KSM Mining, a subsidiary of Seabridge Gold (TSX: SEA; NYSE: SA), has agreed to principal terms of a royalty agreement under which Sprott Resource Streaming and Royalty will pay KSM C$200 million ($150 million) to secure a 1.2% net smelter royalty (NSR) from the KSM gold-copper project near Stewart, British Columbia.
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 CEO Rudi Fronk said this funding will 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.
The funds will be used to complete the switching station and related work required for connecting KSM to BC Hydro’s Northern Transmission Line for construction and operation of the mine. Access to this green energy will substantially enhance KSM’s sustainability and carbon profile.
The proceeds will also allow Seabridge to continue providing significant work at the project for companies owned and managed by its Indigenous partners, it said.
“This new $150 million in financing, coupled with the $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,” said Fronk.
“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,” Fronk added.
The KSM project is the world’s largest undeveloped gold-copper project, when measured by resources. The proven and probable reserves are 2.3 billion tonnes grading 0.64 g/t gold (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 g/t gold (88.4 million gold oz.) and 0.16% copper (19.4 billion lb.) There is also an inferred resource of 5.7 billion tonnes grading 0.36 g/t gold (65.6 million oz.) and 0.28% copper (55.1 billion lb.)
The preliminary economic assessment prepared last year outlines a 39-year operation that will need a preproduction investment of $1.5 billion followed by sustaining costs of $12.8 million. That will support a 170,000 t/d mining rate and average annual output of 368,000 oz. of gold, 366 million lb. of copper, and 1.8 million oz. of silver.
