Seabridge Gold Inc., which said three years ago it wanted to be bought by a larger rival, said its assets are “worth a lot more” than the 30 to 40 percent premiums other metals producers have fetched.
Chief Executive Officer Rudi Fronk prefers a joint-venture agreement to a sale of the Kerr-Sulphurets-Mitchell copper and gold mine in British Columbia or the company, he said in an interview today at Seabridge’s headquarters in Toronto. There have been 22 gold acquisitions larger than $100 million announced this year, at an average premium of 34 percent, according to data compiled by Bloomberg.
“Typically when you have an asset like this in traditional acquisitions by the majors, you are looking at a 30 to a 40 percent premium,” Fronk said. “We think that our asset base is worth a lot more.”
The project, located about 65 kilometers (40 miles) north-west of Stewart, British Columbia, has proven and probable reserves of 38.5 million ounces of gold and 10 billion pounds of copper, according to a statement May 2. Reserves are mineral resources that studies have shown can be viably mined.
KSM could operate for 52 years and would cost about $4.7 billion to start up, according to a prefeasibility study published in May. The operation may yield an average of 854,000 ounces of gold and 166 million pounds of copper annually in the first seven years of operation, Seabridge said at the time.
Seabridge is focusing on Barrick Gold Corp., Newmont Mining Corp. and Goldcorp Inc. as potential partners, Fronk said.
“They are the three that have built mines this size,” he said. “That’s our universe, and it’s with one of those companies that we hope to transact.” The project may also attract interest from large base metals producers, he said.
The company is “moving toward” discussions on joint-venture terms with major gold producers, Fronk said, declining to comment further on the status of talks or when a deal could be announced.
Seabridge wants to sign an option agreement that would allow a partner to earn 51 percent of KSM by funding and completing a bankable feasibility study and securing permitting for the project within a specified time frame. The larger partner, which would operate the project, would also be responsible for the “the first large chunk” of construction costs, Fronk said.
The company would also want an initial cash payment in return for the earn-in option, he said.
Seabridge has said since its founding in 1999 that it would not build mines itself, Fronk said. The company doesn’t hedge metal production and only buys and explores for metals in North America.
A second project, Courageous Lake, in Canada’s Northwest Territories, is 18 months to two years behind KSM in terms of permitting and engineering work, Fronk said. It’s too early to start looking for a buyer or partner on the asset, he said.
Seabridge rose 3.4 percent to C$22.26 in Toronto, the biggest one-day gain since Nov. 1.