Seabridge Gold’s Rudi Fronk Talks KSM Mine Approval

By Charlotte McLeod – Exclusive to Gold Investing

Monday August 11, 2014, 4:30am PDT

British Columbia-focused mining companies have been in the spotlight this week on the back of a tailings pond breach at Imperial Metals’ (TSX:III) Mount Polley copper-gold mine. The incident released water and tailings into the surrounding area, causing physical damage and resulting in widespread water bans.

Unsurprisingly, the breach has shaken investors’ trust in Imperial, especially given that a spokesperson from BC’s Ministry of Environment has said the company was warned “repeatedly” about tailings pond levels before the accident happened.

Given that context, it was refreshing to speak with Rudi Fronk, chairman and CEO of Seabridge Gold (TSX:SEA, NYSE:SA). His company recently received final approval from BC’s environment and energy and mines ministers for its application for an Environmental Assessment Certificate for the KSM project, and Fronk emphasized that Seabridge is focused on following the rules as it advances KSM.

Getting to “yes”

KSM is only the second metal mine in five years to receive an Environmental Assessment Certificate from the province of BC, and according to Fronk, it’s not because no companies are applying. Rather, it’s because the process “is exhaustive and expensive.” It can also be tough to juggle the interests of various stakeholders; of course, as Seabridge has proved, it’s not impossible.

Explaining his company’s process, Fronk said, “one thing you have to recognize is that having the First Nations and treaty nations on side helps you get through the process. You need to make sure that in the process you’re satisfying the questions and concerns that they bring forward as you review the project designs with them.” For Seabridge, that has meant working with treaty nations and First Nations since 2008, a strategy that Fronk said has paid off “in terms of the public endorsement that [Seabridge] has received” from those groups. He added, “we’ve made a lot of design changes based on their input and their feedback.”

Encouragingly, that collaboration will continue into the future. Fronk said, “training of local groups is important to us in terms of being able to attract as much qualified, skilled labor as we can locally. We’re already on that in terms of education we’re supporting in the region.” Continuing, he noted, ”[KSM] will be one of the largest mines ever built in Canada. It’s going to employ thousands of people during the construction phase, and well over a thousand when we’re in operation. It’s a mine life that’ll extend, right now with known reserves, in excess of 50 years.”

Ready to meet challenges

KSM may be looking good in light of the Imperial Metals’ accident, but that hasn’t stopped some market watchers from worrying it will suffer the same roadblocks as Northern Dynasty Minerals’ (TSX:NDM, NYSEMKT:NAK) Pebble project in Southwest Alaska.

Fronk, however, was quick to shut down that line of thought. “There are no comparisons,” he said. “Canada has a well-defined environmental approval process that we’ve been in now since 2008. We’ve gone through the process with regulators, and they’ve come out and concluded that as designed, the project will not have a material adverse impact on the environment. It’s two different countries with two different approval processes.”

He added, “we also have the support of the local aboriginal people and the local community. You can’t say the same for the Pebble project.”

That said, he realizes that Seabridge is likely to face opposition in the 30-day comment period that’s just opened up. “When you design a mine the size of KSM there will always be people that are against the project,” he explained. Even so, Fronk isn’t too worried. “At the end of the day, we’ve done our work, we’ve done it properly and the proof will be in the pudding when we get the official approval,” he said.

Moving forward, investors can expect to see Seabridge search for a partner to fund KSM. That may prove tough given that Fronk believes there are probably only “10 companies or less in the world that can build and operate a mine of [its] size.” However, he sees the task being easier now that Seabridge has an Environmental Assessment Certificate in hand.

At close of day Friday, shares of Seabridge were selling for $10.53 each.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

CEO Note to Shareholders – August 2014

Management of Eskay Mining Corp. would like to congratulate our neighbor to the east, Seabridge Gold (SEA), on the successful application of their environmental permit to build their planned $5.3 Billion mine adjacent to our property.

Seabridge will now await Canada’s Federal Government approval of the plan. With all parties on side to proceed in BC, receiving Federal approval should evolve quickly. The Harper Government is in favor of resource development and the Seabridge mine could be a massive shot in the arm for North Western BC. It would also help to pay for the NW Hydro Transmission line which was built with both Federal and Provincial funds to develop such resources. Naturally, those who build mines will be required to contribute funds toward the substantial costs of building the transmission line. Obviously, mining projects with nearby power availability have a distinct advantage.

This is excellent news for Seabridge, however, the construction of a mine at their project also has huge implications for Eskay. Their project envisions a mine road to be built from the existing Eskay Creek Mine down the west side of our property, then across the Unik River (north of our existing exploration camp), and along the Sulphretes Creek to their mine. Building this road will be an excellent geological opportunity for Eskay as land (rocks) not yet explored will be exposed all along the route.

This road through our property will have major cost implications for exploration on the Eskay ground. Without this impending road we would need to utilize helicopters in moving people and equipment from one place to another. Now, access on much of our 130,000 acres will be easier with land based equipment. Instead of incurring helicopter operating costs of approximately $1600 per hour whereas trucks can be purchased or leased for a fraction of the expense.

Seabridge Management is actively seeking a Joint Venture (JV) partner to build the mine. Major companies are cautious in committing to projects of this size. Reasons for this could be 1) lack of capital, 2) uncertainty as to where base and precious metal prices are headed or 3) unfriendly jurisdictions where their deposits exist. With an expected operating life more than fifty years, the Seabridge deposit appears to be, potentially, a huge money maker. In effect, this permit provides a big plus for Seabridge and the whole Golden Triangle area of BC. Environmental permits are always difficult to obtain anywhere, and considering Canada’s extremely high standards, Seabridge is to be commended for obtaining this permit.

Further yet to the east of Eskay and Seabridge, Pretivm (PVG) is currently working through their own environmental permitting process. Although the Pretivm project has a much lower capex, in the range of $800 Million, they face many of the same decisions.

Currently, Eskay is perfecting a 3D model of our property geology with a view to better define drill targets. This 3D model, built by Mira Geophysics of Vancouver, is an excellent tool for discussing our future potential with possible JV partners in order to move the project forward. In past years an enormous amount of data and exploration work has been completed by prior operators. In addition to this, the Seabridge and Pretivm successes give Eskay a compelling story for any potential partner.

Take some time to review our Corporate Presentation (August 2013) from the Eskay web site. There is also a brief Geological Presentation in the Projects Tab of the website. Both presentations are currently being updated and should be on the site shortly.

As yet, the junior markets have not attracted the interest we would like to see, but we believe that a quality project like ours will eventually receive the necessary attention it deserves. The project’s massive acreage holds several known geologically interesting occurrences. With elephant-scale deposits on either side of us, we are excited about our future. The eastern side of the Corey region has shown many substantial outcrop samples between 3.0 and 5.5 ounces of gold per ton and up to 2.5 % copper along with nickel, cobalt and PGM’s. Our tenures are in good standing with the BC Ministry of Mines until October 2021.

Currently,Eskay management’s does not entertain any intention of breaking up our land package to allow a smaller operator to explore and drill a small portion of our ground. We are of the opinion that the package will be much more interesting to a major mining company partner as complete package.

Eskay management will continue to approach potential JV partners to work with us to fully explore our projects. The closer Seabridge and/or Pretivm are to completing their plans to go to production the easier our task should get. Our neighbors Pretivm and Seabridge’s deposits are among the largest, richest undeveloped deposits in the world. It is possible they are the largest in the world.

We appreciate our shareholder’s support and encouragement to keep moving forward. Eskay management are major company shareholders and believe shareholders come first.

Finally, Canada has a new Anti Spam email law, which is designed to protect those who don’t wish to receive unwanted emails. Therefore, we are electing to build a new data base, rather than have a problem with the law. If you would like to be included in our data base in order to receive our emails, please click the link on the site to be included.

Mac Balkam, CEO Eskay Mining Corp.

For more information, the following links will take you to the websites of Pretivm and Seabridge.

www.pretivm.com
www.seabridgegold.net