The new figure takes into account recently determined economics and upside of the world’s largest undeveloped gold project along with future precious metals prices, noted a ROTH Capital Partners report.
ROTH Capital Partners raised its target price onto $37 per share from $32, based primarily on results of two recent technical reports and updated precious metals price forecasts, reported analyst Joe Reagor in an August 17, 2022 research note.
Seabridge’s current price, in comparison, is around $17.22 per share.
Reagor discussed the three primary factors behind the new price target.
One factor is the mine plan specifics outlined in the PFS, which reflected improved economics and which Reagor updated his Seabridge model to reflect, he noted. Incorporating those changes boosted the discounted cash flow (DCF) valuation by about $3 per share, he added. (ROTH bases its valuation of Seabridge on a combination of an annualized DCF model and a sum of the parts valuation.)
The revised mine operation components include the average milling rate and the estimated mine life, which, respectively, the analyst increased and lowered in the model.
The second driver is the additional upside Kerr and Iron Cap are expected to provide at KSM, which was highlighted in the just-released preliminary economic assessment of those deposits, wrote Reagor. Assuming Seabridge ultimately will own about 30% of the $5.8 billion KSM project after a likely future joint venture, the analyst assigned Kerr and Iron Cap a value of $870 million, half of the 30% amount.
The third factor affecting the previous price target is new gold and silver price forecasts, Reagor relayed. Updating the Seabridge model with ROTH’s new long-term prices for the precious metals increased the DCF valuation by about $2 per share.
These cumulative model revisions resulted in a $5 per share increase to ROTH’s price target on Seabridge. The investment maintains its Buy rating on the Canadian gold resource firm.
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Disclosures for Roth Capital Partners LLC., Seabridge Gold Inc., August 17, 2022
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2022.