Sometime this year, Seabridge Gold (TSX:SEA) plans to announce a joint venture partner to build the KSM mega-mine northwest of Stewart, B.C.
Recognized as the world’s largest undeveloped gold deposit and second-largest copper mine, KSM would cost more than $9 billion to construct, and require a workforce of 4,000 to build and 2,000 to operate.
With an estimated 47 million ounces in proven and probable gold resources, 7.3 billion pounds of copper, and more than 30 years of mine life, it would be the largest mine in Canada and, indeed, one of the largest in the world.
From the outset, Seabridge knew it could not build KSM on its own, and would need a gold or copper mining major as a joint venture partner.
“We recognized almost immediately that this was a project well beyond our capabilities,” Seabridge CEO Rudi Fronk told me.
There are only a handful of gold or copper majors in the world with the wherewithal to build a mine on this scale. Seabridge has whittled prospective partners down to one.
“One of our corporate objectives this year is to announce that joint venture before year-end, and I’m comfortable we’ll be able to do that,” Fronk said.
De-risking the mega-project
Since receiving its environmental certificate in 2014, KSM has suffered a series of setbacks that delayed securing a joint venture partner, so Seabridge has spent more than $1 billion de-risking the project.
But it has taken so long that it risked running out the clock on its environmental certificate.
After spending more than $440 million building 20 kilometres of new roads, a new bridge, a 210-person workcamp, a power station and transmission line, and other infrastructure, Seabridge succeeded in getting a substantial start determination (SSD) from the B.C. Environmental Assessment Office (EAO) in 2024. This means the environmental certificate remains valid.
The unexpected consultation roadblock
But on June 8, it hit a snag when the B.C. Supreme Court ordered the substantial start determination back to the EAO for reconsideration on the basis it had failed to properly consult the Tsetsaut-Skii Km Lax Ha (TSKLH), which is asserting claims over the territory where the mine would be built.
“This does not mean that the TSKLH has a veto over this aspect of the KSM Project (the tailings pond),” Justice Emily Burke wrote in her decision.
“Nor does it mean that the overlapping claims must be resolved at this stage. Rather, the change in acknowledgement of the TSKLH’s territory, along with the timing of the SSD process, supports the TSKLH claim that it should have been “consulted deeply” at the time of the SSD.”
If you have never heard of the Tsetsaut Skii Km Lax Ha, you’re probably not alone.
Until fairly recently, it was considered to be a part of the Gitxsan First Nation.
Darlene Simpson, who was given the hereditary title of Skii Km Lax Ha, has been pushing, with some success, to have her small group of about 58 members recognized as a distinct nation, with historical territorial claims that overlap those of other nations.
Simpson and some other members of TSKLH live in Gitanmaax, more than 300 kilometres south of the KSM site. But the area she is claiming on behalf of the TSKLH is vast, overlaps with areas claimed by other First Nations and includes the area where KSM is being built.
In a judicial review, Simpson and Skeena Wild challenged the KSM substantial start determination.
While the court essentially found the SSD decision itself to be sound, and dismissed Skeena Wild’s petition, it found that the province had failed to properly consult the TSKLH on the SSD and sent it back to the BC EAO for reconsideration.
While he said the recent court-ordered reconsideration is “frustrating,” Fronk does not believe it will be a major impediment.
“We were pleased that the court did rule that the decision was reasonable,” Fronk said. “But it did leave open the door to allow further consultation between the government and the Skii Km Lax Ha.”
Strong regional backing remains intact
He notes that the project has received strong support from other First Nations.
“In support of that designation, we received very strong letters of support from the Nisga’a Nation, the Tahltan Nation, the Gitxsan hereditary chiefs, all the local communities—Smithers, Terrace and also BC Hydro—supporting that designation.”
But the recent court ruling underscores why investors may consider B.C. such a high-risk jurisdiction. Here is an $9 billion-plus investment that is being subjected to yet another regulatory holdup based on territorial claims of a single hereditary chief.
According to a spokesperson for the TSKLH, Simpson isn’t so much opposed to the KSM project as the process the province followed with respect to consultation and clarifying whose territory the mine is in.
Ryan Beaton, a lawyer representing the TSKLH, notes that the province produced a 400-page ethnographic study in 2021 as part of a strength of claim investigation that appears to confirm the TSKLH may have a valid claim to the area where the mine would be built.
In a 2023 letter to Simpson, the Ministry of Indigenous Relations and Reconciliation wrote to confirm that “all evidence suggests” that the Treaty Creek Valley area where KSM is located is part of Tsetsaut Skii km Lax Ha Territory.
If that’s the case, the province should have done a better job of consulting the TSKLH as part of the SSD process, it was argued in court.
“We really want to stress that the TSKLH does not want to stand in the way of development, is not trying to slow things down,” Beaton told me.
“They are certainly not opposed to development. They have IBAs with some mining companies in the area. Many of the members have worked in mining. They’re open to development on the territory.
“Really, at heart, they would like things to move more efficiently. But obviously, once they’ve got the province acknowledging that the project is on their territory, they want the province to act on that conclusion and not just ignore it when they come to consultation.”
The broader question of overlapping claims
There is a much bigger question here, though – one that deals with the thorny question of overlapping Aboriginal rights claims.
It’s a question the Supreme Court of Canada is expected to rule on soon in a Gitanyow rights and title claim now before the court.
For the first time ever, the Supreme Court of Canada may rule on the question of overlapping rights and title claims involving not two but three First Nations: the Gitanyow, Nisga’a and TSKLH.
That decision could have implications for resource projects in northwestern B.C.
Meanwhile, Seabridge is proceeding with its plans for KSM. Since receiving the SSD in 2024, it has spent an additional $200 million on the mine project.
“We continue to go ahead on the project,” Fronk said. “We believe we’re in a very strong position on the substantially started designation, and with the support of the First Nations we have, we’re going to continue activities.”
In 2022, it was estimated the mine would cost US$6.4 billion ($9 billion) to build. It will almost certainly cost more than that now.
But as Fronk notes, the 2022 study was premised on prices of US$1,700 per ounce for gold and US$3.53 per pound for copper. Both gold and copper prices have more than doubled since then.
“So even if there is capital escalation—which there will be—it’s more than offset by the increased revenues and cash flows that come as a result of the higher metal prices,” Fronk said.
The original mine plans contemplated a gold-focused mine for the first 33 years, with about one million ounces of gold per year on average over a 33-year operating life, and 178 million pounds of copper.
But if the joint venture partner turns out to be a copper miner, the mine sequencing could change to focus more on copper.
“You can actually flip this around and just re-sequence the mining and have this project produce 70% of the value from copper and 30% from gold,” Fronk said.
Update:
Beaton takes issue with the characterization that the judge found the process for deciding the SSD to be “sound” or “reasonable.”
He says the judge did not find the SSD decision either reasonable or unreasonable. Rather, the judge concluded she need not make any determination on the SSD’s reasonableness at all because it was being sent back for reconsideration, based on her finding that the province had failed to properly consult the TSKLH.
“Since the court concluded that the province had failed to properly consult the TSKLH on the SSD and sent it back to the BC EAO for reconsideration, that court found that it did not have to determine whether the SSD itself was unreasonable, as argued by both the TSKLH and Skeena Wild,” Beaton writes.
Nelson Bennett’s column appears weekly at Resource Works News. Contact him at [email protected].
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