The Gold Report - Thu, Jan 10, 2019

Company 'Positioning Itself as a Gold-Copper Developer to Watch in a Premier Jurisdiction'

Discoveries, 2019 exploration plans and financings fill the agenda for this gold explorer/developer that has the attention of numerous analysts.

Seabridge map

From new targets at prime locations to major multi-million-dollar financings, Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) begins 2019 with many projects in the works.

New Target at Iskut

In late December 2018, the company announced that summer drilling at its 100%-owned Iskut Project in northwestern British Columbia "encountered the hallmarks of a large copper-gold porphyry system."

The company zeroed in on the Quartz Rise lithocap in 2018. Specifically, it focused on testing for high-grade epithermal precious metal occurrences associated with the uppermost portion of a porphyry mineral system. The drill results indicated that most of the Quartz Rise lithocap had eroded. The company noted that hydrothermal breccia (diatreme) discovered in holes QR-18-14 and 17 confirmed that a porphyry source for the lithocap was nearby.

Seabridge Chairman and CEO Rudi Fronk noted, "We acquired Iskut in 2016 because it showed clear evidence of a large porphyry system similar in age and geology to our KSM project 30 kilometers to the east. Our view was that the Iskut porphyry was likely too deep to be our primary target and we therefore focused initially on finding a lithocap-hosted epithermal top of the porphyry system. We have since learned that this target is probably not viable in the Quartz Rise area due to erosion. However, we are very excited to find that this same erosion has given us the opportunity to explore for another KSM-style porphyry system located much closer to surface than we anticipated. This is the target we will now pursue at Iskut."

Iron Cap Extension

Meanwhile, at Seabridge Gold's 100%-owned KSM project in northwestern British Columbia, Seabridge confirmed the down plunge extension of the Iron Cap core zone. "Results include some exceptional widths of gold and copper mineralization with grades exceeding the KSM resource average," the company noted. Hole IC-18-83, in particular, returned 548 meters of 0.63 g/t gold and 0.44% copper.

During the 2018 drilling program, management assessed the impact of post-mineral intrusions on the south end of the Iron Cap deposit and "obtained data for the optimum alignment of the proposed Mitchell-Treaty Tunnel (MTT) which would transfer ore to the proposed mill."

According to Fronk, "Iron Cap has clearly become one of the best deposits in the KSM cluster, not only for its superior grade but also due to its proximity to infrastructure, which we expect will require less capital to develop than the Kerr and Sulphurets deposits, and also its size and orientation which favour efficient, cost-effective underground block cave mining."

Aside from the 10 holes drilled in the northwest plunge projection, Seabridge also has three holes in its southwest plunge projection and one more in its northeast up dip projection.

Collectively, the drill holes were designed to test down plunge and across the Iron Cap deposit.

Multimillion-Dollar Financing

In late November, Seabridge announced the closing of a $14-million non-brokered private placement.

The proceeds from the financing deal will be used to "fund general working capital requirements and the 2019 drill program at the company's 100% owned Snowstorm Project located in Nevada."

A 250,000 share option was exercised in December 2018, with the company receiving an additional $3.5 million in proceeds. The additional funds will go toward the 2019 drill program as well.

Snowstorm has all of its necessary permits. Management says the project is good to go for exploration. "A current Plan of Operations filed with the US Bureau of Land Management covers most of the property and permits a total disturbance of 200 acres."

Seabridge is on the radar screen of numerous industry analysts.

Derek Macpherson, VP of Mining Analysis at Red Cloud Klondike Strike, wrote on December 18, "Seabridge's summer drill program at its Iskut Property has identified another porphyry target close to surface. Iskut is only 30 km east of Seabridge's KSM Project which hosts four porphyry deposits with P&P Reserves of 39Moz of gold + 10Blbs of copper. These latest results support our view that Seabridge is positioning itself as a gold-copper developer to watch in a premier jurisdiction—we believe majors are taking notice."

Analyst Dalton Baretto with Canaccord Genuity, wrote on December 12, "The 2018 drilling at Iron Cap increases the likelihood of improved project economics from a resequenced mine plan. On the back of these positive results, we continue to note that a key potential catalyst for SEA's shares will be a partnership agreement with a major mining company. We reiterate our SPEC BUY rating on SEA, as well as our CA$26.00/sh target; our target remains based on 1.0x NAV, measured at Oct. 1, 2019, and is predicated on a partnership agreement being concluded."

Mike Kozak, an analyst with Cantor Fitzgerald Canada, wrote on December 12, "Iron Cap is shaping up to be the best deposit within the KSM cluster and potentially one of the most economic. . .Iron Cap is seen to require less capital to develop than the Kerr and Sulphurets deposits. Additionally, its size and orientation favours efficient, cost-effective underground block cave mining methods." Cantor has a Buy rating on Seabridge with target prices of US$19.00 and CA$25.00.

In a December 13 report, ROTH Capital Partners analyst Joe Reagor noted, "We view the drill results as impressive and believe they will drive an increased resource estimate next year." ROTH has a Buy rating and US$17 price target on Seabridge.

On the TSX, Seabridge shares currently sit at CA$16.96, while on the NYSE, the stock trades at US$12.84.

1) Nikia Wade compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Seabridge Gold. Click below for important disclosures about sponsor fees.
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