Infrastructure make its economics problematic

Infrastructure make its economics problematic

Unfavorable Economics: KSM's low grade, remote location and lack of infrastructure make its economics problematic. KSM requires substantial new infrastructure, bringing the project to its considerable 2012 pre-feasibility estimate of $5.3-billion capex.

- Unprecedented Water Management: KSM is a sulfide ore body, likely to require water treatment in perpetuity for acid mine drainage. The mine plan includes annual water treatment for up to 20.8 billion gallons of water per year - nearly eight times that of Utah's Bingham Canyon Mine, the largest open pit mine in North America.

- Rare Sub-glacial Mining Presents Operational Risks: The project involves mining underneath an active glacier, an engineering challenge that has rarely been done. In the few sites where it has occurred, it resulted in major increases in cost, production delays, safety issues and economic shortfalls.

- Political Opposition: Alaska's congressional delegation has raised serious concerns about KSM, asking the Secretary of State to conduct bilateral discussions with the Canadian government. Other groups, including five municipal governments and eleven Alaska Native tribal governments are calling for a review by the International Joint Commission under the Boundary Waters Treaty.

- Legal Uncertainties: The Mitchell Treaty Tunnel, which is necessary to connect the mine with the mill and tailings facility, will pass through ground subject to mineral claims held by third parties. American Creek and Teuton Resources assert Seabridge has not been granted access to their claims.

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