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SSR Mining eyes US$90 million expansion at Seabee

VANCOUVER — SSR Mining (TSX: SSRM; NASDAQ: SSRM), formerly Silver Standard Resources, is planning a US$90-million expansion of its Seabee underground gold mine in northern Saskatchewan that would boost production, cut costs and extend mine life to 2024.

According to the company’s new preliminary economic assessment (PEA), the investment has an after-tax net present value of US$292 million, assuming a 5% discount rate and a gold price of US$1,300 per oz. gold.

“We’re absolutely going ahead with the expansion — the economics look great,” Paul Benson, SSR Mining’s president and CEO, told The Northern Miner during a phone interview in late October.

Production drilling at SSR Mining’s Seabee underground gold mine in northern Saskatchewan. Credit: SSR Mining.

The expansion would be the first significant new development since SSR acquired the operation — which consists of two underground mines, Seabee and Santoy — as part of its $337-million friendly takeover of Claude Resources in May 2016.

Benson said SSR acquired Claude for Seabee’s “exploration upside, grade and the potential to increase the mines throughput at minimal capital.”

As noted in the PEA, mining rates would increase to 1,050 tonnes per day, a 20% increase compared to 2016 production of 870 tonnes per day.

Annual gold production would increase by 29% compared to 2016 levels, averaging 100,000 oz. per gold annually from 2018 to 2023. Life-of-mine cash costs would total US$548 per payable oz. gold — down from US$575 to US$625 per oz. gold based on 2017 guidance — due to higher throughput and a mill feed grade of 8.51 grams gold per tonne.

“We don’t know the operating capacity on the mill yet. There are some signs that suggest we could get it up to 1,200 tonnes per day, and so we’ll do a trial sometime next year. But 1,050 tonnes per day is absolutely doable,” Benson said.

After 2022, gold production is scheduled to taper off, but Benson expects that will likely change in time.

“We certainly believe we’ll find more in and around the current known reserves and resources, so production won’t taper off as quickly as the plan says,” he said.

Drilling completed by SSR last year resulted in a 50% boost in reserves at 7% higher grades than in the company’s 2016 resource update.

Resources for the project total 2.1 million measured and indicated tonnes of 8.02 grams gold for 540,000 oz. gold, and 2.5 million inferred tonnes of 7.66 grams gold for 620,000 oz. gold.

Drill core from exploration drilling at SSR Mining’s Seabee gold operation in northern Saskatchewan. Credit: SSR Mining.

“We’ve done quite a bit of drilling this year — none of which is included in our study —and we’ve been getting really good grades both within and outside the resource,” he said. “We believe we’ll continue to add to the resource, and potentially discover new zones in the near-mine environment.”

Drill results outside of Santoy’s resource shell include 2.5 metres of 27.7 grams gold, 2.8 metres of 17.6 grams gold and 2.1 metres of 6.5 grams gold.

Benson expects the company will spend more than US$5 million on near-mine exploration next year.

The 570 sq. km property covers a portion of a 50-km long greenstone belt entrained within the Proterozoic-aged Trans Hudson orogen, a collisional suture zone that divides the Rae-Hearne cratons in the west from the Superior craton in the east.

The company has eyes on an ore-controlling shear structure that crosscuts the property and extends onto the company’s newly-acquired Fisher property in the south.

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