Seabridge Gold Inc. announces it has filed a new technical report for its 100%-owned Courageous Lake project in the Northwest Territories that makes the operation “considerably more sustainable and profitable.” Read why at least one analyst agrees.
Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) announced it has filed a new National Instrument 43-101 technical report for its 100%-owned Courageous Lake project in the Northwest Territories that makes the operation “considerably more sustainable and profitable.”
The report includes the recently released updated Preliminary Feasibility Study (PFS) and a new Preliminary Economic Assessment (PEA) that looks at expanding the project’s open pit beyond the new PFS.
According to a release from the company, the new PEA is a standalone mine plan that “evaluates a conceptual expansion of the Courageous Lake open pit below the base of the permafrost after the 2024 PFS reserve has been completely mined out.”
The PEA does not include any mineral resources used in the new PFS, the company said.
“The PFS uses less than 30% of the estimated M&I (measured and indicated) gold resource,” said Seabridge Chairman and Chief Executive Officer Rudi Fronk. “The PEA includes inferred resources requiring more drilling as well as additional engineering work to qualify as a PFS. However, we are confident that the PEA reflects the potential for a greatly extended mine life and that the entire estimated M&I resource represents a meaningful call on gold for our shareholders.”
The company noted the PEA is preliminary and includes resources “too speculative” to be considered mineral reserves.
The Catalyst: A ‘Free Option on Future Upside’
After the release of the new reports, Cantor Fitzgerald analyst Mike Kozak noted that although not as big as Seabridge’s massive flagship KSM project in British Columbia, “Courageous Lake is a robust standalone project in its own right.”
Cantor Fitzgerald analyst Mike Kozak noted that although not as big as Seabridge’s massive flagship KSM project in British Columbia, “Courageous Lake is a robust standalone project in its own right.”
Kozak maintained his Buy rating on the stock with a CA$41 per share target price, a 166% increase over the stock’s price Thursday morning.
Seabridge is advancing KSM and looking for a partner. Kozak said Courageous Lake is a “free option on future upside” for the Canadian mining company.
Fronk said the company is already looking ahead. “As we move towards a joint venture on our KSM project, we will be directing more attention to Courageous Lake’s potential to generate additional shareholder value,” he said.
Analyst: ‘Significantly Improved Profitability’
The company said the new PFS featured many improvements over one completed in 2012, including an estimated an after-tax NPV5 of US$523 million, a 73% increase. Initial capital also dropped 50% to US$747 million, and that the company increased its after-tax IRR from 7.3% to 20.6%.
But most importantly, the new study increased the estimated measured and indicated gold resources at Courageous Lake by 38% from 8 million ounces (Moz) to 11 Moz, or 145.2 million tonnes at an average grade of 2.36 grams per tonne gold (g/t Au).
Newsletter writer Chris Temple wrote recently that he is “table-pounding bullish” on Seabridge.
The team that created the new technical report was led by Ausenco Engineering Canada ULC, and included support from Moose Mountain Technical Services, SRK Consulting (Canada) Inc., ERM Consultants Canada Ltd., Tetra Tech Canada Inc., and WN Brazier Associates Inc., all of which are independent of Seabridge.
Kozak noted that the new PFS considers Courageous Lake a smaller project than the 2012 report, at 7.5 thousand tonnes per day (Ktpd) vs. 17.5 Ktpd.
That shrinks the project’s footprint, the initial capex needed, the strip ratio, the 2P reserve, and the mine life, Kozak wrote. But it also provides a higher average gold grade (2.6 g/t vs. 2.2 g/t), a faster payback period (2.8 vs.11.2 years), and a better all-in-sustaining cost (US$999 vs. US$1,123/oz).
Overall, the end result is “significantly improved profitability of the project,” Kozak wrote.
KSM: ‘World-Class Monster’
The company also recently released updated mineral resource estimates for KSM’s Kerr and Iron Cap deposits as it continues to look for a joint venture partner in the Golden Triangle gold and copper project.
Seabridge said inferred mineral resources increased by 5.9 Moz Au, 3.3 billion pounds 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.
The company took an important step for KSM this year by applying for “substantially started” status, a designation could help in its JV partner search.
KSM 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 and has rated the stock a Buy with a target price of US$60 per share.
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.
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$1.28 billion and trades in a 52-week range of CA$12.62 and CA$21.78.
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