In a Sept. 7 research report, Canaccord Genuity noted Seabridge Gold Inc.'s (SEA:TSX; SA:NYSE.MKT) recently released assays from the Iron Cap zone of KSM in British Columbia "support the discovery hole late last year which intercepted 555m at 0.83 g/t Au and 0.24% Cu and together indicate the presence of another higher grade ore body which could result in the favorable resequencing of the mine plan at KSM," wrote analyst Tony Lesiak.
As for those latest drill results, "all five holes intercepted long intervals of copper gold mineralization with drill-indicated grades 21% and 79% higher than the current KSM reserve average for gold and copper, respectively," indicated Lesiak. "The average drill intercept was 558m at 0.67 g/t Au and 0.37% Cu."
In response to the findings, the analyst suggested, "Iron Cap could move to the front of the mining queue given the higher relative grade profile, proximity to planned access tunnel infrastructure and lower capital intensity. We estimate that by moving the Kerr deposit back in the sequence in favor of Iron Cap, the KSM gold production profile could improve from 1.15–1.25 Moz/year over the first seven years offset by lower copper production."
Consequently, Canaccord raised its target price on Seabridge "from CA$25 to CA$26, based on a 0.9x multiple to CA$28.75/share (from CA$27.47/share), our forward curve derived net asset value, which continues to assume a 70/30 joint venture outcome for KSM," noted Lesiak. "Our model has been adjusted to reflect a larger cave scenario at Iron Cap and resequenced mine profile."
In other news, said Lesiak, the gold and copper company "recently received the schedule 2 amendment for the KSM tailings management facility with an approved environmental impact statement and permits for the first two and a half years of construction in hand."
According to Lesiak, near-term rerating catalysts for Seabridge include:
1) "Additional drill results from Iron Cap"; data on seven holes "are expected in the coming weeks."
2) "Initial drill results (12 holes) from the Quartz Rise target on the Iskut project. . .a new higher-grade epithermal gold discovery at Iskut has the potential to be meaningful."
3) "Completion of the impacts and benefits agreement (IBA) with the local Tahltan Nation (Nisga'a Nation IBA already signed)."
Canaccord has a Speculative Buy rating and CA$26 target price per share on Seabridge. The company is trading today at about CA$15.05 per share.
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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.
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Disclosures from Canaccord Genuity, Seabridge Gold, Sept. 7, 2017
Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research.
Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons of Canaccord Genuity Inc. and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
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