Markets Giving Tailwinds to Gold Co. With Massive BC Project

Source: Streetwise Reports 05/14/2024

Seabridge Gold Inc. SA is sharing its highlights and financials for the quarter ending March 31 with shareholders, noting its application for "substantially started" status for its KSM project and exploration plans for its Iskut and 3 Aces projects.

Seabridge has worked diligently toward fulfilling the requirements needed to earn the substantially started designation for KSM, with which its Environmental Assessment Certificate would remain valid for its life.

Recent moves in the gold and copper markets are providing tailwinds for the company's stock as it searches for a partner for the massive gold and copper project in British Columbia. Seabridge went from a six-month low of CA$12.75 per share to as high as CA$23 on April 12. It was at CA$20.86 per share on Tuesday.

Gold and copper are breaking higher so far this year — especially gold, which is up more than 15% so far this year and went up 1% to US$2,362.49 per ounce Friday, Reuters reported. The spot price was US$2,348.63 on Tuesday.

"We're starting to see the benefit of higher gold prices and our share price should also be reacting to copper prices" Seabridge Chairman and Chief Executive Officer Rudi Fronk told Streetwise Reports during a recent interview. "A successful KSM joint venture clearly will be the biggest driver of value for us going forward. And we're diligently working on trying to get the joint venture done with the right partner under the right terms."

Companies are recognizing that that they need new projects, especially in the copper space, Fronk said, which makes KSM even more valuable.

"And here sits KSM, the largest undeveloped gold and copper project in the world, as measured by reserves and resources in a safe jurisdiction with permits in hand and support of the local indigenous peoples" Fronk said. "So, KSM checks a lot of boxes."

The Catalyst: Gold Levels Could 'Shock People'

Fronk has headed the company since 1999. He said he's seeing something different in the gold market this year. Typically, a strong dollar tends to get in the way of gold. But Fronk said gold is flowing from the West to the East, with some nations increasing their ownership as a reserve currency, worried about the U.S. weaponizing the dollar.

He noted in a blog entry on Seabridge's website called "Gold Market Update: The West Is Losing Control of the Gold Price" that central banks are now the biggest gold buyers, and "gold is replacing dollar denominated assets in central bank reserves."

The company "offers among the highest torque to underlying gold prices" wrote Mike Kozak, Cantor Fitzgerald analyst, in an April 29 industry report.

Fronk said he thinks gold will go to levels "that I think will shock people." He also said that Seabridge is a great way to get exposure to higher gold prices if you compare its resources and reserves in the ground vs. its stock price.

"If you play the numbers and just look at all the metal we have in the ground in terms of resources, (such as) gold, copper, silver, and molly (molybdenum), and take today's metal prices for those for metals, and take our shares outstanding, each one of our shares is backed by over $6,000 of metal in the ground per share" Fronk said.

The company "offers among the highest torque to underlying gold prices" wrote Mike Kozak, Cantor Fitzgerald analyst, in an April 29 industry report.

KSM is "one of the largest, undeveloped gold-copper projects in the world" Red Cloud Securities Analyst Taylor Combaluzier described in an April 12 research note.

Goals for 2024

At the top of the company's list of goals for 2024 is finding a joint venture partner for KSM. The company has noted that RBC Capital Markets is running a formal search process.

Lucas N. Pipes of B. Riley Securities, who has rated the stock a Buy with a target price of US$60 per share, wrote that Seabridge has "a clear vision for a potential partnership agreement" for the project, as it runs a formal search process.

It's only a matter of time before KSM attracts possible partners, said wrote Chris Temple, author and editor of The National Investor.

"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, who said he was "table-pounding bullish" on the stock, and not just because of KSM.

But when it comes to exploration, Fronk said this year is about growing resources at two other projects: Iskut, which is about 30 kilometers from KSM in BC, and 3 Aces in the Yukon.

Seabridge plans a 15,000-meter core drilling campaign at Iskut, where it will be looking at expanding the Bronson Slope mineral resource and its discovery in 2023 of similar mineralization at Snip North with three helicopter-portable drill rigs with a budgeted cost of CA$12 million. Work at 3 Aces will include drilling, geophysical surveys, surface mapping, and reclamation efforts.

Q1 Financials

Seabridge also announced that during the quarter ending March 31, it posted a net loss of CA$8.2 million, or CA$0.09 per share, compared to a net loss of CA$10.8 million or CA$0.13 per share for the same period in 2023.

The company said it invested CA$39.3 million in mineral interest project spending compared to CA$48.6 million in first quarter of 2023. [OWNERSHIP_CHART-700]

As of March 31, 2024, net working capital was CA$43.2 million compared to CA$54.5 million on December 31, 2023.

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% of the company with 1.23 million shares.

Reuters reports that institutions own about 55% of the company. According to Reuters, Friedberg Mercantile Group Ltd. owns 13.34%, National Bank of Canada owns 5.15%, Van Eck Associates Corp. owns 4.2%, Kopernik Global Investors, L.L.C. owns 3.64%, Paulson & Co. Inc. owns 2.36%, and Sprott Asset Management L.P. owns 1.14%.

According to Reuters, there are 86.22 million shares outstanding with 85.21 million free float traded shares, while the company has a market cap of CA$1.76 billion and trades in a 52-week range of CA$12.62 and CA$23.

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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