released a prefeasibility study (PFS) and preliminary economic assessment (PEA) on its Courageous Lake open-pit gold project in Canada's Northwest Territories, reported Cantor Fitzgerald analyst Mike Kozak in a January 16 research note.
"Courageous Lake is a robust standalone project in its own right," Kozak wrote.
Return to Target: 170%
Cantor reiterated its CA$41 per share target price on Seabridge, currently trading at about CA$15.21 per share, noted Kozak. The difference between these two prices implies a significant potential return for investors of 170%.
Seabridge is still a Buy.
Kozak noted that because Seabridge is advancing its massive KSM project as well, which "dwarfs Courageous Lake," Cantor considers the latter a "free option on future upside" for the Canadian mining company.
Solid Study Results
Kozak presented the details of Courageous Lake as laid out in the 2024 PFS. The project is a 7,500 tpd (7.5 Ktpd) ore open-pit gold operation producing an average of 201,000 ounces of gold per year (201 Koz Au/year) for the life of mine (LOM), 12.6 years, plus another 250 Koz Au/year in the first five years. The average LOM head grade is 2.6 grams per ton gold (2.6 g/t Au). The payback period is 2.8 years.
Initial capex is an estimated US$747 million (US$747M). The all-in sustaining cost averages out to US$999 per ounce (US$999/oz) over the mine life, reported Kozak.
At a gold price of US$1,850/oz, these components result in an after-tax net present value discounted at 5% (NPV5%) for Courageous Lake of US$523M and an internal rate of return of 21%.
With the 2024 PFS results, Proven & Probable (2P) reserve at Courageous Lake are now estimated at 2,800,000 ounces (2.8 Moz) of Au. This is a high-grade subset of the project's 11 Measured and Indicated resource of 11 Moz Au.
Smaller Project, Better Profitability
Kozak pointed out that the new PFS is an update of the 2012 version but considers Courageous Lake as a much smaller project, at 7.5 vs. 17.5 Ktpd, less than half the previous scope.
A smaller operation shrinks the project's footprint, the initial capex needed (US$747M vs. US$1,522M), the strip ratio (7.6 vs. 12.5), the 2P reserve (33,900,000 vs. 91,100,000 tons) and the mine life (12.6 vs. 15 years), noted the analyst.
It provides a higher average Au grade (2.6 v. 2.2 g/t), a faster payback period (2.8 vs.11.2 years), and a better all-in-sustaining cost (US$999 vs. US$1,123/oz).
Overall, the end result is "significantly improved profitability of the project," Kozak wrote.
Potential Expansion Outlined
The analyst summarized the contents of the 2024 PEA for Courageous Lake.
The report outlines an open-pit expansion at Courageous Lake beyond the mine plan contained in the 2024 PFS, he relayed. This expansion would add to the project 3.3 years in mine life, 0.7 Moz Au of production and an incremental NPV5% of US$104M.
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- [Seabridge Gold Inc.] is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- [Doresa Banning] wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Cantor Fitzgerald, Seabridge Gold Inc., January 16, 2024
The opinions, estimates and projections contained in this report are those of Cantor Fitzgerald Canada Corporation. (“CFCC”) as of the date hereof and are subject to change without notice. Cantor makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; however, Cantor makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained herein and accepts no liability whatsoever for any loss arising from any use of or reliance on this report or its contents. Information may be available to Cantor that is not herein. This report is provided, for informational purposes only, to institutional investor clients of CFCC, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. This report is issued and approved for distribution in Canada, Cantor Fitzgerald Inc., a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), the Toronto Stock Exchange, the TSX Venture Exchange and the CIPF. This report is has not been reviewed or approved by Cantor Fitzgerald & Co., a member of FINRA. This report is intended for distribution in the United States only to Major Institutional Investors (as such term is defined in SEC 15a-6 and Section 15 of the Securities Exchange Act of 1934, as amended) and is not intended for the use of any person or entity that is not a major institutional investor. Major Institutional Investors receiving this report should effect transactions in securities discussed in the report through Cantor Fitzgerald & Co.
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Disclosures as of January 16, 2024 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. (KSM and 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.