Sprott backs Seabridge with US$150M KSM royalty

Seabridge Gold (TSX: SEA; NYSE: SA), has landed US$150 million in new funding for its KSM gold-copper project near Stewart, B.C. Under a deal with Sprott Resource Streaming and Royalty, Seabridge subsidiary KSM Mining will give up a 1.2% net smelter return (NSR) royalty from the project.

Seabridge will use the proceeds to complete the physical works at KSM that will allow the provincial government to give it a designation of “substantially started.”

Seabridge chair and CEO Rudi Fronk said the funding would accomplish three objectives: earn the substantially started designation which ensures the continuity of the approved environmental assessment certificate; allow the completion of key tasks that will shorten the construction period; and make the KSM project more interesting to potential joint venture partners.

If the project is not “substantially started” by July 2026, the company’s current environmental assessment certificate will expire.

The funds will be used to complete the switching station and related work required for connecting KSM to B.C. Hydro’s Northern Transmission Line for construction and operation of the mine. Access to this green energy will enhance KSM’s sustainability and carbon profile.

The proceeds will also allow Seabridge to continue work at the project being conducted by Indigenous-owned and managed companies.

“This new US$150 million in financing, coupled with the US$225 million we raised from Sprott and Ontario Teachers’ Pension Plan last year, provide the capital we believe is needed to achieve substantially started status well before July 2026. KSM’s estimated low operating costs mean that the royalty is expected to have a minimal impact on the project’s projected financial returns,” Fronk said. “Furthermore, this funding does not require share dilution and therefore furthers our long-standing strategy of providing the industry’s best leverage to gold as measured by ounces of gold reserves and resources per share.”

The KSM project is one of the world’s largest undeveloped gold-copper projects. Proven and probable reserves are 2.3 billion tonnes grading 0.64 grams gold per tonne (47.3 million oz. contained gold) and 0.14% copper (7.3 billion lb. contained copper).

The measured and indicated resources (inclusive of reserves) are 5.4 billion tonnes grading 0.51 grams gold (88.4 million oz.) and 0.16% copper (19.4 billion lb.) 

A preliminary economic assessment prepared last year outlines a 39-year operation that will need a preproduction investment of  US$1.5 billion followed by sustaining costs of US$12.8 million. That will support a 170,000-tonne-per-day mining rate and average annual output of 368,000 oz. of gold, 366 million lb. of copper, and 1.8 million oz. of silver.