Gold Co. Looking for Project Partner Posts CA$45M Profit in Q2

Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) announced it has filed its interim financial statements for the three- and six-month period that ended June 30.

The explorer noted that during the three-month period ending June 30, it posted a net profit of CA$45.2 million, or 51 cents per share, compared with a net profit of CA$9 million, or 11 cents per share, during the same period in 2023.

"In both the current and comparative quarters, gains recognized on the remeasurement of its secured note liabilities accounted for most of the net profit," the company said in a release. "During the second quarter, Seabridge invested (CA)$30.1-million in mineral interests, property, and equipment at its projects compared with CA$66.2-million in the second quarter of 2023.

During the first half of 2024, Seabridge said it had net earnings of CA$37.1 million, or 43 cents per share on a basic basis and 42 cents per share on a diluted basis. During the comparative period of 2023, the Company recorded a net loss of CA$1.8 million, or 2 cents per share, on both a basic and diluted basis.

Seabridge also noted it had net working capital of CA$45.1-million on June 30, 2024, compared with CA$54.5-million on Dec. 31, 2023.

Major Company Milestone Reached

Last month, Seabridge's stock went up after it announced it had received its "substantially started" designation from the British Columbia government for its 100%-owned KSM project in the province's Golden Triangle, a major milestone for the company.

The company has worked toward fulfilling the requirements needed to earn the designation since acquiring the project in 2001. Its wholly owned subsidiary, KSM Mining ULC, has spent over CA$1 billion advancing KSM, including CA$800 million after its Environmental Assessment Certificate (EAC) was issued in 2014.

"The receipt of 'substantially started' status, in our view, is a significant permitting de-risking event for KSM, and a catalyst for the stock as management continues to seek a larger partner for development of the +$7bn gold/copper project in BC," RBC Capital Markets analyst Michael Siperco wrote.

Under British Columbia's Environmental Assessment Act, a project's EAC expires if it has not been substantially started by its deadline, which was July 29, 2026, for KSM. Now the KSM's EAC will remain valid for the project's life.

A major focus for Seabridge continues to be finding a joint venture partner or buyer for the massive project, it said in a discussion and analysis of the financial results also released this week.

It was at the top of the company's list of goals for this year. RBC Capital Markets is running a formal search process.

"The company continues its pursuit of a joint venture agreement on the KSM Project with a suitable partner on terms advantageous to the company since it does not intend to build or operate the project alone," Seabridge said. "The KSM Project includes multiple deposits and provides a joint venture partner, or purchaser, flexibility in the design of the project."

Red Cloud Securities Analyst Taylor Combaluzier has described the project as "one of the largest, undeveloped gold-copper projects in the world."

'Significant' De-Risking for Project

RBC Capital Markets analyst Michael Siperco wrote the Substantially Started designation is based on three key criteria: Indigenous support for the project, the physical disturbance from permanent infrastructure, and the total expenditures on construction activities.

Red Cloud Securities Analyst Taylor Combaluzier has described the project as "one of the largest, undeveloped gold-copper projects in the world."

"The receipt of 'substantially started' status, in our view, is a significant permitting de-risking event for KSM, and a catalyst for the stock as management continues to seek a larger partner for development of the +$7bn gold/copper project in BC," Siperco wrote.

A senior producer could "provide funding through feasibility and a construction decision, with an option to acquire control" of KSM, noted the analyst, who rated the stock Outperform, Speculative Risk with a US$30 per share target price.

"A partner with the capability and balance sheet to advance the project to feasibility and a construction decision could, in our view, validate the project, the latest updated studies, and the work done to date at site, while providing a path for Seabridge investors to participate in future potential upside if a positive construction decision is made."

Summer Exploration

Seabridge has more than just KSM in its portfolio. It recently announced its first mineral resource estimate (MRE) for the Bronson Slope deposit at its 100%-owned Iskut project 30 kilometers by air from KSM in the Golden Triangle.

It found an Inferred Resource of 517.3 million tonnes (Mt) at 0.33 grams per tonne gold (g/t Au) for 5.4 million ounces (Moz), 0.09% copper (Cu) for 1.06 billion pounds, and 2.7 g/t silver (Ag) for 45 Moz.

The company continues to explore this summer with a 15,000-meter drilling program at Iskut and an 8,000-meter drilling program at its 3 Aces Project in Southeastern Yukon.

At 3 Aces, the company is drill-testing three priority resource expansion targets in the Central Core Area, completing a surface evaluation of three regional targets, reverse circulation drilling of two priority regional targets, and completing a regional exploration model, prioritizing targets throughout the property for resource definition in 2025, Seabridge said.

Gold Breaks New Barrier

According to an article by CBS News Market Watch on Tuesday, "The price of gold has been on a remarkable upward trajectory in recent months, shattering numerous price records and attracting the attention of investors across the globe."

Gold's price hit an important psychological milestone on Tuesday, breaking through the US$2,500 per ounce barrier for a new high of US$2,506.

"This sustained price increase is helping to draw in a new wave of participants to the gold market," Angela Leicht wrote for CBS.

But why is the yellow metal a great investment? "Gold is an asset that many like to own for inflation protection," Fortune's Kimberlee Leonard wrote on August 5. "Rising prices tend to erode the purchasing power of a currency like the U.S. dollar while gold generally increases in value over the long term."

Some believe gold is already in a bull market. Bloomberg Senior Commodity Strategist Mike McGlone has predicted that it will only be "a matter of time" before gold hits US$3,000.

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 1.41%.

Reuters reports that institutions own about 52% of the company. According to Reuters, Friedberg Mercantile Group Ltd. owns 13.18%, National Bank of Canada owns 5.09%, Van Eck Associates Corp. owns 4.19%, Kopernik Global Investors, L.L.C. owns 3.67%, Paulson & Co. Inc. owns 2.33%, and Sprott Asset Management LP owns 2.21%.

According to Reuters, there are 88.75 million shares outstanding, while the company has a market cap of CA$1.94 billion and trades in a 52-week range of CA$12.62 and CA$23.48.

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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