The 100%-owned Snowfield Project in northern British Columbia is located 65 km north of the town of Stewart and 21 km south-southeast of Barrick's Eskay Creek Mine. Snowfield hosts a near-surface, low-grade, bulk tonnage, porphyry-style gold deposit with gold-copper, molybdenum and rhenium mineralization.
The property was subject to limited exploration from the mid-1980s until 2006 when drilling by Silver Standard Resources Inc. resulted in the definition of the Snowfield Zone which then measured 350 meters by 450 meters on surface. In 2007, a single hole located one kilometer to the north of the known mineralization intersected a significant interval of gold-copper mineralization. In 2008, a 16,945-meter drill program outlined a large gold-copper inferred resource. Drilling in 2009, which totaled 23,778 meters in 42 drill holes, extended the known mineralization to the northwest and southeast. A higher grade gold-copper core with silver and molybdenum was defined, and the continuity of grade in the northern half of the zone was proven. The 2009 drilling doubled the total resource and was successful in upgrading a substantial portion of the inferred gold resource to measured and indicated. In 2010 a total of 17,976 meters of diamond drilling was completed, and this drilling was successful in expanding known mineralization to the south by approximately 600 meters and the southeast by approximately 450 meters, with average copper grades increasing to the southeast.
A NI 43-101 compliant Preliminary Assessment was completed in September 2010 using the 2010 resource (which does not include the results of 2010 drilling) for the Snowfield Project combined with the mineral resources of the adjacent high-grade Brucejack Project. The pre-tax net present value of the combined Snowfield-Brucejack Project is US$2.3 billion using a 5% discount rate and US$878/oz gold price. The pre-tax net present value is US$5.95 billion assuming US$1,235 per ounce gold (the spot price of gold on August 27, 2010).
February 2011 Resource Estimate
An updated resource estimate incorporating the 17,976 meters of 2010 drilling conducted by Silver Standard Resources Inc. has been completed (see news release dated February 23, 2011). The gold resource at Snowfield now comprises 25.9 million ounces of measured and indicated gold resources and 9.0 million ounces of inferred resources at a cut-off grade of 0.30 grams of gold-equivalent per tonne. Mineral resources also include silver resources of 75.8 million ounces measured and indicated and 51.0 million ounces of inferred; copper resources of 2.98 billion pounds of measured and indicated and 1.10 billion pounds of inferred; molybdenum resources of 258.3 million pounds of measured and indicated and 127.7 million pounds inferred; and rhenium resources of 22.5 million ounces of measured and indicated and 11.5 million ounces of inferred.
We have entered into a confidentiality and cooperation agreement with Seabridge Gold, whose KSM project shares a common boundary with Snowfield. The Mutual Confidentiality and Cooperation Agreement provides for, amongst other things, the completion of an engineering study examining the economics of combining Pretivm's Snowfield project and Seabridge's KSM project into one operation. The internal engineering study was finalized during the first quarter of 2012 and indicates that developing the KSM and Snowfield deposits together could produce better economics than developing KSM as a stand-alone project, although no property acquisition costs or allocation of initial KSM capital have been considered.
We have also entered into a mutual access agreement with Seabridge that (a) gives Seabridge access to our Snowfield Project and us access to Seabridge’s KSM Project for the stripping of overburden and (b) provides us with road access to the Brucejack and Snowfield Projects over Seabridge’s KSM Project lands.
Snowfield represents a longer term gold opportunity for our shareholders. We do not have to expend further funds on the project until 2022, and we will be opportunistic to realize value for Snowfield as we focus our corporate resources on advancing the high-grade opportunity at our Brucejack Project.