KSMproject

KSM (Image: Seabridge Gold)

Good news out of Seabridge Gold (SEA.T) this morning: they have received a positive federal environmental assessment decision for the KSM project in British Columbia. The federal decision was consistent with the provinical assessment which was awarded at the end of July.

The permit allows one of the biggest undeveloped gold deposits in the world to continue to move forward toward construction. The KSM deposit hosts 38.2 million ounces of gold and 10.2 billion pounds of copper in proven and provable reserves.

A Preliminary Feasibility Study released in May of 2012 that shows a 55 year mine life with a CAPEX of $5.3 billion and an internal rate of return after tax of 9% using $1330 gold and $3.45 copper. The deposit is still open for expansion and higher grade reserves could potentially lead to better economics.

It is clear that Seabridge will need a partner to help fund the construction of this monster project. Any 'major' looking to have a highly leveraged call on the gold price will probably be interested in taking a look at Seabridge. Current valuatuion is ~$7 enterprise value per reserve gold ounce.

Seabridge Gold chairman and chief executive officer Rudi Fronk stated: "With this positive decision, the Canadian government has concluded its lengthy and rigorous environmental assessment process for the KSM project, which began in 2009. I would like to thank Minister Aglukkaq for her decision and also acknowledge the professionalism of her technical team, led by the dedicated staff from CEAA, who were ably supported by representatives from Natural Resources Canada, including the major projects management office, Environment Canada, Fisheries and Oceans, and Transport Canada. I would also like to acknowledge the continuing support of the Nisga'a Nation, as well as the other first nations and local communities whose involvement made substantial contributions to the achievement of this significant milestone. Finally, I want to thank the outstanding efforts made by our talented environmental and permitting team at Seabridge who deserve enormous credit for this accomplishment."

3yr chart SEA

 

Seabridge is one of the most leveraged gold companies in the world. The share price was as high as $24 back in early 2012 and has since fallen to the $9 level.

The fundamental goal at Seabridge is to add gold ounces per share every year. Management has done a fantastic job doing this so far and currently ranks 1st in reserves/share among leading gold companies (0.92 oz per share).

The only thing that has caused the drop in the stock is the fall in gold price as Seabridge has moved the project forward receiving permits and finding additional resources (Deep Kerr).

Catalysts in 2015 include a new resource estimate from the rapidly expanding Deep Kerr zone of the property. 2014 drilling at Deep Kerr consisted of 13 drill holes (2900 meters).

Other projects in B.C. that are moving through the development phase include the high grade project of Pretium and the smaller but highly economic project of IDM Mining.  IDM optioned the Red Mountain project from Seabridge in April of this year.

The Seabridge business model was founded back in 1999 on the premise of buying gold ounces in the ground providing leverage for shareholder in a rising gold price environment. Seabridge bought the KSM deposit for $200,000 from Placer Dome when they were selling off assets at the bottom of the market.

A very small micro-cap speculative company, CopperBank, has just started trading and has a similar business plan involving copper deposits.

Symbol: SEA.T

Share price: $8.82
Shares outstanding: 48.2 M
Market cap:$425 M

Read:  Seabridge Gold's KSM Project Receives Positive Federal EA Decision

I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence. Please note IDM Mining and Copperbank are sponsors of this website CEO.ca.