Toronto, Canada... Seabridge Gold announced today the completion of its first resource estimate for the Iron Cap Lower Zone at its 100% owned KSM Project in northwestern British Columbia. The Iron Cap Lower Zone is, after Deep Kerr, the second core zone identified at KSM. The grade of the Iron Cap Lower Zone's estimated 164 million tonne inferred resource averages 0.59 g/T gold and 0.27% copper (3.1 million ounces of gold and 961 million pounds of copper), a significantly higher grade than the Iron Cap resource which lies above the Lower Zone. Core zones are the deeper focused parts of porphyry deposits characterized by higher fluid flux and abundant veining which generally results in higher grades than the shallower margins of the porphyry deposits usually associated with them. Since 2012, Seabridge has been successfully exploring for core zones beneath the known porphyry deposits at KSM with the objective of enhancing grades and improving project economics.
Last year's drill program added a total of 431 million tonnes of inferred resources at Deep Kerr and the Iron Cap Lower Zone, collectively containing an estimated 5.4 million ounces of gold and 4.2 billion pounds of copper. During 2014, Seabridge's outstanding shares increased by only 1.36 million common shares, thereby once again fulfilling Seabridge's guiding principle of increasing resource ounces of gold per share. In just two years, the Company's core zone program has added a total of 945 million tonnes of inferred resources at an average grade of 0.38 g/T gold and 0.49% copper (an estimated 11.3 million ounces of gold and 10.3 billion pounds of copper). Given its history of successfully raising inferred resources at KSM to higher categories, the Company is confident that the observable continuity of these new core zone discoveries will support upgrading resources with additional drilling.
Seabridge Chairman and CEO Rudi Fronk noted that "this first resource estimate at the Iron Cap Lower Zone is further confirmation that, until recently, we have only been seeing the tops of KSM's deposits, with better grades below. Fortunately, the location, size and configuration of these deeper core zones appear to support extraction by the most cost effective underground mining methods. This is especially true of the Iron Cap Lower Zone which is located close to key proposed infrastructure including planned tunnels which could be used to facilitate mining. Given these factors, along with the significantly higher metal values, we are very confident that our core zone program has the potential to achieve its objective of improving project economics."
Mr. Fronk also pointed out that exploration of the Iron Cap Lower Zone is still in its infancy. "We think this deposit is likely to get much bigger and with potentially higher grades as well. We will test this hypothesis in this year's drilling using the funds from this month's financing. Perhaps more importantly, we are learning how and where to find better material and we now think that our greatest opportunity may lie under the very large Mitchel deposit. That is now a key target for the 2015 drill season." Seabridge announced it had arranged a $14.2 million bought deal flow-through equity financing on March 10, 2015.
Resource estimates for The Iron Cap Lower Zone were confined to a geological model that was constructed around three distinct intrusions. The dimensions of these intrusions are about 350 meters by 750 meters and open at depth. It seems that the margins of these intrusions tend to control the distribution of higher gold and copper grades and may have provided metal to the surrounding wall rock, much of which is present in the Iron Cap resource estimate. The distinguishing characteristic of Lower Iron Cap is a zone of intensive silica alteration that seems to be spatially and temporally associated with clay dominant and sericite dominant alteration types. Magnetite, biotite and orthoclase are commonly present in deeper quartz-sulfide veins, a relationship that implies vertical zonation and significant depth potential for the Iron Cap Lower Zone.
The geologic and grade models were setup with a block size of 15m x 15m x 15m. The primary constraints that were used to estimate block grades were various grade envelopes that were constructed by Seabridge's geologic staff. These independently constructed gold, copper, silver, and molybdenum grade shells were based on intrusive and structural contacts along with metal grades. A total of 20,952 meters of core drilling in 21 holes was completed during campaigns in 2013 and 2014 and provided coverage over the dimensions of the zone. As part of this drill testing program, intersections in the established reserve were tested against that model with predictable results.
Block grades were estimated at the Iron Cap Lower Zone by Resource Modeling Inc. ("RMI") using inverse distance weighting methods with 15 meter-long capped drill hole composites. Grade models were validated visually and by comparisons with nearest neighbor models. RMI reviewed the quality assurance/quality control protocols and results from Seabridge drilling and has concluded that the number and type of gold and copper standard reference materials (standards, blanks, and duplicates) were reasonable. Based on the performance of those standard reference materials, RMI believes that the Seabridge drill samples are reproducible and suitable for estimating mineral resources. In conjunction with the 21 Lower Iron Cap drill holes, historical drill hole results from the Iron Cap porphyry deposit were used to refine estimated block grades for the upper segment of the resource.
Lower Iron Cap was handled as a block cave (bulk underground) mining target, separate from the existing block cave reserve at Iron Cap. Seabridge worked with Golder Associates, a leading industry expert in underground mining, in both the original concept and this new resource. Golder produced several block cave optimizations on the block model prepared by RMI to establish conceptual draw point elevations at various NSR draw point shut-offs. A $20 NSR shutoff case generated a conceptual cave footprint that was extruded upward 500 meters. Resources were tabulated for this hypothetical block cave shape using various NSR cut-off grades, which is a common industry practice for this type of a deposit. A NSR cutoff value of $20 was used to tabulate resources as summarized in the table below. Evaluation of the economic potential of Lower Iron Cap was based on metal prices of $3.30 per pound of copper, $1250.00 per ounce of gold, $23.00 per ounce of silver, $14.40 per pound of molybdenum and estimated metal recoveries from metallurgical test work. These metal prices are generally in line with, or lower than, the metal prices used by major mining companies for their current resource disclosure for similar types of projects.
To insure that the Lower Iron Cap resource does not overlap with the Iron Cap deposit reserves and resources which lie above and to the east of it, the previously reported Iron Cap resource blocks were segregated from this new inferred resource. The existing Iron Cap deposit was isolated from the new resource by constructing a three-dimensional solid within which resource and reserve blocks were uniquely identified and excluded from the Lower Iron Cap resource estimate. This treatment is identical to that used on the Deep Kerr inferred resource.
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