Impact: Very Positive
Seabridge announced that it received its substantially started designation from the BC Government for its 100%-owned KSM project in the Golden Triangle. The designation ensures the validity of the BC Environmental Assessment Certificate (EAC) for the life of the project. Seabridge submitted its application for the status in Jan/24 – well ahead of when the EAC would have expired in Jul/26 (read notable). We note that according to its US$150M royalty agreement with Sprott Resource Streaming and Royalty Corp. (Private) and US$225M secured note from Sprott and Ontario Teachers’ Pension Plan, if the EAC had expired prior to KSM achieving commercial production, the royalty and note could have been put back to KSMCo at the initial investment plus a premium. This risk has now been eliminated. We highlight that Seabridge’s KSM project is one of the largest undeveloped Au-Cu projects in the world. In addition to achieving the substantially started designation, some of the key objectives for Seabridge in 2024 include: 1) entering a JV agreement on the KSM project and 2) securing ~C$50M in funding to advance construction at KSM (read notable). The company has invested ~C$1B since acquiring the project in 2001 and ~C$800M since the issuance of the EAC in 2014 to advance the project. Recently, it has completed work on power, roads, fish habitat, bridges, and a camp. We view this news very positively and believe the substantially started designation is a significant milestone for the company. The status should help de-risk the project and support Seabridge’s efforts to attract a potential JV partner. Without this regulatory overhang, the company should be able to have more robust discussions with potential partners.
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