Resource Update Bodes Well for Upcoming PFS

Resource Update Bodes Well for Upcoming PFS

This development-stage mining company upgraded the mineral resources for two deposits at its B.C. project, noted a Red Cloud Securities report.

Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) increased the combined updated gold equivalent resources at its Mitchell and East Mitchell deposits at KSM by 21%, reported Red Cloud Securities analyst David Talbot in an April 18 research note. As such, Red Cloud raised its target price on Seabridge to CA$43 per share from CA$42.80. The company is currently trading at around CA$27.12 per share.

“We see this resource update leading to a likely increase in Proven and Probable reserves, better grades early in the mine life and a deferral of the capital-intensive underground block cave development at KSM,” Talbot wrote.

The analyst provided the new and previous updates for each of the metals present in the two deposits. The new Measured and Indicated (M&I) resources for Mitchell and East Mitchell (formerly Snowfield) together now are 87,400,000 ounces (87.4 Moz) of gold, 446.3 Moz of silver, 16,100,000,000 pounds (16.1 Blb) of copper and 819,000,000 pounds (819 Mlb) of molybdenum. These figures include results from 2021 drilling done at both deposits.

These revised figures represent the following increases in resource metals at these prices: 11.7 Moz of gold (US$1,900 per ounce), 91.8 Moz of silver (US$28 per ounce), 4.2 Blb of copper (US$4 per pound) and 148 Mlb of molybdenum (US$12 per pound).

This minerals resource update should boost the economics outlined in the upcoming KSM prefeasibility study (PFS), in which one large open pit is expected to encompass Mitchell and East Mitchell. The recent resource increase plus higher metals prices should help offset inflation and labor costs, according to Seabridge management. The PFS, which will include East Mitchell for the first time, is slated for completion this June.

On a related note, Reagor pointed out, Seabridge increased gold ownership on a per share basis in 2021, one of its yearly objectives. Since the December 2020 resource estimate, the company added 11.7 Moz of gold in the M&I category, lowered Inferred gold resources by 0.2 Moz and based on new financings, increased shares outstanding by about 5.6 million.

Reagor noted that Seabridge is well funded to advance KSM to development. Additionally, the mining firm’s agreement with BC Hydro to provide electricity during construction should afford savings on capex as grid power is about one-fourth the cost of diesel generated power.

Red Cloud has a Buy rating on Seabridge.


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Disclosures

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Seabridge Gold Inc. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

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Disclosures for Red Cloud Securities, Seabridge Gold Inc., April 18, 2022

Red Cloud Securities Inc., its affiliates and their respective officers, directors, representatives, researchers and members of their families may hold positions in the 
companies mentioned in this document and may buy and/or sell their securities.

Additionally, Red Cloud Securities Inc. may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services

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Analyst Certification: The Red Cloud Securities Inc. Analyst named on the report hereby certifies that the recommendations and/or opinions expressed herein accurately reflect such research analyst’s personal views about the company and securities that are the subject of this report; or any companies mentioned in the report that are also covered by the named analyst. In addition, no part of the research analyst’s compensation is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

 

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