In a May 19 research report from B Riley analyst Lucas N. Pipes, Seabridge Gold Inc.'s (SEA:TSX; SA:NYSE.MKT) estimated rating was updated in light of Q1 results for the company's KSM project as well as a reported royalty agreement with Sprott.
With this, Pipes reiterated his Buy rating on the stock and US$60 target price.
KSM Royalty Agreement
The royalty agreement was made to advance the current progress of Seabridge's "substantially started" KSM project. In accordance with the royalty arrangement, Sprott will extend the payment of US$150 million to KSM. Consequently, KSM will confer upon Sprott a 1.2% net smelter royalty pertaining to its project.
This agreement is the second made between KSM and Sprott. Pipes commented that this showcases Sprott's optimism in the project and opens the door for future prospective partnerships.
Pipes noted, "We believe the progress on the ground will further de-risk the development pathway and enhance the efforts for a comprehensive partnership agreement at KSM."
Necessary Capital Provided
US$225 million had previously been raised from Sprott and Ontario Teacher's Pension Plan. This additional US$150 million gives Seabridge the necessary capital to garner "substantially started" status for KSM. This is happening a lot sooner than the June 2026 EAC deadline.
This status will give KSM "long-term validity" for its Environmental Assessment Certificate (EAC).
"We believe these efforts strengthen the attractiveness of the KSM project during joint venture discussions by securing the EAC, further minimizing project risks, and expediting the construction schedule," Pipes noted.
Quarter One Results
Pipes also noted Seabridges Q123 results.
He stated, "As a pre-production company, we would note G&A expense of CA$3.9M versus CA$4.6M YoY, capital spending of CA$42.8M versus CA$10.1M YoY, and a treasury of CA$37.6M in cash and roughly CA$1.3M in short-term deposits."
Structure and Predictions
In his report, Lucas N. Pipes reiterated his US$60 target price.
His research also shared current market data on the company.
- Price: US$13.75, with a 52-week range between US$10.03 and US$16.18
- Price Target: US$60
- Market Cap: US$1,122.6 million
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Disclosures for B. Riley Securities, Seabridge Gold Inc., May 19, 2023
Analyst certification and important disclosures can be found on pages 4 - 7 of this report: This document represents an abbreviated discussion of the subject issuer and should not be used as the sole basis for an investment decision. Contact your B. Riley Securities representative for complete research concerning the subject issuers, including research briefs and reports.
This report has been prepared by B. Riley Securities, Inc. (“B. Riley Securities”) and may be distributed by its affiliates and subsidiaries as third-party research pursuant to FINRA Rule 2241. B. Riley Wealth Management, Inc. (“B. Riley Wealth”). is a subsidiary of B. Riley Financial, Inc., which is the parent company to B. Riley Securities and B. Riley Wealth. As such, B. Riley Wealth may distribute B. Riley Securities research pursuant to Rule 2241 and by mutual agreement. B. Riley Securities, B. Riley Wealth,is a broker-dealer registered with the SEC and are members of FINRA, SIPC, and the NASDAQ stock market. The principal business address of B. Riley Securities is 11100 Santa Monica Blvd., Suite 800, Los Angeles, CA 90025. Company-Specific Disclosures B. Riley Securities, Inc. or any of its affiliates, expects to receive or intend to seek compensation for investment banking services from Seabridge Gold Inc. in the next 3 months. B. Riley Securities, Inc. or any of its affiliates, has received compensation for investment banking services from Seabridge Gold Inc. in the past 12 months. Seabridge Gold Inc. currently is, or within the past 12 months was, a client of B. Riley Securities, Inc. The services provided were Investment Banking Services. For up-to-date B. Riley Securities, Inc. company disclosures, please click on the following link or paste the URL in a web browser: https://brileysecurities.bluematrix.com/sellside/Disclosures.action.
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