Mining Company Wins Tax Battle in Canada's Golden Triangle

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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) announced it has received CA$4.4 million in recovered funds from the Canada Revenue Agency (CRA) following the Supreme Court of British Columbia (SCBC) overturning of CRA's previous decision to deny BC Mineral Exploration Tax Credits for the years 2010 and 2011.

Seabridge had already been reimbursed for trial costs and has now fully recovered the funds held by CRA during the appeal process, along with accrued interest, the company said in an October 29 release.

Seabridge said it believes that the BC METC ruling should lead to the recovery of an additional CA$9.4 million in taxes, penalties, and interest currently held by CRA due to its denial, for similar reasons rejected by the SCBC, of flow-through mining expenditures incurred during the 2014-2016 exploration programs.

"Canadian mining is subject to a vast and ever-growing set of regulations covering everything from taxes and mineral rights to permitting and ESG," Seabridge Chairman and Chief Executive Officer Rudi Fronk said. "Navigating this complex environment is crucial, and we take pride in our ability to do so. We are pleased to have our interpretation of the Income Tax Act confirmed and to have resolved the BC METC challenge. We now look forward to addressing CRA's broader denial of flow-through mining expenditures that we renounced to investors. We believe the CRA should adopt more supportive positions regarding our industry going forward."

Co. Also Appealing 2nd Decision on Exploration Expenses

The company received a refund for the CA$15.8 million in exploration expenditures incurred in 2010 and 2011, which it claimed as qualifying mining exploration expenses under the BC Income Tax Act, making them eligible for tax credits under the BC METC program, the release said.

CRA later decided these expenditures did not qualify for BC METC tax credits. The company has persistently challenged CRA's position, arguing that CRA takes too narrow a view of what qualifies as a mining exploration expense, with the core issue being whether such expenses are incurred to determine "the existence, location, extent or quality of a mineral resource."

During the appeal, CRA held the disputed funds. Seabridge's appeal was heard in the SCBC in late 2024, and a judgment was rendered in March 2025, largely in favor of the company's position that the relevant expenses were eligible for BC METC tax credits. The judge ruled that over 92% of the expenses claimed qualified as mining exploration expenses because they were incurred to determine "the existence, location, extent or quality of a mineral resource." Consequently, CRA was required to return the funds to the company, plus interest.

Seabridge said it is also appealing a second CRA decision denying its claim that exploration expenses incurred in 2014-2016 were flow-through mining expenditures and thus eligible for the tax benefits associated with flow-through shares. CRA denied the 2014-2016 expenditures on the grounds that they were not incurred to determine "the existence, location, extent or quality of a mineral resource."

The denied expenditures were similar to those in the March 2025 SCBC decision, which the judge ruled were incurred to determine "the existence, location, extent or quality of a mineral resource," the company said.

CRA has reassessed the company and most investors in the flow-through shares that renounced the 2014-2016 exploration expenditures, and the company has paid CRA CA$9.4 million in taxes, penalties, and interest based on its reassessment and those of the relevant investors.

Seabridge believes that if the SCBC judgment's reasoning is applied to the 2014-2016 exploration expenditures, CRA's decision is incorrect, and all funds paid to CRA should be returned. The company said it continues to work with tax counsel to have the reassessments reversed and the CA$9.4 million returned.

Finding a Partner for the Flagship

The primary catalyst for Seabridge remains securing a partner for the development of its flagship KSM project in British Columbia's Golden Triangle, according to Royal Bank of Canada Capital Markets Analyst Michael Siperco in a note on September 15.

The analyst explained that management is looking for a senior producer who can provide funding through the feasibility stage and a construction decision, with an option to gain control. A partner with the resources and financial strength to advance the project to feasibility and a construction decision could, in our opinion, validate the project, the latest updated studies, and the work completed on-site, while offering Seabridge investors a chance to benefit from future potential gains if a positive construction decision is reached.

Siperco rated the stock as Outperform, Speculative Risk, based on the expectation that a partner will be found and a feasibility study will further confirm KSM's economic potential.

His US$40 price target reflects a 50% discount to RBC's NPV8% estimate of US$8.4 billion for KSM, and the bank's undiluted US$8.9 billion sum-of-parts NAV at the RBC price deck (US$2,600/oz Au/US$4.00/pound Cu long term). "At spot prices, our NPV for KSM would increase 70% to US$15.2 billion," Siperco wrote.

Taylor Combaluzier from Red Cloud Capital Markets reiterated the firm's Buy rating on the stock on August 13, setting a target price of CA$56.95 per share.

On August 12, Mike Kozak, an analyst with Cantor Fitzgerald, released an updated research note on the company regarding Seabridge's drill program at Snip North at its Iskut project, which is about 20 kilometers north of KSM, Kozak noted. He maintained a Buy rating on the stock with a one-year target price of US$37/CA$46, representing a return of more than 100% from the price at the time of writing.

Dave Storms from Stonegate Capital Partners reported on September 14 that as of the second quarter of 2025, Seabridge Gold maintained a robust financial position, with cash and cash equivalents totaling CA$121.4 million. This was strengthened by a US$100.2 million equity financing in February 2025 and a CA$30.5 million flow-through financing in June 2025. Seabridge's operating expenses are primarily directed towards advancing KSM and exploration activities at its Iskut, 3 Aces, and Snowstorm projects. Additionally, Seabridge renewed its US$750 million base shelf prospectus and US$100 million ATM facility in early 2025.

According to the analyst, KSM is the world’s largest undeveloped gold project and the third-largest copper development resource. The 2022 Preliminary Feasibility Study (PFS) outlined a 33-year mine life with an all-in sustaining cost (AISC) of US$601/oz, net of copper credits, and an initial capital expenditure of US$6.43 billion. The project received its Substantially Started Designation (SSD) in July 2024, securing its Environmental Assessment Certificate for the project's duration. Near-term objectives include completing the KSM Site Investigation Program in the second half of 2025, supporting a future Bankable Feasibility Study (BFS), and advancing the ongoing joint venture process with a target for KSM partner selection by the end of 2025.

The Catalyst: Gold's Shine Dims, But Experts Say Rally Not Over

Gold prices climbed on Wednesday, rebounding after recent declines, in anticipation of a Federal Reserve rate cut expected later in the day, according to a report by Peter Nurse for Investing.com on October 29. At 9:15 a.m. ET spot gold increased by 1.6% to US$4,017.52 per ounce. The precious metal dropped sharply in the past few days, hitting its lowest point since early October.

The U.S. Federal Reserve is set to conclude its two-day policy meeting and is widely expected to announce a 25-basis-point interest rate cut, Nurse wrote. Although lower interest rates typically bolster gold, investors are particularly focused on the forward guidance from policymakers, especially since the U.S. government shutdown has left investors without a clear view of the state of the U.S. economy.

If Fed Chair Jerome Powell indicates that further cuts might be postponed or that inflation remains a concern, higher real yields or a stronger dollar could reduce gold's attractiveness, Nurse said.

Gold had hit a new record of $4,381.21 per ounce on October 20, an almost 10% decrease in less than 10 days, Matt Richardson wrote for CBS MoneyWatch on October 28.

This drop is attributed to several factors influencing gold prices, including reduced geopolitical tensions amid ongoing trade negotiations, Richardson said.

"But it's also important to note that, historically, gold prices only rise over time and that drops in the price, while inevitable, usually come right before the next surge," the author wrote. "So, investors who haven't yet got started with the metal should be strategic in their approach now."

The rally may not be over, as most major banks remain optimistic about gold's future.

JP Morgan analysts reaffirmed their positive outlook for gold, forecasting that prices could average US$5,055 per ounce by the fourth quarter of 2026, as reported by Reuters on October 23.

In addition, Bank of America maintained a long position with a target of US$6,000 per ounce by mid-2026, Ali's article noted.

Ownership and Share Structure¹

Management and insiders own approximately 3% of the company, including the CEO Fronk, who owns 1.22%.

Institutions own about 56% of the company. Friedberg Mercantile Group Ltd. owns 16.08%, Van Eck Associates Corp. owns 2.62%, Kopernik Global Investors L.L.C. owns 7.34%, and Paulson & Co. Inc. owns 2.06%.

There are about 100.54 million shares outstanding, while the company has a market cap of CA$3.21 billion and trades in a 52-week range of CA$13.44 and CA$41.07.