Analysts from Cantor Fitzgerald and Paradigm Capital were part of a site visit earlier this summer to Seabridge Gold Inc.'s (SEA:TSX; SA:NYSE.MKT) KSM copper-gold and Iskut gold projects.
Don MacLean, senior analyst with Paradigm Capital wrote, "We believe Seabridge provides investors with ownership in one of the most strategically compelling and prolific copper‐gold projects in the world, the KSM project in B.C. Seabridge offers investors one of the lowest market caps per ounce, as well as exploration sizzle with the Iskut gold project, acquired in June 2016."
MacLean noted that "following last year's impressive drill results at KSM's Iron Cap deposit, Seabridge is back with two drills currently in operation. This year's campaign will further test the down-plunge extension of the resource shell, stepping out further to the north, as well as the high-grade potential in the footwall of the Sulphurets Thrust Fault. . .growth at Iron Cap could be transformational for KSM's gold production profile."
Referring to the Iskut gold project, MacLean commented that "although the historic data quality on the Iskut property is relatively poor, we are impressed with the boots-on-ground, new-thinking approach and quality target generation that the exploration team has put together at Iskut."
Paradigm Capital has a 12-month target of CA$20 on Seabridge; the shares are currently trading at around $14.45.
Mike Kozak of Cantor Fitzgerald wrote that "at the newly acquired Iskut property, Seabridge has initiated its maiden drill program (3,500-10,000m) also budgeted at C$5.0 MM. The Company is well capitalized with C$35 MM in cash (no debt). Initial assay results from the 2017 exploration program at both projects will be released in batches, likely beginning in the next 4-6 weeks due to assay lab backlog."
Discussing the scale of the KSM project, Kozak commented, "At 5.9 BBt grading 0.44g/T Au and 0.26% Cu (P&P+M&I+Inf.) Seabridge's 100%-owned KSM project is already the world's largest undeveloped mining project globally in terms of Reserves, and the second largest in terms of total Resources. That said, there is still room for the project to grow materially in size, and more importantly, improve in grade."
The single most important event for Seabridge over the coming months, Kozak stated, "will be to partner-up with a large-tier, or consortium of large-tier miners and/or off-takers. Based on our discussions with Seabridge management over the last several months, and its technical team on site earlier this week, we believe there is a strong likelihood of a partnering event by the end of this year, which is the internal goal."
"While the CAPEX requirement at KSM is substantial to say the least (~$5.5 BB), the sheer size/scale of KSM (+1.2 MMoz AuEq/yr over a mine-life of +50 years) makes it a truly unique, sought-after asset, and one that is highly likely to attract a number of potential top-tier JV partners," the Cantor Fitzgerald analyst stated.
Cantor Fitzgerald has a one-year target price of CA$20 for Seabridge.
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1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. 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 Paradigm Capital, Seabridge Gold Inc., Research Note, July 31, 2017
Paradigm Capital Inc. has assumed an underwriting liability for, and/or provided financial advice for consideration to the subject companies during the past 12 months.
Paradigm Capital Inc. expects to receive or intends to seek compensation for investment banking services from the subject companies in the next 3 months.
The analyst (and associate) certify that the views expressed in this report accurately reflect their personal views about the subject securities or issuers. No part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations expressed in this research report.
Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is determined by revenues generated directly or indirectly from various departments including Investment Banking, based on a system that includes the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and investment guidance and client feedback. Analysts are not directly compensated for specific Investment Banking transactions.
Disclosures from Cantor Fitzgerald, Seabridge Gold Inc., Company Update, July 27, 2017
Potential conflicts of interest
The author of this report is compensated based in part on the overall revenues of Cantor, a portion of which are generated by investment banking activities. Cantor may have had, or seek to have, an investment banking relationship with companies mentioned in this report. Cantor and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. Although Cantor makes every effort possible to avoid conflicts of interest, readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.
Disclosures as of July 27, 2017
Cantor has provided investment banking services or received investment banking related compensation from Seabridge Gold Inc. within the past 12 months.
The analysts responsible for this research report do not have, either directly or indirectly, a long or short position in the shares or options of Seabridge Gold Inc.
The analyst responsible for this report has visited the material operations of Seabridge Gold Inc. (KSMand Iskut). No payment or reimbursement was received for the related travel costs.
Analyst certification: The research analyst whose name appears on this report hereby certifies that the opinions and recommendations expressed herein accurately reflect his personal views about the securities, issuers or industries discussed herein.