Miner Finalizes Courageous Lake Spinout, Unlocking Major Value for Shareholders

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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 the successful completion of its spin-out transaction of Valor Gold Corp., according to a June 3 release.

The transaction was executed through a statutory plan of arrangement under the Canada Business Corporation Act and became effective at 12:01 a.m. (Vancouver time) on June 3.

Under the terms of the Arrangement, Seabridge has divested its entire interest in the Courageous Lake gold project, located in the Northwest Territories, Canada, to Valor. Additionally, each existing share of Seabridge held at the close of business on June 2 was exchanged for one new Seabridge share and approximately one Valor share for every 1.957 Seabridge shares owned. Following this Arrangement, Valor now has 55,000,000 shares issued and outstanding.

The final order for the Arrangement was granted by the Supreme Court of British Columbia on May 27.

Trading of the old Seabridge shares is expected to be suspended on the Toronto Stock Exchange and the New York Stock Exchange at the close of trading on June 4. The new Seabridge shares are set to begin trading under the new CUSIP 811927102 on the TSX and NYSE starting June 5, maintaining the ticker symbols "SEA" on the TSX and "SA" on the NYSE.

Valor shares are also expected to commence trading on the TSX under the ticker symbol "VGC" and CUSIP 919921106 on June 5. The schedule for the trading of Valor shares on the OTCQB will be detailed in a forthcoming news release by Valor once the formal approval is secured.

Shareholders approved the spin-out at a recent meeting. Seabridge said 99.76% of the shares voted at the gathering were in favor of the transaction.

2026 Corporate Objectives

Seabridge Gold has been diligently working towards its 2026 corporate objectives, one of which is to secure a partnership for its expansive KSM project, following an update to its mineral resources, as noted in a May 13 release.

In its report to shareholders, Seabridge conveyed significant advancements in this area, stating, "We continue to make material progress on a partnership at KSM with our preferred partner who is now participating with our technical team to advance the feasibility program and early works construction planning while we formalize our partnership agreement."

A notable achievement for Seabridge this year is the recognition of the KSM Project as a provincial priority project by the Province of British Columbia. This prestigious designation is set to provide focused provincial permitting coordination and support, which is anticipated to significantly streamline and accelerate the permitting process.

The KSM Project stands out as one of the world's largest undeveloped copper and gold projects, boasting impressive reserves of 7.3 billion pounds of copper and 47.3 million ounces of gold across 2.29 billion tonnes.

Analyst: Move Unlocks Embedded Value

The decision by Seabridge to spin out the Courageous Lake project into Valor Gold is seen as a strategic move that could significantly unlock embedded value within Seabridge's portfolios, according to an updated research note by RBC Capital Markets Analyst Harrison Reynolds on June 1.

"With renewed project momentum and a dedicated management team, we see a path to independent valuation expansion as Valor advances the project through its own development milestones," the note said. "We estimate NAV8% at spot (~US$4,500/oz) of US$2–2.9B, implying CA$10–14/sh at 0.2x (current SEA P/NAV at spot). This implies a potential future market cap range of ~US$400-$600 million vs. our carried valuation in SEA at US$150 million (<1% of NAV) as in-situ value being de-prioritized vs. KSM. The wide range on valuation reflects a multi-year timeline to first production (earliest ~2031-2032) and the need for substantial project de-risking before a build decision."

Key catalysts moving forward include the integrated Pre-Feasibility Study (PFS) incorporating Walsh Lake by the end of 2027, infrastructure development, exploration results from both deposits, and progress in permitting, Reynolds noted. The potential of Walsh Lake is particularly promising, with an existing resource of 0.5 million ounces at 4.2 grams per tonne (g/t), compared to the total Courageous Lake resource of 14.3 million ounces at 2.4 g/t, which is non-refractory. The discovery or expansion of Walsh Lake analogues could further enhance project economics.

Company Enters 'Catalyst-Dense Phase,' Analyst Says

In an updated research note on May 27, Stonegate Capital Partners Analyst Dave Storms said the company is going through a "catalyst-dense phase as KSM partnership discussions advance alongside FS (Feasibility Study) preparation, BC permitting support, the Valor Gold spin-out, and the maiden Snip North resource."

He continued, "In our view, SA is increasingly converting embedded asset value into externally validated milestones across KSM, Courageous Lake, and Bronson Corridor."

The KSM (Kerr-Sulphurets-Mitchell) project continues to be the primary value driver for Seabridge Gold, showing potential for a near-term re-rating, Storms said.

Since the last report, the project's prospects have improved with Seabridge's preferred partner actively participating in the feasibility and early works planning, as the company progresses towards finalizing a formal agreement, the analyst noted. The focus for 2026 includes preparing for the FS, developing green power infrastructure, constructing access roads, conducting environmental work, and ensuring readiness for early works, with the completion of the FS targeted for the second half of 2027.

The spin-out of Valor Gold was overwhelmingly supported by shareholders, he wrote, noting that Seabridge anticipates distributing approximately 55 million Valor shares. This separation is expected to provide a clearer valuation reference for the 11 million ounces Measured and Indicated (M&I) gold asset at Courageous Lake, which has previously been overshadowed by the KSM project.

Beyond KSM and Courageous Lake, the Bronson Corridor is gaining significance within Seabridge's portfolio, Storms said. The initial resource estimate at Snip North revealed 9.2 Moz of inferred gold, along with additional exposure to copper and silver. The 2026 program at Snip North aims to assess its potential to evolve into a major district-scale growth driver, presenting Seabridge with a substantial second-system opportunity within its portfolio.

"When valuing SA we apply an EV/NAV range of 0.8x to 0.9x which results in a valuation of US$67.86 to US$76.85 with a midpoint of US$72.36," the analyst wrote. " When using an EV/In-Situ valuation method we apply a multiple range of 7x to 9x which results in a valuation of US$72.41 to US$94.25 with a midpoint of US$83.33."

Expert: A Long-Term Investment Perspective Needed

A recent article reviewed by Sasha Jovanovic for Simply Wall St. on May 7 emphasized the long-term investment perspective required to own Seabridge Gold, highlighting the company's potential in translating large-scale gold and copper discoveries into substantial project developments. The report identified significant near-term catalysts for Seabridge, including advancements at the KSM and Iskut projects, with developments such as the new Snip North resource, metallurgical work, and crucial permitting steps for infrastructure projects like the Mitchell Treaty Tunnels.

Additionally, the spin-out of the Courageous Lake project into Valor Gold was noted as a strategic move to streamline Seabridge's portfolio and provide shareholders with direct exposure to a standalone project, subtly altering the risk dynamics towards permitting, financing, and execution at KSM and Iskut.

Mike Kozak from Cantor Fitzgerald reviewed this strategic decision on April 27, noting Seabridge's financial commitment to support Valor Gold with a CA$10 million investment. This includes purchasing 0.7 million shares of Valor at CA$7.29 each and acquiring a 10% gold stream with a US$4,000 threshhold. Kozak views this spinout positively, estimating Valor Gold's market capitalization at about CA$400 million and suggesting that the strategy will likely deliver immediate value to Seabridge shareholders.

Kozak continues to advocate for buying Seabridge stock, setting a target price of CA$66 per share, which implies a potential 119% return.

He praised the strategic decision to spin out the Courageous Lake project, emphasizing its expected beneficial impact on shareholder value. The updated 2024 Pre-Feasibility Study (PFS) for the project outlines a scaled-down, less capital-intensive operation with an annual gold output of 201,000 ounces and an All-In Sustaining Cost (AISC) of US$999 per ounce over a 13-year lifespan. The revised plan includes a processing plant with a capacity of 7,500 tons per day and an initial capital cost of US$747 million. The project's economics project a post-tax Net Present Value (NPV) at a 5% discount rate of US$523 million and an Internal Rate of Return (IRR) of 21% at a gold price of US$1,850 per ounce.

Additionally, RBC Capital Markets, through Analyst Josh Wolfson, rated Seabridge stock as Outperform with a price target of US$71 per share. B. Riley Securities Analyst Nick Giles has also given Seabridge a Buy rating with a target of CA$65, forecasting a 44% return at the time of his analysis.

The Catalyst: Gold Middle East Events Give Gold Room to Breathe

On Thursday, gold prices saw a notable increase, with spot gold rising by 1.6% to US$4,505.12 an ounce and gold futures climbing by 1.5% to US$4,533.72 an ounce as of 9:15 am ET, according to Scott Kanowsky from Investing.com. This surge in gold prices was primarily driven by a decrease in crude oil costs, which fell following the announcement of a ceasefire agreement between Israel and Lebanon. This development alleviated concerns about rising inflationary pressures and contributed to a weakening of the U.S. dollar, making gold more affordable for international buyers and potentially boosting demand.

The ceasefire has also reignited hopes for a broader peace deal in the Middle East, especially between the U.S. and Iran. The stability in Lebanon is seen as crucial since the U.S.-Iran agreement depends on the cessation of hostilities in the region, where U.S.-aligned Israeli forces and Iran-backed Hezbollah militants have been engaged.

Further influencing the gold market, oil prices dropped more than 3% due to the positive developments in the Iran conflict, as reported by CNBC on June 4. The easing of the dollar by 0.3% also made gold priced in the U.S. currency more accessible to buyers using other currencies. Additionally, a drop in U.S. Treasury yields, including the 10-year note, enhanced gold's appeal as a non-yielding asset.

Independent metals trader Tai Wong commented to CNBC, "Record highs for gold this year seem increasingly unlikely unless we get a clean, lasting ceasefire with Iran that opens Hormuz, allowing energy prices to drop and markets to stop worrying about potentially higher rates."

Gold, traditionally viewed as a safe-haven asset, reached a record high in January but has declined by 16% since the onset of the Iran conflict in late February, pressured by high interest rates during this period.

Investors are now turning their attention to the upcoming release of the U.S. employment report for May, scheduled for Friday. This report is expected to provide valuable insights into the current state of the labor market, which could influence the Federal Reserve's future monetary policy decisions.

Ownership and Share Structure¹

Management and insiders hold approximately 2% of the company, while institutions own about 59%. The remainder is held by retail investors.

Friedberg Mercantile Group Ltd. holds 15.08%, Kopernik Global Investors L.L.C. holds 10.26%, Pan Atlantic Bank and Trust holds 9.92%, and Van Eck Associates Corp. holds 6.07%.

There are around 107.62 million shares outstanding, with the company having a market cap of CA$5.13 billion and trading within a 52-week range of CA$17.35 to CA$54.29.