Seabridge Gold Inc.'s (SEA:TSX; SA:NYSE.MKT) latest drill results from the Snip North target at its Iskut project in British Columbia further confirmed and expanded the copper-gold porphyry-style mineralization present, reported RBC Capital Markets Analyst Michael Siperco in a Sept. 15 research note. Iskut is about 50 kilometers from Seabridge's flagship KSM project and adjacent to Skeena Resources Ltd's (SKE:TSX.V) Snip project.
"The mineralized zone now measures 1,800 meters (1,800m) by 600m by 600m, roughly +10% versus prior, and demonstrates consistent grade from the results disclosed to date," Siperco wrote.
112% Return Implied
RBC maintained its $40 per share target price on the Canadian mining junior, trading at the time of Siperco's report at about $18.83 per share, the analyst noted. From this price, the return to target is 112%.
Seabridge remains rated Outperform.
Interpretation of the Results
The newly reported drill results are for three drill holes, part of this year's program at Snip North, the purpose of which is to follow up on last year's exploration data to better understand the deposit and expand the mineralized footprint.
Siperco provided a highlight intercept from each of the newly reported holes:
- Hole SN-25-28: 0.42 grams per ton gold (0.42 g/t Au) and 0.13% copper (Cu) over 513m
- Hole SN-25-29: 0.54 g/t Au and 0.09% Cu over 478m
- Hole SN-25-30: 0.72 g/t Au and 0.13% over 715m
The grades and widths are consistent with previous results, noted Siperco. According to Seabridge, these latest data indicate a wide, higher-grade zone. Also, hole SN-25-30 may have encountered mineralization that could be indicative of the intrusive body and thus could guide future drilling, noted management.
So far this year, Seabridge completed 18,000m of the total 2025 Snip North drill campaign and added another 3,000m. After it finishes this program, the company intends to release an initial resource estimate, in early 2026.
Project Portfolio at a Glance
The bulk of the value of Seabridge's portfolio is from KSM, "a world-class gold/copper project with strong leverage to higher metal prices," Siperco described. At spot prices, RBC's net present value (NPV) of KSM would be $15.2 billion, 70% higher than its current valuation. The rest of the portfolio offers growing optionality and potential to provide funding beyond 2025, the analyst highlighted.
RBC values the whole Iskut project, offering "promising longer-term upside," on a discounted in situ basis at $60 million ($60M), or about 1% of NAV, noted Siperco." Already Iskut has an Inferred resource at the Bronson Slope deposit of 5,400,000 ounces (5.4 Moz) of gold and 1,100,000,000 pounds of copper.
"Progress toward defining an economic deposit on the property could see significant further value surface versus our model," Siperco wrote.
Courageous Lake, another of Seabridge's projects, this one in the Northwest Territories, also offers potential upside. Though still in an early stage and needing permitting and further study, the project "could see renewed interest at higher metal prices," the analyst pointed out. Siperco added that the economics of large-scale projects with a potentially long life seem to be improving with higher prices, especially ones in tier 1 jurisdictions.
A prefeasibility study of Courageous Lake updated last year outlined a $747M project producing 201,000 ounces of gold per year at an all-in sustaining cost of $999 per ounce ($999/oz) over about 13 years. The after-tax net present value discounted at 5% is $523M and the internal rate of return is 21%, at a gold price of $1,850/oz.
"Valued at about $150M on an enterprise value:ounce basis, the market ascribes limited value to the project within Seabridge," Siperco wrote.
Courageous Lake hosts reserves of 2.8 Moz of 2.6 g/t gold and a Measured and Indicated plus Inferred resource of 14.3 Moz at about 2.4 g/t gold. These could possibly extend the mine life to about 30 years.
Possible Positive Future Events
Siperco presented three potential key catalysts for Seabridge. One would be a positive outcome of the court hearing scheduled for this month regarding the challenge made to British Columbia's Environmental Assessment Office (EAO) having designated KSM "Substantially Started" in 2024.
A ruling in favor of the EAO could "reconfirm KSM's environmental permits for the entire 33-year mine life," Siperco wrote.
A second potential stock-boosting event would be Seabridge landing a partner to advance KSM toward a feasibility study and construction decision. The company is actively seeking a senior producer that could provide funding through feasibility and a construction decision, with an option to acquire control.
A partner with this ability "could, in our view, validate the project, the latest updated studies and the work done to date at site, while providing a path for Seabridge investors to participate in future potential upside if a positive construction decision is made," Siperco commented.
RBC's Outperform rating on the mining company assumes it lands a partner to develop KSM and assumes the feasibility study further confirms KSM's economic potential, noted Siperco.
Seabridge continues carrying out the $150M worth of work at KSM planned for this year and already funded. The company already spent more than $800M at the property since the environmental assessment certificate was issued in 2014. Of this total, $400M were used since 2021 to cover early project construction, including investment in access road construction, a permanent camp and early environmental work.
The third material catalyst for Seabridge would be further advancing, partnering on or selling Courageous Lake to fund KSM activities.
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