Gold Co. Updates Resource Estimates for Huge BC Project

As it continues to move toward finding a joint venture partner for its massive KSM gold and copper project in British Columbia's Golden Triangle, Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) on Monday released updated mineral resource estimates for the project's Kerr and Iron Cap deposits.

The estimates "updated the underground block cave constraining shapes at Kerr and Iron Cap based on the same metal prices . . .  used in calculating the open-pit constraining shapes at the Mitchell and East Mitchell deposits in the 2022 Pre-Feasibility Study (PFS)," wrote Cantor Fitzgerald analyst Mike Kozak in an updated research note.

Seabridge said inferred mineral resources increased by 5.9 million ounces gold (Moz Au), 3.3 billion pounds of copper (Cu), 55.4 Moz silver (Ag), and 51 million pounds of molybdenum.

Indicated mineral resources increase by 300,000 ounces Au, 200 million pounds Cu, 3.5 Moz Ag, and 2 million pounds of molybdenum.

At long-term prices of US$2,000 an ounce Au and US$3.25 per pound Cu and the updates to Kerr and Iron Cap, Kozak noted consolidated Measured & Indicated and Inferred resources across the entire KSM project increased by 1% and 9%.

Cantor Fitzgerald analyst Mike Kozak reiterated his Buy rating for the stock with a target price of CA$41 per share.

Kozak reiterated his Buy rating for the stock with a target price of CA$41 per share.

Seabridge Chairman and Chief Executive Officer Rudi Fronk said the resource restatements reflect gains from a consistent application of metal prices.

"As we move towards a joint venture on KSM, it makes sense to normalize our resource estimates across all of KSM's deposits," he said.

Newsletter writer Chris Temple wrote recently that he is "table-pounding bullish" on Seabridge.

"Even some 'experts' in the precious metals space are WAY behind in their understanding of just what kind of world-class monster Seabridge's flagship KSM Project in British Columbia's Golden Triangle has become," wrote Temple. "I believe that once [Chairman and Chief Executive Officer Rudi] Fronk & Co. have tied up their one (or more?) development partners, we'll see a major rerating of Seabridge shares."

The Catalyst: 'A Key Milestone'

Last month, Seabridge took an important step for KSM by applying for "substantially started" status for the mine. Getting the designation could help in its search for a JV partner for the project.

"We believe this is a key milestone for the company and that the status would help de-risk the project and thereby support Seabridge's efforts to attract a potential JV partner," noted Red Cloud analyst Taylor Combaluzier in a research note.

The company said that since 2001, it has spent more than CA$997 million on the project, which is in one of the world's best mining jurisdictions with good government infrastructure and green hydroelectric power.

Newsletter writer Chris Temple wrote recently that he is "table-pounding bullish" on Seabridge.

Combaluzier rated the stock a Buy with a CA$46.50 per share target price, a more than 230% increase over its price of CA$14.06 Monday afternoon.

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 has noted.

He said Seabridge has "a clear vision for a potential partnership agreement" for the project, rating the stock a Buy with a target price of US$60 per share. 

In its third-quarter report to shareholders last year, Seabridge noted it was making progress in the partner search, with several companies visiting the project as part of their due diligence.

"Dialogue is now continuing with a number of these companies," the company noted in the report.

Seabridge also closed last year 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.

Analyst Michael Siperco of RBC Capital Markets has noted that KSM would be a "top-five annual gold producer" at full production. He gave the stock an Outperform, Speculative Risk rating with a US$25 per share target price.

The application will "likely succeed, given general support from affected indigenous communities (including two benefit agreements in place), the +$800 (million) spent at the site since the EAC was issued in 2014, the +$400 (million) spent on KSM early project construction since 2021, and the investment in access road construction, a permanent camp, and early environmental work," Siperco wrote.

"The application for 'substantially started' status, and in our view, the likely approval of this submission could be a significant permitting de-risking event for KSM, and a catalyst for the stock as management continues to seek a larger partner for the development of the +$7 (billion) gold/copper project," the analyst wrote.

Ownership and Share Structure

Reuters provided a breakdown of the company's ownership and share structure, where management and insiders own approximately 3% of the company. According to Reuters, CEO and Chairman Rudi P. Fronk owns 1.45% of the company with 1.23 million shares.

Reuters reports that institutions own 54% of the company. According to Reuters, Friedberg Mercantile Group Ltd. owns 13.79%, National Bank of Canada owns 5.34%, Van Eck Associates Corp. owns 4.13%, Kopernik Global Investors, L.L.C. owns 3.22%, Paulson & Co. Inc. owns 2.44%, and Sprott Asset Management L.P. owns 2.43%.

According to Reuters, there are 84.79 million shares outstanding with 82.22 million free float traded shares, while the company has a market cap of CA$1.18 billion and trades in the 52-week period between CA$13.34 and CA$21.78.

Important Disclosures:

1. Seabridge Gold Inc. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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