BC gov’t approves Seabridge’s KSM project

Seabridge Gold (TSX: SEA; NYSE: SA) has received a provincial environmental approval for its KSM gold–copper project in northwestern B.C., putting it closer to “becoming a reality,” the company’s vice-president of environmental affairs Brent Murphy says.

Seabridge reported that B.C.’s Environment Minister Mary Polak and Energy and Mines Minister Bill Bennett approved the company’s application for an environmental assessment certificate on July 30, 2014.

“This decision confirms that KSM is a well-designed, environmentally responsible project which is technically feasible,” Seabridge’s chairman and CEO Rudi Fronk said in a statement.

The approval reflects over six years of economic and environmental studies that the junior has completed, along with its efforts building and fostering community, government and aboriginal relations.

“It’s exciting news for the company, and I think it’s a testament to the work of the entire team at Seabridge, as well as at our consulting team. For that, we thank everybody for their efforts,” Murphy said in an interview. 

The KSM project is located in the Iskut–Stikine River region, 65 km northwest of the town of Stewart. It consists of four large, gold–copper porphyry deposits: Kerr, Sulphurets, Mitchell and Iron Cap.

Seabridge acquired a 100% stake in the project in 2000. From 2006 to 2013, it has invested over $176 million in exploration, engineering and environmental work to advance the proposed mine. This year it intends to spend another $29 million on the sizable property.

The four main deposits at KSM contain reserves of 38.2 million oz. gold and 9.8 billion lb. copper grading 0.55 gram gold and 0.21% copper, along with silver and molybdenum by-product credits, making it one of the largest undeveloped gold–copper deposits in the world.

The cost to put the Mitchell deposit into production, which contains most of the reserves, is US$5.3 billion. A 2012 prefeasibility study envisions Mitchell as a combined open-pit and underground mine operating for 55 years, with annual output averaging 508,000 oz. gold, 147 million lb. copper, 2.2 million oz. silver and 1.1 million lb. molybdenum.

Given the hefty price tag, Fronk noted in a June interview that Seabridge is looking for a joint-venture partner at KSM to do the “heavy lifting” in terms of financing. At that time, he said the company had signed several confidentiality agreements and would finish a partnership in the next year. 

The project’s ability to provide employment and generate wealth for the province and Canada makes it quite attractive.

During its five-year construction period, the mine could create 1,800 direct jobs and 4,770 indirect jobs across Canada each year. While in full production for 52 years, it would provide 1,040 on-site jobs and 5,620 indirect jobs in B.C. and Canada each year.

During the construction period, Seabridge will spend $3.5 billion in B.C., generating an estimated $3.4 billion in gross domestic product (GDP) for the province. Over its 52-year mine life, it should generate $400 million in annual GDP for B.C. and $800 million in annual GDP for Canada.

Murphy says that the Canadian environmental assessment agency (CEAA) has published its final comprehensive report on the KSM project for a 30-day public comment period. The report concluded the project “is not likely to cause significant adverse environmental effects.”

Following the comment period, the CEAA will forward its final recommendation to the federal minister of environment.

Seabridge expects to receive a positive federal decision shortly.

The company gained 37¢ to close July 31 at $10.21.