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Seabridge improves KSM economics

An updated preliminary feasibility study for Seabridge Gold’s KSM project in British Columbia, Canada, has seen the after-tax NPV5% soar by 426%, production nearly doubled, and total capital expenditure trimmed.
Seabridge improves KSM economics Seabridge improves KSM economics Seabridge improves KSM economics Seabridge improves KSM economics Seabridge improves KSM economics

Seabridge Gold's KSM

"We have redesigned KSM for an inflationary environment. The themes for this PFS are capital and energy efficiency," Seabridge chairman and CEO Rudi Fronk said.

"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," he added.

The new PFS shows an operation that consists of an all open pit mine plan that includes the Mitchell, East Mitchell, and Sulphurets deposits only.

The after-tax NPV5% has been lifted from US$1.5 billion to $7.9 billion and the after-tax IRR rose from 8% to 16.1%.

Seabridge said the inflation was the primary cause for an increase to initial capital from $5 billion to $6.4 billion, while total capital was trimmed from $10.5 billion to $9.6 billion. Upward pressures to the total capital from inflation and a mill expansion were wholly offset by the elimination of block cave mining.

Sustaining capital over the 33 year mine life is estimated at $3.2 billion, which is down by $2.3 billion from the 2016 PFS.

The mill throughput has been expanded from 130,000 tonnes per day to 195,000tpd.

The average annual gold production has been increased by 90%, copper production is up by 22%, silver production by 36%, and molybdenum by 363%.

The payback period has been dropped from 6.8 ears to 3.7 years.

Toronto-based Red Cloud Securities said the update is "very positive".

"This study was all about decreasing risk and improving project economics. It incorporates a well-thought-out strategy and has been issued with the goal of helping attract a larger senior producer to develop the project," Red Cloud said.

Seabridge Gold's share price was quoted at C$16.78 on June 29. The company had a market capitalization of C$1.35 billion.