VANCOUVER, Sept. 7, 2017 /CNW/ - SSR Mining Inc. (NASDAQ: SSRM) (TSX: SSRM) ("SSR Mining") is pleased to report the results of a Preliminary Economic Assessment ("PEA") for the Seabee Gold Operation in Saskatchewan, Canada prepared with SRK Consulting (Canada) Inc. The PEA evaluates the expansion of the Seabee Gold Operation to a sustained mining and milling rate of 1,050 tonnes per day for a seven-year period.
Highlights of the Seabee Gold Operation PEA:
(All financial results are in U.S. dollars unless otherwise noted)
- Near-term production growth: Estimated peak gold production of 120,000 ounces in 2020 is 55% higher than 2016 output.
- Expands operating margins: Estimated LOM cash costs of $548 per payable ounce of gold sold due to higher sustained throughput and an average mill feed grade of 8.51 g/t gold.
- Extends production profile to 2024: Estimated gold production averages 100,000 ounces per year over the period from 2018 to 2023, a 29% increase from 2016 production.
- Improves processing plant performance: Estimated mill production averages 1,050 tonnes per day beginning in 2019, a 21% increase to 2016 throughput, with a projected 96.5% recovery.
- Low capital investment: Development near existing infrastructure reduces projected total capex to $90 million, driving low AISC of $682 per payable ounce of gold sold.
Paul Benson, President and CEO said, "We acquired Claude Resources because we recognized Santoy was a high-quality orebody and we saw the potential for near-term production growth and improved margins, which this expansion plan confirms. At sub-$550 per ounce cash costs and peak annual gold production of over 120,000 ounces along with a production profile for at least another seven years estimated under the PEA, Seabee is firmly positioned as a key asset and significant cash flow generator in our portfolio. Underpinning our longer-term view, we believe that recent drilling success at Santoy, our large land position and our option on the Fisher property represent the potential for further mine life extension."
SEABEE GOLD OPERATIONS OVERVIEW
The Seabee Gold Operation is located in Northern Saskatchewan, Canada, and has been in continuous operation since 1991. The operation is accessed by fixed-wing aircraft to an airstrip located on the property. During winter months, an ice road is built to transport supplies and equipment by truck. Electrical power to the property is provided by the provincial power authority via a 138-kilovolt hydroelectric transmission line from Island Falls, Saskatchewan. Potable water is obtained locally through the on-site potable water system to support the operation. The Seabee camp facilities can accommodate 200 employees at site.
Mineral Resources Estimate
The current Mineral Resources estimate for the Seabee Gold Operation is based on data as at December 31, 2016 and excludes Porky Main Mineral Resources, which are considered a historical estimate and do not contribute to current Mineral Resources.
Table 1: Seabee Mineral Resources Estimate (as at December 31, 2016)
| Category | Tonnes | Au | Au |
| (Mt) | (g/t) | (Moz) | |
| Measured | 0.81 | 7.71 | 0.20 |
| Indicated | 1.27 | 8.22 | 0.34 |
| Total (M+I) | 2.07 | 8.02 | 0.54 |
| Inferred | 2.50 | 7.66 | 0.62 |
| Notes: Mineral Resources are not Mineral Reserves and have not demonstrated economic viability. Mineral Resources are reported inclusive of Mineral Reserves. All figures are rounded to reflect the relative accuracy of the estimates. Mineral Resources are reported within classification domains inclusive of in-situ dilution at a diluted cut-off grade of 4.40 g/t gold at the Seabee mine and 3.26 g/t gold at the Santoy mine assuming an underground extraction scenario, a gold price of US$1,400/oz, C$:US$ exchange rate of 1.25; and metallurgical recovery of 96.5%. Block modelling techniques were used for Mineral Resources estimates for the Santoy mine and the majority of the Seabee mine. Polygonal techniques were used in areas of historical mining at the Seabee mine at Porky West. For additional information regarding the Mineral Resources estimate, please refer to our Annual Information Form dated March 22, 2017, a copy of which is available under our profile on the SEDAR website at www.sedar.com. |
Mineral Reserves Estimate
The current Mineral Reserves estimate for the Seabee Gold Operation is based on data as at December 31, 2016.
Table 2: Seabee Mineral Reserves Estimate (as at December 31, 2016)
| Category | Tonnes | Au | Au |
| (Mt) | (g/t) | (Moz) | |
| Proven | 0.52 | 6.97 | 0.12 |
| Probable | 0.85 | 8.93 | 0.25 |
| Total | 1.37 | 8.19 | 0.36 |
| Notes: All figures have been rounded to reflect the relative accuracy of the estimate. Mineral Reserves are based on a cut-off value of 3.65 g/t gold for the Santoy mine and 4.92 g/t gold for the Seabee mine assuming: a gold price of US$1,250/oz; a C$:US$ exchange rate of 1.25; milling recoveries of 96.5%; royalty of 3.0%; and operating cost of C$172/t at Santoy mine and C$231/t at Seabee mine. Mineral Reserves are stated at a mill feed reference point and include for diluting materials and mining losses. For additional information regarding the Mineral Reserves estimate please refer to our Annual Information Form dated March 22, 2017, a copy of which is available under our profile on the SEDAR website at www.sedar.com. |
PRELIMINARY ECONOMIC ASSESSMENT
Based on our operating experience and investment in exploration to increase Mineral Resources at the Seabee Gold Operation since our acquisition in May 2016, the PEA contemplates the technical and investment requirements for and demonstrates the robust economics of a potential expansion to a sustained mining and milling rate of 1,050 tonnes per day. This results in increased gold production and decreased cash costs, over a seven-year operating period. The increased utilization of latent capacity within site infrastructure allows for lower capital investment required for an expansion.
The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA will be realized.
Mining and Processing
The Seabee Gold Operation is comprised of two underground gold mines, Santoy and Seabee, and the Seabee mill. Production as outlined by the PEA is primarily sourced from the Santoy mine.
Primary access at the Santoy mine is provided via a main ramp from surface. The Santoy mine portal is located at the top of the Santoy 8 deposit. The Santoy mine uses longitudinally retreating longhole mining methods for the majority of production, while areas with minimal strike length use Alimak mining methods to reduce lateral development costs. As the number of advanced mining fronts increases at the Santoy mine, the PEA contemplates an increase in production tonnage of 20% to 1,042 tonnes per day compared to 2016 production rates of 870 tonnes per day, which were reported for the period from our acquisition of the Seabee Gold Operation on May 31, 2016 to December 31, 2016. The tonnage movement rate under the expansion averages 1,050 tonnes per day over the life of the production plan beginning in 2019. On completion of individual stopes within the Santoy mine, stopes are backfilled with development waste rock. Material is trucked, using 40-tonne haul trucks, from the Santoy mine approximately 13 kilometers along a dedicated haul road to the Seabee mill. The PEA includes additional mining equipment with the increase in haulage and drilling demand as mining advances along strike and deeper at the Santoy mine and the installation of additional electrical distribution capacity.
The PEA contemplates that material will continue to be processed at the Seabee mill, a conventional crushing and grinding circuit, adjacent to the Seabee mine. The mill utilizes gravity concentration and cyanide leaching with carbon-in-pulp for gold recovery to produce doré bars on site. Primary crushing is carried out with a jaw crusher followed by cone crushing in closed circuit with a triple deck screen. The grinding circuit consists of a primary ball mill and two secondary ball mills. A portion of the primary grinding mill discharge is pumped directly to a Knelson concentrator with the upgraded material further concentrated on a shaking table. The gravity concentrate is generally smelted with the gold recovered in the electrowinning circuit. The PEA assumes a forecast gold recovery rate of 96.5% for the life of the production plan, which is consistent with recent historical average recovery rates. Tailings are pumped to one of two existing tailings management facilities located approximately two kilometers east of the Seabee mill. An expansion to the tailings management facility will be required under operations contemplated in the PEA.
Selected operating and production statistics from the PEA are presented in Table 3 and Table 4.
Table 3: Estimated PEA Operating and Production Statistics
| Units | Annual Average (1) | Total (2) | |
| Tonnes Milled | kt | 381 | 2,654 |
| Processing Rate | tpd | 1,042 | - |
| Mine Life | years | - | 7 |
| Gold Grade | g/t | 8.51 | 8.30 |
| Gold Recovery | % | 96.5% | - |
| Gold Production | koz | 100 | 683 |
| Notes: |
| 1. Annual Average figures are for the period from 2018 to 2023. |
| 2. Total figures are for the period from H2 2017 to 2024. |
Table 4: Estimated PEA Annual Operating Statistics
| Year | Units | H2 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
| Tonnes milled | kt | 168 | 365 | 383 | 384 | 384 | 383 | 384 | 203 |
| Tonnes milled | tpd | 920 | 1,000 | 1,050 | 1,050 | 1,051 | 1,051 | 1,051 | 1,051 |
| Gold mill feed grade | g/t | 7.71 | 7.85 | 8.40 | 10.10 | 9.11 | 8.09 | 7.44 | 6.48 |
| Gold recovery | % | 96.5% | 96.5% | 96.5% | 96.5% | 96.5% | 96.5% | 96.5% | 96.5% |
| Gold production | koz | 41 | 89 | 100 | 120 | 108 | 96 | 88 | 41 |
| Percent of gold ounces attributable to Inferred Mineral Resources |
% | 7% | 18% | 45% | 63% | 48% | 74% | 95% | 47% |
The total Mineral Resources processed in the PEA include 62% of the 2016 Inferred Mineral Resources estimate presented in Table 1 above. The PEA does not impact the Seabee Gold Operation's current 2016 Mineral Resource and Mineral Reserve estimates.
Capital Costs Summary
Capital cost estimates in the PEA consider historical construction costs, equipment purchase prices and actual development costs. The total capital required to expand the Seabee Gold Operation to a 1,050 tonnes per day operation over the seven-year operating plan in the PEA is estimated to be $89.6 million. The underground expansion includes the associated lateral development for Alimak mining, ramp development to support multi-stope longhole mining and additional mining equipment. The surface infrastructure expansion includes mine electrical distribution and tailings management facility expansion. A summary of estimated capital costs is presented in Table 5 and annual estimated capital costs are shown in Table 6.
Table 5: Summary of PEA Capital Costs
| Capital Costs | Value ($M) |
| Infrastructure Capital | $50.2 |
| Capital Development | $23.4 |
| Capitalized Exploration | $15.9 |
| Total | $89.6 |
Table 6: Estimated Annual PEA Capital Costs
| Year | Units | H2 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
| Infrastructure Capital | $M | $4.2 | $16.2 | $13.7 | $7.4 | $4.5 | $4.2 | $0.0 | $0.0 |
| Capital Development | $M | $1.8 | $5.1 | $4.4 | $4.8 | $3.7 | $3.2 | $0.4 | $0.0 |
| Capitalized Exploration | $M | $1.9 | $2.7 | $2.7 | $2.5 | $2.5 | $2.5 | $0.7 | $0.4 |
Operating Costs Summary
Cash costs and all-in sustaining costs ("AISC") per payable ounce of gold sold are non-GAAP financial measures. Please see "Cautionary Note Regarding Non-GAAP Measures".
Total estimated operating costs in the PEA are presented in Table 7. These operating costs were developed based on actual operating experience at the Seabee Gold Operation and are adjusted where appropriate to characteristics specific to the Santoy mine and Seabee mill considering the throughput increase to 1,050 tonnes per day.
Table 7: Summary of PEA Operating Costs
| Operating Costs | Value ($/t milled) |
| Mining | $58 |
| Processing | $20 |
| General and Administrative | $52 |
| Total | $130 |
Cash costs, which include mining, processing and administrative costs (net of capital development), royalties and refining costs, total $548 per payable ounce of gold sold over the seven-year operating plan in the PEA. AISC, which include infrastructure capital, capital development, capitalized exploration and reclamation, total $682 per payable ounce of gold sold over the seven-year operating plan in the PEA.
Financial Analysis
Over the seven-year operating plan outlined in the PEA, the post-tax NPV using a 5% discount rate is $292.0 million. Key financial estimates presented in Table 8 are based on the key economic assumptions presented in Table 9.
Table 8: Key PEA Financial Estimates
| Units | Total | |
| Net Revenue | $M | $893.5 |
| Mining Costs | $M | $(154.3) |
| Processing Costs | $M | $(52.8) |
| Administration Costs | $M | $(138.9) |
| Royalties and Other | $M | $(28.5) |
| Operating Cash Flow | $M | $519.1 |
| Change in Net Working Capital | $M | $10.3 |
| Operating Cash Flow | $M | $529.3 |
| Infrastructure Capital | $M | $(50.2) |
| Capital Development | $M | $(23.4) |
| Capitalized Exploration | $M | $(15.9) |
| Reclamation | $M | $(7.2) |
| Pre-Tax Cash Flow | $M | $432.7 |
| Tax | $M | $(86.0) |
| Post-tax Cash Flow | $M | $346.7 |
| Pre-Tax NPV (5%) | $M | $363.5 |
| Post-Tax NPV (5%) | $M | $292.0 |
| Notes: Figures may not total exactly due to rounding. |
Table 9: Key Economic Assumptions
| Assumption | Units | Value |
| Gold Price | $/oz | $1,300 |
| CAD:USD Exchange Rate (2017 to 2018) | $ | $1.275 |
| CAD:USD Exchange Rate (2019 onwards) | $ | $1.250 |
Sensitivity Analysis
The Seabee Gold Operation expansion under the PEA demonstrates strong economic performance across a range of gold prices and exchange rates. Estimated NPV sensitivities for key operating and economic metrics are presented in Tables 10 and 11.
Table 10: NPV Sensitivity Analysis: Gold Price and Canadian Exchange Rate
| Pre-tax NPV (5%) Sensitivities ($M) | ||||||
| Gold Price ($/oz) | ||||||
| $1,100 | $1,200 | $1,300 | $1,400 | $1,500 | ||
| Canadian Exchange Rate |
1.15:1 | $216 | $272 | $329 | $386 | $442 |
| 1.20:1 | $233 | $289 | $346 | $403 | $459 | |
| 1.25:1 | $250 | $307 | $364 | $420 | $477 | |
| 1.30:1 | $263 | $319 | $376 | $433 | $489 | |
| 1.35:1 | $276 | $333 | $389 | $446 | $502 | |
| Notes: The Canadian exchange rate for the row labeled "1.25:1" is assumed to be 1.275:1 in 2017 and 2018 and 1.25:1 thereafter. |
Table 11: NPV Sensitivity Analysis: Site Costs and Infrastructure Capital
| Pre-tax NPV (5%) Sensitivities ($M) | ||||||
| Site Costs (% change) | ||||||
| -20% | -10% | 0% | 10% | 20% | ||
| Infrastructure Capital (% change) |
20% | $420 | $387 | $354 | $322 | $289 |
| 10% | $424 | $392 | $359 | $326 | $294 | |
| 0% | $429 | $396 | $364 | $331 | $298 | |
| -10% | $433 | $401 | $368 | $335 | $303 | |
| -20% | $438 | $405 | $373 | $340 | $307 | |
| Notes: Site costs include mining costs, processing costs, administrative costs, capital development, and capitalized exploration. |
Environmental and Permitting
Based on the PEA production schedule, the tailings management facility expansion will be required earlier than contemplated under our current operations. Such expansion will require an environmental assessment screening by the relevant regulatory authorities. The PEA assumes that all requisite approvals and permits for the expansion will be obtained. While we believe that such approvals and permits can be obtained on a timely basis and on acceptable terms, there is no certainty that this will be the case.
Opportunities and Next Steps
Several potential opportunities to improve the economics of the Seabee Gold Operation contemplated under the PEA have been identified. Examples include, but may not be limited to:
- The Seabee mill has the potential to achieve operating throughput of up to 1,200 tonnes per day based on upgraded mill facilities and operating experience at similar mills. This would further increase production from that contemplated under the PEA and potentially improve operating costs due to economies of scale and extend mine life.
- The implementation of Operational Excellence projects identified based on our operating experience that may present incremental improvements to production and operating costs, which may include the following:
- Drilling and blasting studies to improve fragmentation, reduce over-blast and reduce dilution, leading to lower costs and better grade control;
- Equipment availability and utilization improvements to increase equipment efficiency and lower costs;
- Installation of a ventilation-on-demand system to lower ventilation costs;
- Improvement and modification of current ground support systems, increasing efficiency and reducing costs;
- Evaluation of digital tracking of underground operations and equipment to improve efficiencies;
- Further capacity and efficiency improvements in the process plant to reduce costs and increase production; and
- Evaluation of a runway extension to allow larger direct flights to reduce costs and improve efficiency of shift changes.
Further opportunity exists for potential Mineral Resources discovery and conversion of Mineral Resources to Mineral Reserves at the current Seabee Gold Operation, including:
- Exploration drilling during 2017 has been successful in expanding known gold mineralization at Santoy 8 and Santoy Gap as well as identifying new gold mineralization in the area of Gap Hanging Wall. These results are expected to upgrade Mineral Resources when we report Mineral Resources and Mineral Reserves estimates for year-end 2017. See our news release dated September 5, 2017, for information about recent exploration results at the Seabee Gold Operation.
- Potential for new mineralization discoveries in close proximity to existing infrastructure, including potential at the Carr target, located four kilometers to the north of Santoy Gap, and on the extension of the Santoy shear on the Fisher property.
Given the positive financial analysis included in the PEA, we expect to advance further exploration and engineering work on the expansion of the Seabee Gold Operation, which will be supported by our current drilling program to upgrade Inferred Mineral Resources prior to planned mining. Stakeholder engagement plans have been developed to support the proposed expansion of the tailings management facility, and engagement activities defined in these plans are currently underway.
Qualified Persons
The scientific and technical information contained in this news release pertaining to the Seabee Gold Operation has been reviewed and approved by the following qualified persons under National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101"):
- Michael Selby, P.Eng., Principal Consultant (Mining), SRK Consulting (Canada) Inc.;
- Dominic Chartier, P.Geo., Senior Consultant (Geology), SRK Consulting (Canada) Inc.;
- Mark Liskowich, P.Geo., Principal Consultant (Environmental), SRK Consulting (Canada) Inc.; and
- Jeffrey Kulas, P. Geo., our Manager Geology, Mining Operations at the Seabee Gold Operation, with respect to the Mineral Resources estimate only.
The qualified persons have verified the information disclosed herein, including the sampling, preparation, security and analytical procedures underlying such information, and are not aware of any significant risks and uncertainties that could be expected to affect the reliability or confidence in the information discussed herein.
Technical Report
A NI 43-101 technical report prepared by SRK Consulting (Canada) Inc. will be filed on SEDAR within 45 days of this news release and will be available at that time on the SSR Mining website.
About SSR Mining
SSR Mining Inc., formerly Silver Standard Resources Inc., is a Canadian-based precious metals producer with three operations, including the Marigold gold mine in Nevada, U.S., the Seabee Gold Operation in Saskatchewan, Canada and the 75% owned and operated Puna Operations joint venture in Jujuy Province, Argentina. We also have two feasibility stage projects and a portfolio of exploration properties in North and South America. We are committed to delivering safe production through relentless emphasis on Operational Excellence. We are also focused on growing production and Mineral Reserves through the exploration and acquisition of assets for accretive growth, while maintaining financial strength.
