KSM Gold-Copper Project, BC, Canada

Overview

The KSM project is a collection of gold-copper-silver-molybdenum deposits in northern British Columbia, Canada known as the Kerr, Sulphurets, Mitchell and Iron Cap deposits. With 47.3 Moz of gold, KSM is the world’s largest undeveloped gold resource. The KSM project is 100% owned by Seabridge Gold (TSX:SEA). This project is in the advanced exploration phase of development, with published reserves and resources along with preliminary construction.

Regional Geology

The KSM project is located in the “Stikinia” terrane, a ancient volcanic arc dating to early Mesozoic times and later accreted to older basement rock in the region. The entire area was subjected to the folding and thrusting of the late Cretaceous Laramide Orogeny, a period of mountain building that resulted in the Rocky Mountains of North America.

Deposit Geology

The deposit is somewhat similar to a copper porphyry deposit, but instead of a single large intrusion it consists of numerous smaller dikes, sills and plugs that are strongly deformed and hydrothermally altered. It appears that these were emplaced over some time period, rather than forming all at once. While the mineralization styles vary between the respective deposits that make up the KSM Project, it is primarily in the form of sulfide veinlets and fracture fills associated with quartz vein systems.

Discussion

For a porphyry copper deposit, the copper values at the KSM are a little low, but this is offset by the consistently higher gold values. This is also why they refer to it as a “gold-copper” project rather than “copper-gold”. Comparing the current KSM resources and reserves to those of the famous Bingham Canyon Mine in Utah (Rio Tinto) one notices that the copper grades are less than half those of Bingham, but the gold values are nearly double. Of course, Bingham has been operating for more than a century and its reserve and resource estimates are likely much more accurate than those from Seabridge’s prefeasability study. Still, that the KSM project compares favourably with that of a proven operating mine is impressive.

According to the KSM project prefeasibility study and subsequent updates, seabridge was proposing a combination of open pit (70%) and underground mining  (30%) that could conceivably result in a mine life of 55 years. More recent plans estimate mine life at 33 years. The project received environmental assessment and early construction approval as early as 2014, however it’s still not clear when or if the mine will go into production. This is partially due to the mine’s remote location; Seabridge is currently constructing two ~30km long access roads through the rugged mountains of northern BC. This difficult location, coupled with the logistics of mining multiple separate deposits, explains KSM’s large Capex of $6.432 billion.Another major challenge will be the project’s low grades; few new mines exploit deposits with gold grades substantially below 1 g/t. Recent increases in gold prices, as well as the sheer size of KSM’s resources, will help offset this.

Further Reading

• Seabridge Gold (Corporate Site)
• Rio Tinto (Bingham Canyon)