North of 60 Mining News - The mining newspaper for Alaska and Canada's North

KSM, an enormous gold-copper project in northwestern British Columbia, has received a federal license for water management facilities located on Mitchell and Sulphurets creeks, tributaries of the trans-boundary Unuk River system that flows through Southeast Alaska.

"This important permit highlights the government of Canada's continued support for the environmental standards incorporated into our design of the KSM project," said Rudi Fronk, chairman and CEO, Seabridge Gold, the company that is advancing KSM.

The issuance of this permit comes on the heels of a statement of understanding aimed at strengthening British Columbia and Alaska's commitment to protect trans-boundary rivers.

"British Columbia and Alaska have a long history of working together and supporting each other, as good neighbors do," said B.C. Minister of Energy and Mines Bill Bennett. "This statement of cooperation between British Columbia and Alaska ensures we are working together effectively on trans-boundary water quality, environmental assessments and permitting for mine projects, and reporting on mine discharges, operations and closure."

Signed by Bennett, B.C. Minister of Environment Mary Polak and Alaska Lt. Gov. Byron Mallott, the agreement formalizes a mutual commitment to protect and enhance the trans-boundary environment for the benefit of both jurisdictions.

"It is another step in Alaska's commitment to open and transparent collaboration with our Canadian neighbors on the vital issue of safeguarding our precious trans-boundary watersheds that feed our people and nourish our cultures," Mallott explained.

World-class KSM

While there are a number of northwestern B.C. mineral projects situated upstream of Alaska, KSM has emerged as the largest and among the most advanced of these potential mines.

Situated about 22 miles (35 miles) upstream of the Alaska border, KSM hosts 2.2 billion metric tons of proven and probable reserves averaging 0.55 grams per metric ton (38.8 million oz.) gold, 0.21 percent (10.2 billion pounds) copper, 2.6 g/t (183 million oz.) silver, and 42.6 parts per million (207 million lbs.) molybdenum.

These reserves support a 53-year mine that would average 540,000 oz. of gold, 156 million lbs. of copper, 2.2 million oz. of silver, and 1.2 million lbs. of molybdenum annually, according to a prefeasibility study published in September.

While these reserves already support a long-lived world-class mine at KSM, the project encompasses nearly as much gold in resources not included in the mine-plan as are in the reserves.

Much of this added resource is found in Deep Kerr and Iron Cap Lower, two zones discovered after completion of the 2014 PFS.

In March, Seabridge published an updated resource estimate for Deep Kerr that includes 1.01 billion metric tons of inferred resource grading 0.53 percent (11.8 billion lbs.) copper and 0.35 g/t (11.3 million oz) gold.

Lower Iron Cap, another deep deposit, hosts 163.8 million metric tons of inferred resources averaging 0.59 g/t (3.1 million oz.) gold and 0.27 percent (961 million lbs.) copper.

Contact water

While the four deposits that are included in the current mine plan - Kerr, Sulphurets, Mitchell and Iron Cap - are in the Unuk River watershed, the processing and tailings storage facilities would be situated in an area drained by the Nass River, which runs to the south and does not cross the Alaska border.

The federal permit issued to Seabridge on Nov. 21 regulates the waters storage facility, diversion ditches and other facilities needed to manage the water as the deposits in the Unuk River drainage are developed.

These facilities would separate water which has not contacted mined material from contact water originating from disturbed areas of the mine site. The water contacted during development and mining would be diverted to a storage facility and treated before release to the watershed.

The permit was authorized under the International Rivers Improvement Act, a set of Canadian regulations that specifically address waters that flow from Canada into the United States. Environment and Climate Change Canada, the federal agency that administers such permits, authorized the KSM water permit for a 25-year term.

The downstream impacts of Seabridge's plans to handle water in the Unuk River watershed were addressed in a 2014 report by a separate federal regulator, the Canadian Environmental Assessment Agency.

"The agency is satisfied that identified mitigation measures for the project would address potential impacts in Alaska on fish; recreational and commercial fisheries and human health from changes to water quality and quantity in the Unuk River," CEAA wrote.

In fact, it is anticipated that treatment of contact water originating from disturbed areas of the mine site, especially at the Mitchell deposit, would improve downstream water quality.

The Mitchell deposit is currently oxidizing due to its recent exposure to air as a result of a subsiding glacier. This process is causing naturally occurring acid rock drainage.

Removal of the sulfur- and metal-bearing ore, along with the water management required by environmental law, is expected to stem the flow of acidic and metals-laden waters currently flowing into a tributary of the Unuk River.

"Because of the fact that once we go into the Mitchell Valley, we have to contain and treat all contact water, we predict that water quality in the Unuk River will actually improve - it is currently very poor," Brent Murphy, vice president of environmental affairs, Seabridge Gold, explained during a 2014 presentation at the Alaska Miners Association convention in Anchorage.

Attracting a partner

Before Seabridge begins mining and treating water in the Mitchell Valley, however, the company will likely need to bring in a world-class mining partner to help fund the currently estimated C$5.3 billion of capital needed to develop KSM.

Recent growth of the higher-grade Deep Kerr deposit will likely help lure in such a partner.

Seabridge foresees the use of highly efficient block cave mining as the ideal means of extracting ore from Deep Kerr. This year's drilling was targeted to expand the deposit in such a way to support such a mine plan.

"The mineralized intervals encountered in this year's drilling are effectively oriented for efficient extraction and should support an expanded rate of daily production," said Fronk.

An updated PFS that restates the mineral resources for all of the zones at KSM by employing both open-pit and block-cave mining methods is slated for completion by the end of the year.

Additionally, the study will incorporate a preliminary economic assessment that considers the inclusion of the Deep Kerr and Lower Iron Cap zones into KSM mine sequencing.

The anticipated improved economics reflected in these studies, along with holding key permits, should help Seabridge attract a partner to help fund the costs to build a world-class gold-copper project in far western B.C.