Seabridge Gold Inc

Is Iskut a Fifth Deposit at KSM?

Impact: Mildly Positive

Seabridge’s summer drill program at it's 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.

  • Another porphyry on the way? While still early days, the Iskut Property shares similarities to the large porphyries identified at Seabridge’s core KSM asset, 30km to the east. KSM hosts substantial reserves totaling 39Moz Au, 10Blbs Cu, 183 Moz Ag and 207 Mlbs Mo. Given the company’s track record of drilling and defining large porphyry systems, we look forward to the 2019 drilling program at Iskut which will be testing this new porphyry target.  
  • Porphyry-style mineralization overlying a large IP anomaly. Holes QR-18-14 and QR-18-17 drilled at Iskut intercepted chalcopyrite-pyrite-magnetite bearing porphyritic diorite clasts within a hydrothermal breccia. These breccias are understood to be diatreme(s) venting from an intrusive source. Importantly, they occur over a large IP chargeability anomaly within 500m of surface. This combination of factors suggests to us that a sulphide-rich porphyry intrusion may exist at depth. 
  • Better logistics for drilling, suggests we should quickly learn Iskut’s potential. Initially, Seabridge was targeting an epithermal system beneath the Quartz Rise Lithocap near the peak of Johnny Mountain. Results from this year’s program are pointing to a source porphyry target to the south and southwest, on the slopes of the mountain, at considerably lower elevation. This will simplify logistics and mean Seabridge can forego helicopters for drill moves and allow for a longer drilling season in 2019.
Seabridge is actively growing the size and quality of its already substantial resources. With KSM reserves alone, Seabridge is trading at US$12/oz AuEq compared to peers at US$45/oz AuEq on a total resource basis. Given the scale of KSM, and the fact that it is permitted, we believe the company should trade closer to peers. Upcoming catalysts: 1) Iron Cap resource update (H1/19), 2) Iskut exploration results (H2/19) and 3) Updated project economics (H2/19)



Seabridge Gold Inc

Iron Cap Success Should Improve Mine Economics

Impact: Mildly Positive

Seabridge has announced that it has once again extended the Iron Cap mineralization down plunge to the northwest, which is already defined a 49Moz AuEq deposit within the wider KSM property in BC. Results align with our thesis that Seabridge is in possession of a major-scale gold-copper project in a premier jurisdiction that we expect to attract major partners.

  • Seabridge delivers on 2018 exploration objectives. The 2018 exploration program that was focused on the Iron Cap Deposit has successfully extended the mineralization down-plunge from the high-grade core and tested the southern limits of the Iron Cap Deposit, as defined by a 2018 resource update. Highlights include 548m grading 1.30g/t AuEq (0.63g/t Au and 0.44% Cu) in hole IC-18-83, which exceeded the average KSM reserve grade of 0.89g/t AuEq and average Iron Cap resource grade of 0.83g/t AuEq.
  • Expansion of high-grade core should improve project economics. With permits in-hand, that allow the company to mine +2B tonnes of ore, the objective is mine the most profitable tonnes first. We would expect that Iron Cap’s growing higher-grade core may play is likely to be mined sooner and for longer than was outlined in the 2016 PEA, which we think would improve project economics, particular since it is so close to the planned Mitchell-Treaty Tunnel.
  • Another resource update for Iron Cap is now underway. We view the growth of Iron Cap as a game-changing addition to the KSM Project as increased grades in early years with minimal development capital required allows for enhanced project economics. With a high-grade core of 635Mt grading 1.34g/t AuEq at Iron Cap already defined earlier this year, we expect that the resource update currently underway is likely to enhance the already exceptional size and grade of the deposit.
Improving grade and major scale should see this project trade closer to peers. Based on KSM reserves alone, Seabridge is trading at US$11/oz AuEq compared to peers at US$45/oz AuEq on a total resource basis. Given the scale of KSM, and the fact that it is permitted, we believe the company should trade closer to peers. Upcoming catalysts: 1) Iron Cap resource update (H1/19), 2) Iskut exploration results (Q1/19), and 3) Updated project economics (H2/19)


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