ounces) pounds) ounces) pounds)
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Mitchell 11.7 2,101 54.1 73.0
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14.5 2,722 72.0 105.0
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26.3 4,823 126.1 178.0
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Sulphurets 2.8 883 2.0 31.9
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Kerr 1.1 1,319 5.1 Nil
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Totals 11.7 2,101 54.1 73.0
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18.4 4,924 79.1 137.0
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30.2 7,024 133.1 209.9
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Estimated proven and probable reserves of 30.2 million ounces of
gold (1.60 billion tonnes at 0.59 grams of gold per tonne) are
derived from estimated total measured and indicated resources of
38.9 million ounces of gold (2.1 billion tonnes at 0.57 grams of
gold per tonne) including allowances for mining losses and dilution
(see www.seabridgegold.net/KSM-PFS.pdf for details).
Production
At 120,000 tonnes per day, annual throughput for the mill is
estimated at 43.8 million tonnes. With 1.60 billion tonnes of
proven and probable reserves, KSM's mine life is estimated at
approximately 37 years. Production is scheduled to commence at the
Mitchell deposit, to be augmented by Kerr and then Sulphurets. The
PFS mining plan is significantly improved over the 2009 KSM
Preliminary Assessment; the mill feed is increased by approximately
25% and US$160 million in pre-production stripping expenses have
been eliminated.
At Mitchell, there is a near-surface higher grade gold zone that
would allow for gold production in the first five years
substantially above the mine life average. This higher grade gold
zone would significantly reduce the project's payback period to
approximately 6.9 years for the Base Case. A payback period
representing less than 20% of mine life is considered highly
favorable. Metal production for the first five years compared to
life of mine average production is estimated as follows:
Average Annual Metal Production
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Years 1-5 Average Life of Mine Average
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Average Grades:
Gold (grams per tonne) 0.80 0.59
Copper (%) 0.19 0.20
Silver (grams per tonne) 2.62 2.58
Molybdenum (parts per million) 54.2 59.4
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Annual Production:
Gold (ounces) 878,000 634,000
Copper (pounds) 149 million 158 million
Silver (ounces) 2.7 million 2.6 million
Molybdenum (pounds) 1.7 million 2.1 million
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Capital Costs
Start-up capital costs (including contingencies of US$394
million) are estimated at US$3.37 billion, approximately 9% above
the start-up capital cost estimate from the July 2009 KSM
Preliminary Assessment. Start-up capital costs are higher due to
the increase in mine size which requires additional mine waste rock
placement and storage as well as associated water diversions,
storage dams and water treatment facilities. Additional capital has
also been allocated for on-site energy recovery plants to generate
power from planned water diversions, process solutions and
slurries. A total of five on-site small energy recovery plants
would provide green power to the site and the B.C. Hydro grid.
Increased capital has also been allocated for offsite concentrate
storage and handling facilities. A breakdown of estimated start-up
capital costs is as follows:
Start-up Capital Costs
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Description US$'000
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Overall Site 106,000
Open Pit Mining 153,000
Crushing, Stockpiles and Grinding 371,000
Tunnelling 199,000
Mitchell Teigen Tunnel Transfer System 127,000
Plantsite Grinding and Flotation 272,000
Tailings Management Facility 72,000
Water Treatment 185,000
Site Services and Utilities 70,000
Ancillary Buildings 83,000
Plant Mobile Equipment 10,000
Temporary Services 142,000
Permanent Electrical Power Supply 146,000
Energy Recovery Plants 51,000
Permanent Access Roads 72,000
Temporary Winter Access Roads 15,000
Offsite Infrastructure and facilities 62,000
Project Indirects 760,000
Owner's Costs 77,000
Contingencies 394,000
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Total 3,365,000
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Operating Costs
Average mine, process and G&A operating costs over the
project's life (including waste mining and on-site power credits)
are estimated at US$11.66 per tonne milled (before base metal
credits). Estimated unit operating costs are up approximately 10%
from the 2009 Preliminary Assessment due primarily to the higher
strip ratio required to accommodate the 25% increase in tonnes of
ore mined over the project life. A breakdown of estimated unit
operating costs is as follows:
Unit Operating Costs
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US$s
(Per Tonne
Cost Category Milled)
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Mining Costs 4.97
Milling Costs:
Staff and Supplies 4.48
Power (Process only) 0.89
G&A 0.62
Site Services 0.23
Tailings 0.25
Water Treatment 0.36
On-Site Power Credit (0.14)
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Total 11.66
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Economic Analysis
A Base Case economic evaluation was undertaken incorporating
historical three-year trailing averages for metal prices as of
March 15, 2010. This approach is consistent with the guidance of
the United States Securities and Exchange Commission, is accepted
by the Ontario Securities Commission and is industry standard. An
Alternate Case was also constructed using more conservative copper
and silver metal prices and a slightly higher gold price. Finally,
a Spot Price Case was prepared using recent spot metal prices. The
pre-tax economic results in U.S. dollars for all three cases are as
follows:
Projected Economic Results
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Base Case Alternate Case Spot Price Case
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Metal Prices:
Gold ($/ounce) 878 900 1100
Copper ($/pound) 2.95 2.25 3.25
Silver ($/ounce) 14.59 14.00 17.00
Molybdenum ($/pound) 16.50 16.50 16.50
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Net Cash Flow $11.7 billion $8.3 billion $18.6 billion
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NPV @ 5% Discount Rate $2.9 billion $1.6 billion $5.6 billion
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IRR (%) 11.4 8.8 16.5
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Payback Period (years) 6.9 8.5 4.4
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Operating Costs Per Ounce
of Gold Produced (life of
mine) 144 313 68
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Total Costs Per Ounce of
Gold Produced (includes
all capital) 373 541 297
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US$/Cdn$ Exchange Rate 0.92 0.92 0.92
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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.
National Instrument 43-101 Disclosure
The KSM PFS was prepared by Wardrop, and incorporates the work
of a number of industry-leading consulting firms. These firms and
their Qualified Persons (as defined under National Instrument
43-101) are independent of Seabridge and have reviewed and approved
this news release. The consultants and their QPs are listed below
with their responsibilities:
- Wardrop, under the direction of Frank Grills (overall report
preparation, process and infrastructure capital costs, infrastructure,
and financial analysis) and John Huang (metallurgical testing review,
mineral processing and process operating costs)
- Moose Mountain Technical Services under the direction of Jim Gray (mine
planning, rock storage facilities, mine capital and mine operating
costs)
- W.N. Brazier Associates Inc. under the direction of W.N. Brazier (power
supply, energy recovery plants and associated costs)
- Rescan Environmental Services Ltd. under the direction of Greg McKillop
(environment and permitting)
- Bosche Ventures Ltd. under the direction of Harold Bosche (rope
conveying, slurry, tailings delivery and return water pumping and piping
and associated capital costs)
- Klohn Crippen Berger Ltd. under the direction of Graham Parkinson
(diversion and seepage collection ponds, tailings dam, water treatment
dam, water treatment plant, water diversions and capital, operating and
closure costs)
- Allnorth Consultants Ltd. Under the direction of Mr. Darby Kreitz
(storage dam and tailings starter dam construction cost estimates)
- Resource Modeling Inc. under the direction of Michael Lechner (mineral
resources)
- McElhanney Consulting Services Ltd. under the direction of Robert
Parolin (main and temporary access roads and associated capital costs)
- BGC Engineering Inc. under the direction of Warren Newcomen (rock
mechanics and mining pit slopes)
- EBA Engineering Consultants Ltd. (EBA) under the direction of Kevin
Jones (winter access roads and associated capital costs)
- Thyssen Mining Construction of Canada Ltd. under the direction of Adrian
Bodolan (tunnel design and capital costs).
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 resources by
project and resource 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) the amount of future
production over any period; (iii) net present value and internal
rates of return of the proposed mining operation; (iv) capital
costs, including start-up, sustaining capital and
reclamation/closure costs; (v) operating costs, including credits
from the sale of copper, silver and molybdenum; (vi) strip ratios
and mining rates; (vii) expected time frames for repayment of
borrowed funds; and (viii) mine life. 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
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) metals recovery rates, (xi) reasonable contingency
requirements; (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 rate 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 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 Annual Information Form filed with SEDAR in Canada
(available at www.sedar.com) for the year ended December 31, 2009
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.
Contacts: Seabridge Gold Inc. Rudi P. Fronk President and C.E.O.
(416) 367-9292 (416) 367-2711 (FAX) info@seabridgegold.net
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