Seabridge targets KSM JV, Courageous Lake sale

Seabridge Gold is targeting a joint venture agreement for its massive KSM gold-copper deposit in British Columbia, Canada, and the sale of its Courageous Lake deposit in Northwest Territories, Canada, this year, chief executive Rudi Fronk told Mining Journal.

The company has entertained seeking a JV partner for KSM since it obtained environmental approvals in 2014, although the fall in the gold price in 2015 and the COVID-19 pandemic in 2020 delayed the process.

Having engaged RBC Capital Markets bank in 2023 to run a process to seek a JV partner, having conducted site visits, and entered discussions with several companies, Fronk believes a deal is a matter of months away.

"RBC has done a good job to generate some competitive tension. Five large mining companies have visited KSM, and we think we can have a JV in place within the next several months," Fronk said.

Fronk said KSM appeals to both gold and copper producers due to its large resources of both metals, with reserves of 47.3Moz of gold, 7.3Blb of copper and 160Moz of silver over an initial 33-year mine life.

"There are five deposits at KSM: Mitchell, Sulphurets and East Mitchell are gold dominant while Iron Cap and Kerr are more copper dominated, so a copper company can push copper production first and a gold company can push gold production first," he said.

Seabridge wants to retain a 40-49% interest in KSM and would like a two-phase earn-in agreement for a partner to fund and complete a feasibility study for an initial percentage of the project and then advance to a construction decision and secure funding for the US$6.4 billion development.

To de-risk the KSM project, Seabridge began an early works program in 2021. Since then it has spent $444 million on roads, bridges, powerlines and camps. Earlier in January 2024, it applied for substantially started status, which will secure the project's approved environmental assessment certificate for the life of the project.

Courageous Lake

Another key milestone for 2024 is the potential sale of the Courageous Lake deposit, where the company recently completed a prefeasibility study for a 7500tpd operation to produce an average 201,000ozpa of gold over 12.6 years at an AISC of $999/oz following a $747 million initial capital investment.

"With an increase in the gold price and a weakening in the Canadian dollar from when we did the 2012 PFS (when the Canadian dollar was at par with the US dollar), we decided to look at it again, and with a smaller project only mining above the permafrost in the initial mine life. We won't take that through permitting, as we want to unlock the value right now to fund our early-stage exploration assets Iskut in British Columbia, Snowstorm in Nevada, US, and 3 Aces in Yukon," Fronk said.

"We take a view on the gold price, and it is going to be dictated by what the US Federal Reserve is doing. In the last five cycles, when the Fed lowered interest rates, the best asset class was gold stocks," Fronk added.

Seabridge's strategy is to create optionality to leverage the gold price through growing its ounces per share. On this metric, Seabridge is a standout.

"We have 86 million shares outstanding and 2oz/share of resources. Newmont buying Goldcorp and now Newcrest [Mining] has made them bigger, but not better on an oz/share basis," Fronk said.

Shares in Seabridge Gold are trading at $10.46, valuing the company at $881 million.