Seabridge Gold Inc.'s (SEA:TSX; SA:NYSE.MKT) recent preliminary economic assessment (PEA) shows the copper-rich Kerr and Iron Cap gold deposits at KSM "providing considerable value" to the company, reported Red Cloud Securities analyst David Talbot in an August 4, 2022 research note.
Thus, Red Cloud raised its price target on Seabridge to CA$51 per share from CA$49.60. The Canadian mining company's current share price is around CA$17.09.
Talbot presented the PEA highlights of this standalone, expansion mine plan. First, it adds 39 years to the current 33-year mine life for KSM's Mitchell, East Mitchell and Sulphuret deposits.
Second, the project economics are "stellar," Talbot wrote. They include a US$5.8 billion (US$5.8B) after-tax net present value discounted at 5%, an 18.9% internal rate of return and a 6.2-year payback. This is assuming opex of US$11.98 per ton milled or US$1.44 per pound copper after byproduct credits as well as a US$1,742 per ounce gold price and a US$3.53 per pound copper price.
As for costs, initial capex is an estimated US$1.5B, given that only minimal infrastructure development will be needed. Sustaining capex, primarily for the underground block cave, is projected to be US$12.8B over the mine life.
As for operations, Talbot relayed, the PEA outlines a starter pit at Kerr at the beginning then moving to an underground operation. Average yearly production is forecasted to be 368,000 ounces of gold, 366 pounds of copper, 1,800,000 ounces of silver and 400,000 pounds of molybdenum.
Given these figures, the project is projected to reach peak mill feed capacity of 170,000 tons per day by year 12.
Talbot pointed out that "additional resources and potential production from copper-rich underground deposits help provide optionality to any potential partner."
He added that Seabridge will likely need a strategic or mining partner to "overcome the capital spend and associated financial risk."
Looking to the rest of this calendar year, the next possible catalysts for Seabridge are drill results from its Iskut project in British Columbia, noted Talbot.
Red Cloud has a Buy rating on Seabridge, and Seabridge is currently trading at
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