Seabridge Gold’s (TSX: SEA; NYSE: SAKSM) KSM gold-copper project in British Columbia has reached a significant milestone that may soon lead to a major partnership. The company’s chairman and CEO, Rudi Fronk, announced that securing a joint venture partner could be imminent following the recent permit designation from the BC government.
Permit Milestone Sparks Interest
The BC government’s acknowledgment that construction at the KSM project has “substantially started” validates the project’s environmental assessment certificate for its entire lifespan. This milestone has revived interest from potential partners, with Fronk revealing that six major gold and copper companies are currently in negotiations. RBC Capital Markets is managing the joint venture process, aiming to create a competitive environment to secure the best deal.
Fronk noted that the company had been close to a deal in 2020 before the pandemic disrupted talks. Now, with the permit in place and additional support from federal and provincial governments, a partnership could be finalized within months. The recent commitment of C$195 million from these governments for local infrastructure improvements, including upgrades to Highway 37, underscores the project’s strong backing.
Strategic Investments and Future Plans
Seabridge has already invested over C$1 billion in the KSM project since 2000. The company secured $150 million in funding last year through a deal with Sprott Resource Streaming and Royalty, which included a 1.2% net smelter return (NSR) royalty on the project. This funding has enabled Seabridge to commence early work activities.
Fronk aims to advance the project through staged investments to minimize upfront capital requirements and equity dilution. He seeks a partner who will fund the bankable feasibility study and subsequent project financing, ensuring Seabridge’s financial exposure is minimized.
During a recent site visit, the vast scale of the KSM deposits and the extensive pre-construction activities were evident. Road networks, bridges, and infrastructure to support future mining operations are already in place. At the Mitchell deposit, the project’s cornerstone, the tour highlighted the area’s rich mineralization.
Flexibility and Potential of KSM
The 2022 prefeasibility study emphasizes the KSM project’s flexibility, allowing for different mining approaches tailored to a partner’s expertise. The study positions KSM as a gold project with a $6.4 billion cost and a 33-year mine life, producing an average of 1 million ounces of gold annually.
In addition to gold, the project holds substantial copper resources. The prefeasibility study projects average annual production of 178 million pounds of copper and 3 million ounces of silver. The favourable life-of-mine strip ratio of 1:1 and the removal of capital-intensive block caves have reduced total project costs.
Seabridge also completed a 2022 preliminary economic assessment (PEA) focused on developing the copper-rich Kerr and Iron Cap deposits through block caving. This study suggests a 39-year mine life with a total after-tax net cash flow of $18.5 billion.
Seabridge maintains strong partnerships with local indigenous groups and governments, reflecting its commitment to community engagement and social responsibility. Beyond KSM, the company continues to invest in exploration projects like the Iskut gold project and the 3 Aces gold project in the Yukon.
Seabridge’s stock performance has been robust, recently hitting a 12-month high and boasting a market capitalization of about C$2 billion. The company’s reserve-to-share ratio is notably high compared to its peers, indicating significant underlying value.
Source: Mining.com
