Gold Co.'s Focus Remains on Finding a Partner, Analyst Says
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Disclosures for Cantor Fitzgerald, Seabridge Gold Inc., November 21, 2024

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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.