Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) received the substantially started status for its KSM copper-gold project, from the British Columbia (B.C.) government, reported Red Cloud Securities Vice President and Mining Analyst Taylor Combaluzier in a July 29 research note.
"We view this news very positively and believe the substantially started designation is a significant milestone for the company," Combaluzier wrote.
107% potential return
On this news, Red Cloud reiterated its CA$46.50 per share target price on the Canadian explorer, now trading at about CA$22.43 per share, noted the analyst.
The difference between these two prices implies 107% upside for investors.
Seabridge remains a Buy.
Designation derisks project
Combaluzier explained that now, due to the substantially started status, the environmental assessment certificate (EAC) on KSM will remain valid throughout the life of the project. KSM, in B.C.'s Golden Triangle, is one of the world's largest undeveloped copper-gold projects.
Seabridge completed the necessary requirements for the designation well before the deadline of July 2026. Doing so eliminated the risk of the US$225 million ($225M) secured note from Sprott and the Ontario Teachers' Pension Plan being "put back to KSMCo at the initial investment plus a premium," the analyst pointed out.
Also, receipt of the substantially started status, highlighted the analyst, removed the regulatory overhang on Seabridge and KSM. This should make the project more attractive to prospective joint venture partners and, therefore, increase Seabridge's chances of securing a partner.
Investment made in project
Since acquiring KSM in 2001, Seabridge spent about CA$1 billion on it, including work on power, roads, bridges, a camp and fish habitat.
The company invested CA$800M of the total after receiving the EAC, in 2014.
Next goals to achieve
The mining company has two major catalysts ahead, noted Combaluzier.
One is signing an agreement with a joint venture partner to advance KSM. The second is securing funding, about CA$50M, to cover the costs of construction at the project.
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