Question: Like you, I have regarded Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) as one of the "Cadillacs" among exploration companies. I love the combined gold/copper story at KSM, plus all the other great assets. However, is the recent sharp drop due to the sudden legal challenges/headaches that have come up over KSM or, more, the overall drop in precious metals (PM_ stocks? It seems too big to be just the latter. . .
Answer:
I agree it is too big to be the latter, and as you can see below, SEA shares have been cut almost half now from their mid-October peak. Indeed, the gap down you see just after that was as the news hit of a challenge to the company having been granted that Substantially Started Designation. (See here.)
On Nov. 25, Seabridge issued news noting that the Tsetsaut Skii km Lax Ha ("TSKLH") has filed a petition with the BC Supreme Court against the Province of BC and relevant Ministries seeking judicial review of the "Substantially Started" ("SS") designation provided to KSM.
The TSKLH is an Indigenous group claiming extensive territory in northwest BC and contests the rights of the Nisga'a and Tahltan Nations over the eastern side of the KSM project. They are alleging that the Province failed to consult the group adequately in the determination, and therefore, the Province failed in its duty of procedural fairness.
Seabridge Co-Founder, Chairman, and C.E.O. Rudi Fronk responding to my own query for more color on this, sent me along the following: Some additional context: The TSKLH have been pushing for years to have their claim recognized by the Province. TSKLH is incensed by the rights granted to the Nisga'a Nation under the Nisga'a Final Agreement and the Province giving equivalent or superior status to the Tahltan claim to the eastern area of KSM being Tahltan traditional territory.
This Petition is a reflection of TSKLH's frustration over a perceived lack of respect for their rights by the Province and Seabridge. It is not unexpected that TSKLH would take action like this — they are not shy about commencing litigation, even when the arguments they are making look weak. They are presently fighting a Gitanyow claim to areas they consider TSKLH territory, and they have applied to the court for a declaration of title to an area covering about 1/3 of the Golden Triangle and overlapping traditional territories of the Tahltan Nation, the Gitxsan Nation, the Nisga'a Nation, and the Gitanyow Nation. TSKLH just lost an action challenging the acquisition of Pretium by Newcrest, alleging TSKLH consent was necessary for the transaction to proceed. Seabridge has made continued efforts over the years to complete an IBA with the group and has been rebuffed consistently as they demand an agreement that recognizes their exclusive use of the area to the detriment of the Nisga'a and Tahltan.
Seabridge has a Capacity Funding Agreement in place for permit reviews and another for IBA negotiations. Seabridge and TSKLH IBA negotiations in 2023 and 2024 have included exchanges of proposals for terms for an IBA. TSKLH is not considered a First Nation by the Province of BC, but as a house (orwilp) of the Gitxsan Nation. During the EA process, Seabridge was informed that the TSKLH has a population of approximately 30 people. More recently, Chief Simpson has claimed its population is over 60 people; in any case, it is a small number, whichever is correct.
Contrast that to the Tahltan and Nisgaa Nations, each with a population base well in excess of 5,000. Considering the group's insistence on deep consultation, the BC government was careful to ensure TSKLH was provided with relevant information early and given a reasonable opportunity to participate in the Province's SS review process.
As you know, Seabridge's application for the Substantial Start designation was supported by representatives of the three largest Indigenous peoples in the area, including the Nisga'a Lisims Government, the Tahltan Central Government, and the Gitxsan Hereditary Chiefs Office. Seabridge is confident that, based on the information it has available from the Petition, correspondence it has received from the Province, advice Seabridge has received, and discussions with senior government officials during the Substantial Start determination review process, the petition against the Government will be dismissed.
Meanwhile, it would be difficult to see the Government place a different emphasis on one smaller group's claims against the majority of First Nations and other regional stakeholders who have expressed continued support for the KSM project and its Substantially Started status. (End of Fronk points.)
Though a nuisance, no doubt, as these things regularly are, it seems as if Seabridge and everyone else in the right will ultimately prevail, I.M.O. Not surprisingly— with a gold/copper project of such magnitude moving toward development — others are attempting to gum up the works as well with nuisance lawsuits.
A second challenge to Seabridge's SSD status was announced on December 2. As you read through the details, this nuisance suit is also a waste of time, money, and energy, and one Seabridge will very likely prevail on. It's a shame that these actions have helped to erode what had been a nice 2024 for Seabridge's share price.
Down here anew, I rate SEA as a BUY once more.
Inevitably, KSM will get the suitor it needs and deserves, and once the renewed "doubt" over the project being built is again removed, I think we'll see the ground recently lost recovered and then some. This, as we've discussed before, is the second major event along the Lassonde Curve that typically leads to the biggest gains in market cap.
| Want to be the first to know about interesting Base Metals, Gold and Critical Metals investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
Important Disclosures:
- 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.
- 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.
- Chris Temple: I determined which companies would be included in this article based on my research and understanding of the sector.
- Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
- 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.
Chris Temple Disclosures:
The National Investor is published and is e-mailed to subscribers from chris@nationalinvestor.com. The Editor/Publisher, Christopher L. Temple may be personally addressed at this address, or at our physical address, which is: National Investor Publishing, P.O. Box 1257, Saint Augustine, FL 32085. The Internet web site can be accessed at https://nationalinvestor.com/. Subscription Rates: $275 for 1 year, $475 for two years for "full service" membership (twice-monthly newsletter, Special Reports and between-issues e-mail alerts and commentaries.) Trial Rate: $75 for a one-time, 3-month full-service trial. Current sample may be obtained upon request (for first-time inquirers ONLY.) The information contained herein is conscientiously compiled and is correct and accurate to the best of the Editor’s knowledge. Commentary, opinion, suggestions and recommendations are of a general nature that are collectively deemed to be of potential interest and value to readers/investors. Opinions that are expressed herein are subject to change without notice, though our best efforts will be made to convey such changed opinions to then-current paid subscribers. We take due care to properly represent and to transcribe accurately any quotes, attributions or comments of others. No opinions or recommendations can be guaranteed. The Editor may have positions in some securities discussed. Subscribers are encouraged to investigate any situation or recommendation further before investing. The Editor receives no undisclosed kickbacks, fees, commissions, gratuities, honoraria or other emoluments from any companies, brokers or vendors discussed herein in exchange for his recommendation of them.
All rights reserved. Copying or redistributing this proprietary information by any means without prior written permission is prohibited. No Offers being made to sell securities: within the above context, we, in part, make suggestions to readers/investors regarding markets, sectors, stocks and other financial investments. These are to be deemed informational in purpose. None of the content of this newsletter is to be considered as an offer to sell or a solicitation of an offer to buy any security. Readers/investors should be aware that the securities, investments and/or strategies mentioned herein, if any, contain varying degrees of risk for loss of principal. Investors are advised to seek the counsel of a competent financial adviser or other professional for utilizing these or any other investment strategies or purchasing or selling any securities mentioned.
Chris Temple is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.
Notice regarding forward-looking statements: certain statements and commentary in this publication may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 or other applicable laws in the U.S. or Canada. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of a particular company or industry to be materially different from what may be suggested herein. We caution readers/investors that any forward-looking statements made herein are not guarantees of any future performance, and that actual results may differ materially from those in forward-looking statements made herein.
Copyright issues or unintentional/inadvertent infringement: In compiling information for this publication the Editor regularly uses, quotes or mentions research, graphics content or other material of others, whether supplied directly or indirectly. Additionally he makes use of the vast amount of such information available on the Internet or in the public domain. Proper care is exercised to not improperly use information protected by copyright, to use information without prior permission, to use information or work intended for a specific audience or to use others' information or work of a proprietary nature that was not intended to be already publicly disseminated. If you believe that your work has been used or copied in such a manner as to represent a copyright infringement, please notify the Editor at the contact information above so that the situation can be promptly addressed and resolved.
