has submitted an application for "substantially started" status for its KSM project in British Columbia, according to RBC Capital Markets analyst Michael Siperco in a January 17 report.
If approved, this would extend key environmental permits over the estimated 33-year mine life, significantly derisking the US$7 billion gold/copper project.
The Application and Requirements
Seabridge applied to the BC government for substantial start approval, which is based on the following:
- Indigenous community support
- Physical on-site construction progress
- Total expenditures
RBC believes Seabridge should meet these thresholds given agreements with local communities, over US$800 million invested since 2014, and hundreds of millions spent on access roads, camps, and other early works.
De-risking the Mega-Project
In Siperco's view, successfully extending provincial environmental approvals over KSM's life-of-mine would be a major derisking milestone. The project previously received harmonized provincial and federal assessment approval in 2014.
However, BC required substantial progress within five years, plus a 5-year extension, to maintain permits. This deadline is July 2026 after pandemic-related delays.
Securing the substantial start designation years ahead of that deadline would effectively derisk this crucial permit for the project's decades-long operational phase.
Path to Construction Decision
With permitting clarity, Siperco sees Seabridge's top priority as securing a major mining partner. This would provide funding for feasibility studies and a potential construction decision to develop the US$7+ billion project.
A partner validating KSM's economics at the feasibility stage and contributing capital to reach production could drive significant upside for Seabridge investors.
RBC's Outperform rating and US$25 price target assumes a partner is found, permits extended, and positive feasibility results enable the building of the large-scale gold/copper mine complex.
In summary, Seabridge Gold has filed for environmental permit extension approval at its British Columbia mega-project. Securing substantially started status could derisk KSM's development path and help attract a construction partner.
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Disclosures for RBC Capital Markets, Seabridge Gold Inc., January 17, 2024
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