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KSM - an accronym to remember

August 13, 2013

Seabridge Gold’s KSM project is huge. The pieces are coming together to develop the property, notably with the company’s announcement of a benefits agreement with the Nisga’a First Nation.

The KSM (Kerr-Sulphurets-Mitchell) property is located in the Iskut-Stikine River region, approximately 65 km northwest of Stewart, British Columbia. The KSM project is one of the largest undeveloped gold projects in the world. Proven and probable reserves total 44 million ounces of gold and 9.9 billion pounds of copper.

The Nisga’a Nation and Seabridge say that they “...have worked diligently over the last number of months towards reaching agreement on material terms related to economic benefits, opportunities for jobs and contracting, ongoing engagement and project certainty.” (press release) Seabridge is also working with three other First Nations (Tahltan, Gitanyow, and Gitxsan) with respect to the project, in addition to several communities within the region.

Seabridge has a $24M exploration budget for 2013—$15 M for KSM work and $9M for its Courageous Lake property in the NWT. The results of a Preliminary Feasibility Study (PFS) were announced on March 31, 2010. This PFS was updated and the results were released on May 2nd, 2011.

Seabridge received confirmation from the Province of British Columbia regulatory authorities that its Application for an Environmental Assessment Certificate completed the screening process and it had been accepted for formal detailed review.

In construction, the project will generate direct spending of approximately $3.5 billion in the BC economy for goods and services.  The total GDP generated in BC by the project (direct, indirect, and induced) is approximately $3.4 billion and $6 billion for all of Canada during construction.  In production, the KSM Project will generate approximately $400 million in GDP annually for BC and a total of $42 billion in GDP for Canada over the life of the project. The project will employ up to 1,100 people during construction and will create approximately 930 permanent jobs during mine operations. 

Seabridge Gold Inc. trades for $14.38 on the TSX (ticker SEA). The company has a market cap of $655 M. The company trumpets its low political risk—both properties are located in Canada.

Commentary

The KSM project is helped by BC Hydro’s $500M Highway 37 expansion, to bring power nearby. Seabridge has no debt and has assembled impressive reserves at its KSM project. The mine plan envisions a 50 year + mine life to develop the three core deposits.

The stars are aligning for this project. Keep in mind the huge LNG projects planned for Prince Rupert and Kitimat and other mines in the north-west corner of BC. It is not hard to envision a trades and skilled labour shortage in the medium term.

Sources

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Source: Seabridge Gold website.