Gold Co.'s Focus Remains on Finding a Partner, Analyst Says
Research Report

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. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Seabridge Gold Inc.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
4. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

For additional disclosures, please click here.

Cantor Fitzgerald last week hosted Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) for a one-day institutional marketing non-deal roadshow in New York, the firm said in a November 21 updated research note.

Analyst Mike Kozak, who reiterated his Buy rating on the stock with a CA$45 per share price target, said the schedule was made up of investors of all AUM sizes and strategies and included a blend of existing shareholders and asset managers who were being introduced to Seabridge for the first time.

According to Kozak, one of the main takeaways from the even was that Seabridge's "primary focus remains on securing a joint-venture (JV) partnership on the KSM project with a large-cap gold or copper miner which management expects to complete in the near-term."

Ideal JV Structure

Seabridge said the ideal JV structure would be a two-phased approach, with a Phase I partner earn-in (less than 10% of the project) funding a Bankable Feasibility Study (BFS) at a cost of about CA$150 million over two years. The Phase II earn-in (total 51-65% of the project) would be comprised of the partner making a construction go-ahead decision, securing more than 50% of the KSM project's initial CAPEX requirement within the JV in a non-recourse way net to Seabridge (offtake, project debt, etc.), and the partner sole-funding the front-end of the majority of the remaining initial CAPEX requirement.

"Seabridge’s primary focus remains on securing a joint-venture partnership with a large-cap gold or copper miner, which management expects to complete in the near-term," Kozak wrote. "Seabridge noted that receiving its 'substantially started' designation from the British Columbia provincial government, that affirms its Environmental Assessment Certificate (EAC) over the life of the KSM project, was a major de-risking event from the perspective of the company's potential large-cap joint-venture partners."

Discussions Continue

Kozak noted the company is in JV partnership discussions with both large-cap gold and large-cap copper miners, with the potential copper JV-partners considering future production expansion scenarios at KSM from the 195 kilotons per day (ktpd) outlined in the 2022 Pre-Feasibility Study (PFS) to up to 400 ktpd.

"Over its +20-year history, approximately CA$1 (billion) has been spent at the KSM project (exploration, permitting, economic studies, early-stage construction, etc.)," Kozak wrote. "At present, BC Hydro is constructing the switching station at Treaty Creek that will eventually connect the KSM project site to province’s existing low-cost hydro-sourced Northwest Transmission Line (NTL)."

Kozak said his reiterated price target of US$36/CA$45 "has a bias to the upside."

"Our target is derived via a 1.0x NPV7.5% multiple on the KSM project and the assumption that Seabridge attracts a 50% JV-partner on industry standard terms," he wrote.