Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) released the data generated through drilling last year at its 3 Aces gold project in the Yukon, reported Taylor Combaluzier, Red Cloud Securities vice president/mining analyst, in a Feb. 15 research note.
"We believe these results help Seabridge in understanding the geological parameters controlling gold-rich mineralization, which could lead to further target delineation and eventually a maiden resource estimate at the project," Combaluzier wrote.
265% potential return
Given the news, the analyst noted, Red Cloud reiterated its target price on the Canadian gold company of CA$46.50 per share.
In comparison, Seabridge is trading now at about CA$12.75 per share.
"We only value a nominal US$20 million in situ for 3 Aces (within our total NAV of CA$6.7 billion)," Combaluzier wrote. "As such, we consider any exploration upside at the project as a bonus upside to our target price."
Given the current target and share price, the possible gain for investors now is 265%.
Seabridge remains a Buy.
Results in brief
Combaluzier discussed the newly released information and provided some of the notable intercepts. Results are from about 7,800 meters (7,000m) of reverse circulation drilling done in the Central Core Area (CCA) of 3 Aces, around the Spades, Hearts and Clubs zones.
One highlight result, encountered in hole 3A23-381 drilled in the Clubs zone, was 0.81 grams per ton gold (0.81 g/t Au) over 111.2m, including 1.52 g/t Au over 41.2m.
Another standout finding, hit in hole 3A23-377 placed in the Hearts W zone, was 7.59 g/t Au over 7.2m, including 46.4 g/t Au over 1m.
Better geological understanding
Seabridge developed a three-dimensional deposition model of 3 Aces, using these new drill results and historical ones, Combaluzier reported. The model suggests mineralization between the deposits in the CCA is continuous.
"Mineralization is concentrated at the stratigraphic contact between sandstones and phyllites and gets wider, continuous and higher grade where these contacts have gone through second-generation folding," he described.
What is next
Seabridge intends to investigate other possible areas in which gold may have been deposited in the system, Combaluzier wrote. As well, it plans to follow up on any freshly identified targets and expand the mineralization in the known zones.
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