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Toronto Co. Applies for KSM Permit Extension Approval

Source: Michael Siperco 01/17/2024

Seabridge Gold Corp.’s application for “substantially started” status for its KSM project in British Columbia has been submitted, according to RBC Capital Markets.

Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) 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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( Companies Mentioned: SEA:TSX; SA:NYSE.MKT,
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