After two years of building camps, roads, and bridges, Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) said it is planning to submit its application early next year for the "substantially started" designation for its flagship project in the Golden Triangle, KSM.
As the company continues to search for a partner for the mine — which one analyst noted would be a "top-five annual gold producer" — British Columbia requires sufficient on-site improvements to attain the "substantially started" label.
"With the work completed over the past two years, Seabridge is now planning to submit our application for a Substantially Started designation in January 2024," the company said in its third quarter report to shareholders released Tuesday. "If approved, KSM’s Environmental Assessment Certificate would remain valid for the life of the project."
"Though Seabridge shares have suffered with the rest of the pack, smart money along the way has regularly taken stakes — when it comes to equity, often at above the current market — realizing the kind of an anchor project KSM will one day become in the global copper/gold mining mix," wrote Chris Temple, editor of The National Investor.
KSM's deadline for receiving the certificate is July 29, 2026.
The goal of the company is to secure a joint-venture project for KSM, which is in one of the world's best mining jurisdictions in British Columbia, with good government infrastructure and green hydroelectric power.
As part of the report, Seabridge also released its financials for the third quarter. The company posted a net loss of CA$5.3 million (6 cents per share) compared to a net profit of CA$5 million (6 cents per share) for the same quarter in 2022.
It invested CA$73.7million in mineral interests during the quarter, compared to CA$63.4 million during the same period last year, the company said. As of September 30, net working capital was CA$79.9 million compared to CA$88.4 million on Dec. 31, 2022.
"Though Seabridge shares have suffered with the rest of the pack, smart money along the way has regularly taken stakes — when it comes to equity, often at above the current market — realizing the kind of an anchor project KSM will one day become in the global copper/gold mining mix," wrote Chris Temple, editor of The National Investor.
The Catalyst: Finding a Partner
A goal of the company continues to be finding a joint venture partner for the project, and it said it is making progress. Five companies visited the project site as part of their due diligence during the quarter.
"Dialogue is now continuing with a number of these companies," the company noted in the report. "KSM is now well advanced with over (CA)$950 million having been spent on the project, including significant infrastructure investments, engineering and technical work, obtaining permits, and securing social license from local First Nations and communities."
KSM "would be a top-five annual gold producer" at full production "with resources that could support a mine life of +100 years," analyst Michael Siperco wrote for RBC Capital Markets, giving the stock an Outperform.
KSM "would be a top-five annual gold producer" at full production "with resources that could support a mine life of +100 years," analyst Michael Siperco wrote for RBC Capital Markets, giving the stock an Outperform — Speculative Risk rating with a per-share target price of US$25.
"The key catalyst for the stock is finding a senior partner to bring KSM to a construction decision, with a process underway," the analyst wrote. "We think generational gold/copper assets in good mining jurisdictions are hard to find and harder to advance, making KSM a potentially attractive option for producers looking for long-term, consistent production potential."
Potential partners would include "senior gold, copper, or diversified miners with experience building large-scale open pit (or potentially block cave) operations," Siperco wrote.
Seabridge recently closed on the sale of a US$150 million secured note to Sprott Resource Streaming and Royalty Corp. to complete the "substantially started" work at the project.
When the note matures, Sprott Streaming will use the principal amount repaid to purchase a 1% net smelter royalty (NSR) on all metals produced at the project, the company said.
'A Clear Vision'
Proven and probable reserves at KSM's initial mine total 47.3 million ounces gold (Moz Au), 7.3 billion pounds copper (Cu), 160 Moz silver (Ag), and 385 million pounds of molybdenum (Mo), with average production over a 33-year mine life of 1.03 Moz Au, 178 million pounds Cu, 3 Moz Ag, and 4.2 million pounds Mo, a preliminary feasibility study (PFS) found.
In addition to the activities at KSM, Seabridge also noted it had completed nearly 20,000 meters of drilling in 23 diamond-core holes at its Iskut project, also in the Golden Triangle, and 27 holes totaling nearly 8,000 meters at its 3 Aces project in the Yukon Territory. Two holes totaling 1,900 meters were also drilled at its Snowstorm project in Nevada. Assays are pending for all of them.
The company said it also has engaged RBC Capital Markets to run the formal search for a KSM joint venture partner and to advise on the optimal partner and structure.
Streetwise Ownership Overview*
Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT)
The massive 41,000-hectare project is the world's largest undeveloped gold project by reserves and resources, analyst Lucas N. Pipes of B. Riley Securities noted in a research note.
The company has "a clear vision for a potential partnership agreement," he wrote, rating the stock a Buy with a target price of US$60 per share.
"The market is currently short on development projects, and market interest/M&A is heating up," Pipes wrote. "While the lack of partnership at KSM has been an overhang for the stock, we believe the asset is now ripe for third-party validation."
Ownership and Share Structure
About 36% of the company is held by institutional investors. Management, board members, and company insiders own approximately 25%, the company said. Fronk owns 1.49% or 1.21 million shares, according to Reuters. The rest is retail.
It has a market cap of CA$1.32 billion and has about 82.4 million shares outstanding, with 79.95 million free-floating. It trades in a 52-week range of CA$21.78 and CA$13.34.
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