Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Shares in Seabridge Gold (TSX:SEA) (NYSE:SA) were off to the races on Thursday after the Toronto-based company bulked up its already massive KSM gold-copper-silver project in northern British Columbia.
During morning trade Seabridge stock was exchanging hands for $11.90, up 5.3% on the New York Stock Exchange, in higher than usual volumes. Seabridge is now worth $642 million after a 44.8% year to date gain.
The KSM project is the world’s largest undeveloped gold project based on mineral reserves and on Thursday the company announced expansion of the resource base at the main Deep Kerr deposit of the 100%-owned project.
By vastly increasing the amount of copper mined life of mine operating costs are now a negative $179 an ounce while all-in costs fall to just $358 an ounce
According to a statement, the new inferred resource at Deep Kerr now totals 1.92 billion tonnes grading 0.41% copper and 0.31 g/t gold (containing 19.0 million ounces of gold and 17.3 billion pounds or 7.85 million tonnes of copper) constrained by conceptual block cave shapes.
The updated resource estimate represents an increase of 3.0 million ounces of gold and 2.1 billion pounds of copper over last year’s inferred resource estimate which was incorporated into the updated National Instrument 43-101 Technical Report released September last year.
A preliminary economic impact study released by Seabridge in October transformed the ambitious project into a much larger operation than originally envisaged and in the process improved both the environmental impact and economics of KSM.
An NI 43-101 report filed in November incorporating the PEA and an updated PFS calls for mill throughput of 170,000 tonnes per day, 40,000 tonnes more than the earlier study which Seabridge says can be done without significant redesign of facilities. Initial capital costs have been increased by just less than 10% to $5.5 billion.
In the study the bulk of the operations are moved underground and using the block-cave method Seabridge says it can reduce waste rock by a whopping 81% or 2.4 billion tonnes over the 51 year life of the mine.
By vastly increasing the amount of copper mined life of mine operating costs are now a negative $179 an ounce while all-in costs fall to just $358 an ounce.
Economically viable Proven and Probable Mineral Reserves at KSAM are pegged of 2.2 billion tonnes grading 0.55 grams per tonne gold, 0.21% copper and 2.6 grams per tonne silver (38.8 million ounces of gold, 10.2 billion pounds of copper and 183 million ounces of silver)
During the first seven years of operation annual gold output would top 1 million ounces and life of mine annual production is estimated at 592,000 ounces of gold, 286 million pounds of copper and 2.8 million ounces of silver.
Measured and Indicated Mineral Resources at KSM are estimated at 2.9 billion tonnes grading 0.54 grams per tonne gold, 0.21% copper and 2.7 grams per tonne silver which translates into 49.8 million ounces of gold, 13.6 billion pounds of copper and 253 million ounces of silver.
KSM received the green light from Canada’s federal government at the end of 2014 . The federal and provincial environmental assessment process took nearly seven-years and KSM was only the second metal mine in five years to receive approval.
Comments
Oredigr
I am guessing the production rates for the first 7 years understates the Cu production by about a 1000 fold. Does anybody at Infomine actually read these short articles and edit for accuracy?