The broadcast is now starting. All attendees are in listen-only mode.
Thanks, everyone, for your participation. We're pleased to host Rudi Fronk, the Chairman and CEO of Seabridge Gold, and Ryan Hoel, the President and COO, who's been working around the clock to substantially start the construction of KSM and maybe do the next couple of phases that Rudi hasn't announced yet, as well as working on the five satellite projects. Rudi, please bring us up to speed.
Okay, thanks, John. Just kicking off here. Appreciate the opportunity, John, to spend time with you and also to people that are signed in on this. It's hard to believe, John, that 12 years have now come and gone since you came to KSM many years ago before any of this real infrastructure was in place. I think when I share some of the photos with you here in terms of the work we've done over the past few years, you'll see a project that has really advanced a long way since your site visit back in 2013. Just a reminder that I will be making forward-looking statements during today's presentation. Yeah, so we're now coming on our 26th anniversary of starting Seabridge. We kicked the company off in October of 1999.
I've been the CEO of the company ever since then, and Ryan joined us a few years ago initially to kick off the work at KSM in terms of substantially starting construction activities. Ryan has a long history of working with large projects and large mining companies. One of the guiding principles we followed from day one was to try and minimize political risk by focusing in safe jurisdictions. Jurisdictions really matter, as you know, John. If you do not believe me, go ask First Quantum how they're getting on in Panama or Barrick how they're getting on in Mali. All of our assets are located either in Western Canada or the Western United States.
We have two significant assets, KSM and Courageous Lake, which collectively give us over 50 million ounces of proven and probable gold reserves and gold resources of about 175 million ounces of gold, and three earlier stage projects, Iskut, Snowstorm, and Three Aces. I'll spend most of the time today on Courageous Lake. The other guiding principle we followed from day one was to try and create optionality and leverage the gold price through a simple concept of growing ounces in the ground of gold faster than shares outstanding. The thought being that the more gold we can provide our shareholders on a per-share basis, the better our share price should do if we're correct on calling for higher gold prices. If you look at Seabridge today, we have far more gold ownership per share than the leading gold companies.
In fact, 5 times-50 times more gold reserves or gold resources per common share than the leading gold companies. What this has led to was what we were hoping for, and it is significant outperformance in our share price relative to the gold price. If you look over the past 26 years since we launched the company, the gold price is now up about 1,000%, and our share price obviously has outperformed that over the long haul. Yes, there are periods of time when our share price underperforms the gold price, like most gold companies have over the past few years, but over the long haul, we have delivered on the concept of optionality and leverage.
People buy a share of a gold mining company with the expectation if the gold price is up by 10%, the share price of that company should be up by more than 10% because of operational leverage. However, if you look at how the large gold companies have performed relative to the gold price over the past 26 years, they have not delivered those types of returns. For example, gold up 1,000%, Barrick up only 28%. Gold up 1,000%, Kinross up 133%. Gold up 1,000%, and Newmont up less than 200%. The one company that seems to get it right in terms of providing that optionality and leverage and outperforming the gold price is Agnico Eagle.
I think if you take a look at the reasons why we think this is happening in terms of this underperformance, we think that the larger gold companies have lost sight of the concept of per-share metrics. They've all gotten bigger since the global financial crisis in 2008 in terms of their share count going out and doing large acquisitions. Yet if you look at their reserves or their production on a per-share basis as a result of that dilution, they have destroyed shareholder value. This is why we think speaks to why the big companies have underperformed the gold price, whereas companies like Seabridge and Agnico Eagle, I think, have focused on the idea of per-share metrics.
At this point in time, I do not think there is a lot of CEOs of gold mining companies, especially gold development stage companies like Seabridge, where their CEOs are happy with their share price performance given where the gold price is. This is a chart that shows the ratio of the GDX relative to the GLD over the long term. As you can see here, we are trading close or near to bottoms in terms of the relative value of gold mining stocks relative to the gold price. We believe that this is connecting. It is starting already, we believe. I think a lot of this has to do when you look at the buyers or the investors in the gold space right now, their central banks, their sovereign wealth funds, their family offices that are buying physical gold. They are not purchasers of mining stocks.
That is why the gold price has risen with gold equities not performing what you would expect as the gold price has gone a lot higher.
Rudi, if I could interject.
Yep.
At 4:00 P.M. yesterday, we hosted a quarter billion dollar royalty company called Elemental Altus.
Yep.
They said that after the close, Tether Investments, a crypto company, bought out their two largest shareholders and owned 47%.
Wow.
The crypto company owns physical gold, owns treasury bonds, and bought 47% of a respectable royalty company as though they know crypto is bullshit.
That's very interesting, John. I have not heard that.
In support of your argument, I agree that gold shares are understated. As a footnote, I would use XAU or HUI in this chart. I think GDX and GDXJ had their own specific issues and did worse than a lot of things in gold.
Fair enough. I'll rerun the chart at HUI because I think the HUI was around back then as well, where some of these indices are fairly new.
XAU was the first one.
Yeah.
In the S&P Gold Group, but now there's only Newmont in the S&P, so that's not so good.
Yeah. Look, I speak to a lot of people looking at investing in gold, and if I go across the U.S. right now and elsewhere, in the West, typically in my career, exposure to gold would be 2%-2.5%. Today, if you look at large pools of capital like pension funds and others, the exposure to gold is less than one half of 1%. The Western investor is not yet here. We think that's changing. When they do come back and want exposure to gold, they're the types that buy mining stocks. I think you should see a reconnection of gold equity valuations to where they should be given gold above $3,000 an ounce. John, I love the back and forth, so please feel to jump in anytime you want. So we.
I don't think the top in gold or gold stocks occurs until Bitcoin and these crypto things melt down to nothing.
Okay. From your lips to God's ears. We talk a lot about our gold, and clearly we have tremendous gold reserves and resources, but along the way, we also found a lot of copper. If you actually ignore our gold, our silver, and our molybdenum, and just look at our copper reserves or copper resources, we actually have more pounds of copper per share than the leading copper companies. I am bullish on gold clearly, but I'm also bullish on copper as we go forward because of what's going to be needed in terms of supply, where it's very difficult to get new supply online because of delays in permitting and opposition to big mines. It's a KSM. KSM is a project that we've been working on now diligently ourselves since 2006. We purchased this project from Placer Dome in the year 2000.
Placer Dome had spent $25 million at KSM finding the Kerr deposit and the Sulphurets deposit. In the year 2000, they sold it to us for $200,000. If you fast forward to today, we have now spent over $1 billion in advancing KSM to the point where today KSM is the largest undeveloped gold project in the world if you just look at gold reserves and resources. If you ignore our gold and just look at our copper, it is actually the third largest copper project in the world today as well. Having the benefit of both gold and copper also gives the project a lot of optionality where this project could work to a gold company or to a copper company.
I'll spend some time on that looking at the optionality that exists in terms of how you may want to sequence this project as you move forward. Project located in the Golden Triangle in an area that's now becoming a hotbed of activity by not just the juniors, but also the large companies. Newmont came into this area in a big way when they purchased Newcrest, which gave them 100% of Brucejack and 70% of the Red Chris mine. They already had owned 50% of the Little Sprott asset. Our work at KSM has been on the initially exploration, then engineering, and then permitting. This is one of the few large projects in the world that actually is permitted. In fact, as you'll see, we've done a lot of construction already under the permits we have.
To get to where we are today, we work very hard to get the support and the approvals of the Indigenous people around the project. We have fully baked Impact Benefit Agreements in place with the Nisga'a Nation and the Tahltan Nation. On top of that, the Gitxsan Nation continues to support the project as we move forward. We've made it very clear that this is a project well beyond our capabilities. It's going to require a major mining company in through a partnership to develop this asset. We're not equipped to build and operate a mine the scale of KSM. As a matter of fact, there's very few companies in the world today that probably could. I would say that the list is for less than 10.
Over the past several years, we've been advancing the project and de-risking the asset to get to the point where we can get a joint venture done. We think that everything is now lined up for us to get that deal done. Over the years, we've continued to improve the project by adding resources either through exploration or acquisition. We've updated pre-feasibility studies and engineering studies along the way, and we've continued on working with First Nations on activities at the project. Probably the big success we had over the past year was getting the substantially started designation from the BC government, which now ensures that the approvals we have at the project are good for the life of the project. The last box to check here is a joint venture partner.
I'll spend some time in a couple of slides, we're well on our way in moving that forward and expect to have that done. Our partner announced before the end of this year.
I'm sorry, you said a partner for KSM.
Partner for KSM, correct.
Rudi, it would seem eminently logical that Newmont would be your partner because of Brucejack, Red Chris, Galore. Also, they bought out GT Gold a couple of years ago, so it is a fourth asset in the Golden Triangle.
Yep. John, obviously, they'd be on the list of a potential partner, as would a few others. It's up to them to come to the table and agree to.
Brucejack has a lot of infrastructure, but they're more copper than gold. I don't think they'd mind 175 million ounces.
Yeah. Let's see where we get to. I can't speak specifically on companies. What I will say is that we did a financing earlier this year to continue to advance the project for the next step of final feasibility study. We raised $100 million US in that financing, and $20 million of that was taken down by a strategic investor who is not just there with money. It's there as someone that's aligned with us to move this project forward towards a construction decision. When we bought this project from Placer Dome, there was very little infrastructure in place. That's all changed. We now have a major highway just to the east of KSM, Highway 37. Along that highway, the government has now built the power line, the Northwest Transmission Line.
From that power line now, we've secured 245 MW of power from that line at a current tariff of about $0.05 per kWh , some of the cheapest power in the world. Last but not least, to the south of us are two port facilities, one that's been there for a while servicing Red Chris and a new one that's been built over the past few years that's waiting for an anchor tenant. We believe that KSM will become that anchor tenant as the project moves into construction and production. Having access to roads, ports, and power are a big plus for the project. The project itself, it really is a district. We have five separate deposits at KSM. Kerr and Sulphurets were known when we bought the project from Placer Dome. Mitchell, we found in 2006 with the first drill program.
We found Ironcap in 2010, and we purchased the East Mitchell deposit from an ex-dorm neighbor, Pretium, in 2020. After we acquired East Mitchell from Pretium, we then moved forward to show how the project would improve from a construction and operation and economic perspective by integrating East Mitchell into the mine plan. Now, what's unique about KSM is we have 12 billion tons of economic resources contained in those five deposits. As we went through the environmental assessment process, however, right now, we're only permitted for 2.3 billion tons of tailings. We have now developed an initial mine plan here focusing on open pits at Mitchell, East Mitchell, and Sulphurets that basically captures 2.3 billion tons of material from those three deposits, which fills up the permitted tailings capacity we have. We did an updated pre-feas in 2022 after we purchased East Mitchell.
That study was done at $1,740 gold and $3.50 copper. That project back then showed a mine life of 33 years, averaging over 1 million ounces of gold production a year and about 178 million pounds of copper a year. That project back then, using those metal prices, had an all-in cost of production of about $600 an ounce, which included the upfront capital of $6.4 billion, the sustaining capital, the closure cost, and the reclamation cost net of copper and silver credits. What the market has not yet fully comprehended is how much better the project is today relative to what it was in 2022 just as a result of the increase in metal prices. I reran the numbers here recently using spot gold at $3,400 and copper at $4.50.
We can see a significant increase in the NPV going from $8 billion to $23.5 billion, the IRR going from 16% to nearly 30%, and a quick capital payback of less than three years with an initial mine life of 33 years. What's also interesting is if you look at, because we're mining some better grades right out of the gate at KSM, at Mitchell and East Mitchell, in the first five years of mine life or first seven years of mine life, we're averaging about 1.4 million ounces of gold a year and 250 million pounds of copper, well above the average over the 33 years. If you look at the projected cash flow, the EBITDA over the first five years of mine life, back in 2022, we were looking at an EBITDA of about just over $12 billion.
At today's metal prices, over that same time period, it's over $25 billion. Yes, this has high capital, $6.4 billion, and probably the capital has increased. That's a 2022 number. Even if you take much higher capital numbers into the project, the project still has very high NPVs, very high internal rates of returns, and very quick paybacks. This is one of those few projects out there that could withstand increases in both capital and operating costs without really damaging the economic viability of this project. One other thing I'll point out is that this mine plan excludes the two higher-grade copper deposits at the project, namely Kerr and Ironcap.
We've now run independent mine plans showing that if you bring Ironcap and Kerr into the mine plan, you can build a mine here that's going to go on well beyond 100 years, and all five deposits can be mined as open pits at very low strip ratios. This, again, is the optionality. If you want to focus on copper, change your mine plan and bring Ironcap and Kerr forward in the mine plan. If you want to concentrate on gold, that's what we have in our pre-feasibility study. One of the last big de-riskings that we went to get accomplished was the idea of getting substantially started. KSM was initially approved in 2014, and those permits were set to expire in July of 2026.
You can imagine that any large company looking at KSM as an opportunity would have concerns about the permits basically expiring in a short few years. Fortunately, in British Columbia, there is a concept known as substantially started that if we were able to get that designation, the permits do not expire, but they are then good for the life of the project. In 2021, we decided as a company to go out and start work here to get that designation. We knew that was going to cost a lot of money to do that. We estimated that from beginning to end, it was probably going to cost about CAD 500,000,000 of work to get to that designation. Had we done a traditional equity raise at the time, we probably could have given our shareholder base. It would have been about 25% dilution to our shareholders.
Instead of that, we found a very creative way of funding substantially started activities without any upfront equity dilution. We have used now secured notes in two tranches. The first secured note was sold for $225 million cash to Ontario Teachers' Pension Plan and to Sprott Royalties. That gave us the kickoff to start work at the project. In 2023, we went back and raised another $150 million with a second secured note. The great thing about these notes is, John, they do not get repaid. They convert into royalties automatically at commercial production. The first note converts into a royalty on 60% of the silver. It sounds like a big number, but recognize that silver represents far less than 3% of the project's revenues in most of our mine plans. The second note converts into a 1% NSR on all metal production at KSM.
This choice of using secured notes as a way of funding substantially started was much better than going out and diluting our shareholders through a large equity deal.
Just to make sure I understand, from the standpoint of the investor in the secured note, if you never reach production or somehow bankrupt, they're first in line.
Correct. Yeah, they are first in line, which you would expect them to be based on the dollars.
They are rooting for you to produce a lot of gold and for them to earn big royalties.
100%. I meet with Teachers and Sprott on a very regular basis. They're definitely cheering for us. Obviously, they want to see this project because if you look at the value of the royalties today, John, versus when we struck the deals in 2022 and 2023, if I were to go out and sell a 1% royalty at KSM today, I can get far more than $150 million U.S. just because of what metal prices have done. Understand that these royalties are worth a lot more than when we priced the deal back when we issued the notes. Again, it allowed us to do the work necessary to get substantially started, which we did finally receive in July of last year. In January of 2024, we filed our formal application with the BC regulators.
It was also filed alongside with all of the First Nations that were involved in the process. Along with our application, we had very strong letters of support from the Tahltan Nation, the Nisga'a Nation, the Gitxsan Nation, the towns of Stewart, the towns of Terrace, the towns of New Hazelton, the towns of Smithers. After doing their work to determine whether we achieved substantially started, the government on July 25th granted a substantially started designation. From that point in time, our shares went on a tear. Our shares were then up more than 100% from where they were earlier in the year, rising to over $20 and about CAD 28. Unfortunately, two petitions have been filed against the substantially started designation.
The first petition was filed by a group called the Tisao Atskika Maha, which is a band of 30 individuals that are theoretically part of the Gitsan Nation, but they're acting as their own First Nation. They were claiming that the decision of the government granting a substantially started was unreasonable and that the government did not properly consult with them during the process. A week after the Tisao Atskika Maha filed their petition, two other NGOs, Skeena Wild and also Sedec, which is a group that represents 15 different tribes in southeast Alaska, filed a second petition claiming that the decision by the government was unreasonable. We have now filed our responses to these petitions. The government has filed theirs.
If you spend the time to look at the responses by both the government and Seabridge, you come away saying, "Wow, Seabridge and the government bent over backwards in trying to consult with this group over the review period," as we have been doing now for 15+ years as we've been engaged with the Tsetsaut Skii km Lax Ha and others. Again, just to put it in context in terms of size, the Tsetsaut Skii km Lax Ha, on their website, they have 30 members. The Nisga'a Nation, the Tahltan Nation, and the Gitxsan Nation combined probably have over 20,000 members. Those three larger First Nations support the project and the substantially started designation. We now have a court date set for the end of September.
To summarize, there's multiple tribes or fragments of tribes that may have crossed the land over the last hundreds of years that claim a pot of gold and want to participate or oppose.
They're conflicting.
The First Nations are not homogenous. There are many, and in the Canadian system, they all have standing.
Yeah, Ryan, maybe you want to handle this one.
Yeah. So John, with the KSM property, where it's positioned, right, there's actually five indigenous groups working with the government that have been identified that we consult with, right? Kind of back to your comment, from time immemorial, thousands of years, yes, the different indigenous partners have lived, worked in the area. There is overlap. One of the things that actually was pretty special about the Treaty Creek that runs through our property, it comes back to a treaty that was signed between the Tahltan Nation and the Nisga'a Nation back in the 1800s. One of the things that they've recently formed in February of 2023 was the Treaty Creek Limited Partnership, a joint venture partnership between the two largest indigenous groups that have.
Which support?
What's that?
That support you.
That support us, right, that support the KSM project, the two largest Indigenous groups that are active in that area. They want to see the benefits, and they want to coordinate and work together as the two nations together to mutually get to see the benefits come out of KSM. There are five groups that we actively work with. As Rudi said, we've been working with them for 15+ years on that. Yeah, we have out of the five, right, we have this one that has obviously filed a petition against us.
I think if you do read through the paperwork, as Rudi said, you'll clearly see that, yeah, we have been fair and reasonable in working with them around one from the Environmental Assessment back when the Environmental Assessment was being processed through to also working with them in the substantially started window from 2021 through 2024.
Yeah, more than 50%.
Ryan, you do not know me well, but every August, I am indigenous, and I go to the village in Greece that my father left 105 years ago. There is no special benefits. I have the privilege of being draft eligible for 99 generations. The beach was mined when I went there in 1981, seven years after the Turkish invasion of Cyprus. It is a four-mile swim to Asia Minor. Erdogan gives speeches wanting to take the eastern half of the Aegean. If they landed on our island, they would land on the beach I say. Those are my privileges of being indigenous. There is more respect in Canada.
No, there is. Look, there is huge mutual respect between ourselves and the First Nations that we're close with, the Tahltan, the Nisga'a, and even the Gitxsan hereditary chiefs we're very close with. It's unfortunate we have this one splinter group, the Tsetsaut Skii Km Lax Ha, that put this petition in. We're very confident in our position here that when a judge looks at this, he will come to the realization that not only did the government do the right thing in granting it, but they also duly consulted with the Tsetsaut Skii Km Lax Ha during the entire process and, in fact, consulted with the Tsetsaut Skii Km Lax Ha over this 15-year period since we started the environmental assessment process in 2008.
You are not the only company that encounters fragmented and dissident First Nations. Is there a procedure either in the province or the federal government to manage dissident First Nation, like to count the ones with the most heads or something like that or vote?
Not that I'm aware of, John. I wish there were. I do know that the Tsetsaut Skii km Lax Ha a few years ago put in a very, very big land claim in the Golden Triangle, basically claiming that a big portion of the Golden Triangle was exclusively their land. The government did look at that claim and came to the realization, no, this is a shared territory that involves both the Nisga'a and the Tahltan and the Tsetsaut Skii km Lax Ha. That was a big loss for them. That's the only process I know that a government has been looking at in terms of these overlapping claims that happen all across Canada. They're dealt with, unfortunately, one by one. Probably each province has a different procedure to go through to get that.
I've been reading the Yukon Daily News since the Victoria Gold tailings wheat pad collapse a year ago. The local First Nation covers almost half of the territory and seems to be the biggest political voice. It's amazing to me how much political influence the First Nations have in Canada, more so than the Sioux or the Apaches or they have in America.
No question about that. No question about that. John, maybe just I'll run through a few of the photos here just to kind of give people that are participating here just a sense of the amount of work we have done here to get this substantially started designation. John, when you were there, we did not really have a camp. We have now built a large camp right off of Highway 37 that gives us 210 beds. This is probably a better photo of the camp there, three branches that come out, a state-of-the-art camp. Each room has its own big screen TV and ensuite bathroom. You have to build camps like that to attract people.
Dealing with water at the camp, we built a state-of-the-art water treatment facility to make sure that as water is discharged back into the environment in high water flow times, that we're at or below code. I think the big part, though, of substantially started activity is focusing on the power. The power at KSM is really what drives the economics far more than anything else. Being able to buy hydro power off the grid that's right there. You can see here in this photo, if you look towards the behind the trees there, you actually can see the Northwest Transmission Line that's built. This is the switching station that BC Hydro is building for us. They're actually using our camp now at Camp 11. A lot of this work is being done through the Treaty Creek Limited Partnership between the Niskan Nation and the Talatan Nation.
As you can see here, a big advancement in terms of being able to tie into this power grid. As a result of the investment we've now made with BC Hydro and the work that's being done now and will be continued to be done throughout this year, we'll have line power available to us at KSM sometime in early 2027. As we continue to advance the project, being able to switch off diesel gensets and into line power will be a big plus for this project.
How many millions of dollars a year will you save when you're on line power?
Oh, I have to go back and look at that, but good question.
Closer to 10 or closer to 25?
Probably even more than that. $0.05 per kWh . If we were to build a diesel plant or a coal-fired plant or a gas plant here, you're probably looking at $1 billion plus of capital we do not have to spend. More importantly, you're looking at operating costs there of $0.15-$0.20 per kWh , three to four times what we'll be buying power for right off the grid here. As you know, power is a big part of operating costs here at the project. We'll run that number for you, John, and let you know what we're saving there relative to other sources of power that we do not have to put in.
Roads, we've now done a fair bit of roadwork coming off of Highway 37 past our camp up to where the tailings and mill facility will be located, and then also starting the Coulter Creek access road that comes down from the old SK Creek Mine Road down to the south that will give us access to the five deposits. We continue to do pioneering of roads out in front of us. This is where the line will come in to provide power to the mill site and the tailings facility. A big part of our work over the past few years was dealing with fish habitat. In Canada, if infrastructure will impact and destroy fish habitat, you need to build offsetting fish habitat.
We have a number of sites that's part of our environmental assessment plan here that will be built over the construction period for this project. We've now completed.
You're cleaning up sulfides and acid runoff. I remember being on site where the glacier had melted and exposed a big sulfur rock. You look down at the creek or the river, and there was like a yellow line where the sulfur water merged in with other water.
Yeah.
Why aren't you being celebrated for saving the day?
A lot of the indigenous groups, environmental groups that come in and see this, are actually surprised that a mining company is doing this well in advance of a construction decision for the overall mine. You're right. Water is a key issue here. You have to deal with water. On the mine side, we're going to build a large water storage dam that'll basically allow us to discharge water that's running over exposed porphyry now. As you mentioned, that runoff that was coming down from the Mitchell Glacier there, that was running, I think, at pH of two or three. That was going into the Unuk River and obviously impacting fish habitat there. This project will actually improve the water that flows out of the project from a natural sense right now by building the water treatment facility in and around the water storage dam.
This is on the tailing side of the project, the fish habitat here. This now is fully operational. We spent a lot of time on this working with First Nations. This was another big part of our substantially started activity. We have two big river crossings at the project. One is across the Bell Irving River. This is one that goes right to Highway 37 and right to where we're building the switching station. We've completed our first bridge there. This will remain for the life of the project. This now gives us access from the project down to the town of Stewart by road, which is an important aspect of the project because that's how we'll transport concentrate from the mill down to the Port of Stewart.
When you look at all the work we've done here, we are very confident that this project is substantially started. We've spent far more money than any other company that has achieved substantially started. More to the point, we also have the support from so many different groups that are supporting this project and the designation the government grant us. Hopefully, we'll get this resolved before the end of this year. As I said, we now have our court date set for late September. Hopefully, the judge will come up with a timely decision, and we can move forward on this.
Worst-case scenario, John, is the judge goes back and says, "We'd like the government to reassess the substantially started designation," which would then give us a chance to refile an application and take into account the work we did beyond 2023, which is a large dollar amount, again, focusing on the power. They could come back and say, "We just want you to recommit and reengage with the First Nations." We do not think that's likely when they look at the facts here. The worst-case scenario is not canceling substantially started. It is just going back and asking the government to perhaps reassess or to go in and ask the government to reengage with the First Nation, with the Tisao Atskika Maha. I think when you look at the work we did through that and then beyond that, we're in a pretty good position.
The question I always get asked is, "You've been talking about a joint venture for more than 10 years. Why hasn't it happened yet? What's delaying the ability to get a joint venture done to bring a major mining company as a partner?" We started joint venture discussions in 2012 after we completed a pre-feasibility study on the project. That pre-feasibility study was then used to apply for the environmental assessment certificates. Right out of the gate, there was a lot of skepticism by the big mining companies whether we can get this project through the environmental assessment process. That kind of delayed any progress in terms of getting a joint venture done. We did get the environmental approvals in 2014, both provincially and federally. Joint venture discussions then picked up again following that.
By 2015, there was a big collapse in the gold market. The gold price had gone from $1,900 down to $1,050. The big gold companies were focusing more internally in terms of selling non-core assets as a way to pay down debt. They were not doing big deals. The market got opened up again in 2018. Gold had recovered. Copper price was doing well. We actually had received a number of proposals on joint ventures back then. One of them was a fully negotiated joint venture with a major mining company. As we were moving forward with that transaction, they then wanted to renegotiate some key specific terms, mostly because the copper price had fallen completely out of bed. That kind of stopped discussions back then in terms of the market environment for copper. We then moved forward in 2019.
Dialogue continues again in a big way. In fact, we had two big mining companies working as a syndicate promising us a proposal in a short period of time. We were sitting with them in the BMO conference in February 2020, waiting for our proposal to come in. COVID hit. The world shut down again. Big companies were not doing big deals. They were focused on protecting their employees and their own operations. Another issue we were facing coming out of that was our original pre-feasibility study at KSM involved both open-pit mining and underground block caving. Unfortunately, very few companies have block caving experience to the scale we were looking at. We had a lot of also pushback in terms of some of these big companies not really comfortable with block caving.
That's when we went out and decided to improve the project, get rid of the block caving for at least the first 30-some odd years by acquiring East Mitchell. We then did the updated pre-feasibility study showing a much more robust project, open-pit only for 33 years at a strip ratio of about 1:1. We then moved into joint venture discussions. We've now been running a formal joint venture process for a couple of years being led by RBC Capital Markets. What I will say is after we got substantially started, that was the last de-risking, I think, to get the deal done. We then moved forward with what we call three finalists and discussions. We're now at a point where we believe the window is now open. The big companies need new projects.
The elephant in the room is that they're running out of reserves. A project like KSM, with its location in a safe jurisdiction, a project that's fully permitted, a project that has tremendous capital efficiency, a project that pays back its capital in less than three years on a mine life that you can play out well beyond 70 years if you choose to go after more of the material that's not in our current mine plan, we think now is the time to get a deal done. In our recent financing, we had a strategic investor come in and invest $20 million into the company as part of that financing. Unfortunately, we're not allowed to name who that strategic investor is, subject to confidentiality. We agreed with them. What I will say is the strategic investor is not just money.
It's not private equity. It's somebody that's aligned with us to move this project forward from where we are today through bankable feasibility and then to a construction decision. We like to say the window is now open. We've done all the de-risking that we can. Looking back on the starts and stops we've had over the past decade plus, we think we're now finally at a point where we can get that deal done.
Rudi, I do not think you should apologize. I think you are better off because the prices of gold and copper have risen over a decade. You are not doing your deal at $1,250 gold and $3 copper.
Agreed.
If you received a royalty, a revenue royalty without exposure to CapEx and OpEx, clearly you would be better off.
Look, there will be a great outcome. That's obviously on the table. Probably not as likely with a gold company, but more realistically with a copper company that's willing to give up some upside, perhaps in the form of a gold stream back to us as part of our interest in the project going forward. Look, our goal in joint venture is number one, to find a partner that has the technical, financial, and social wherewithal to build and operate KSM. That's a small starting point right from there. Also to find a partner that's willing to leave us with a meaningful interest in the project. And then also find a partner that's willing to do most of the heavy lifting on the construction and the funding of the joint venture. What we have in front of big companies now is a two-phased- earn-in for them at KSM.
Phase one is for them to come in and sole fund and complete bankable feasibility. We've already started a lot of work to be in a position to do that. Matter of fact, a big part of this year's fundraise was to collect the final data that's necessary for a bankable feasibility, as well as to do value-add engineering that as we move into final feasibility, we're aligned in terms of what the project will be designed at. For that initial investment, they will earn a minority interest in the project. That kicks off phase two, which is for them within an agreed period of time to go out and make a construction decision, go out and secure at least 50% of the project's capital to the benefit of the joint venture.
Then three, to continue to sole fund another agreed dollar amount that will take them from a minority 10% interest in the project to something at 51% or higher. We believe that based on the conversations we're having now with prospective partners, we'll be able to keep somewhere between 35%-49% of the project, but not having to come up with anywhere near 35%-49% of the capital with whatever capital we contribute comes in towards the end of construction. When you look at the numbers, John, if we can keep 35% of this project and not have to come up with a lot of the capital, right out of the gate at today's metal prices, this project has generated almost $5 billion of cash flow a year. Give me a multiple on that compared to our share price.
The upside to Seabridge shareholders getting a joint venture done on those types of terms will be phenomenal. Okay, I'm going to move quickly now, John, through the other assets, but I do want to touch on the other four assets we have in the portfolio. Seabridge is known obviously for KSM. That's been our focus on spend and work over the past decade plus. People forget, though, that we have another large project in the portfolio called Courageous Lake that we acquired in 2002 from Newmont and TotalEnergies. I think we paid $5 million for this asset. When they sold it to us, there was 5.5 million ounces of gold resources identified there. We started working at Courageous Lake pretty quickly after acquisition, completed a pre-feasibility study on this project in 2012 at a time when the Canadian dollar was essentially at par with the U.S. dollar.
We're also well on our way at KSM moving that forward with our first pre-feasibility study. We finally came back to this project in 2024 because we're disappointed that we're not getting any value in our shares for this second large asset. Courageous Lake has 15 million ounces of resources at better than 2 grams per ton in an open-pittable configuration. We went out in 2024 and did a new pre-feasibility study. We actually shrunk the footprint of the mine to reduce the upfront capital and then updated that pre-feas from the 2012 study to the study which was done at a base case gold price of $1,850 gold. It showed a project that had okay economics, not great, but okay economics. If you look at this project relative to today's metal prices, obviously very, very different as we would expect.
We are now working with RBC Capital Markets to unlock value on Courageous Lake. We have not been remiss in the past to sell non-core assets at the appropriate time to get value back to consumers. Right now, where our head is at, we believe that the best path forward for Courageous Lake because of the gold market we're in and where we think gold is headed from here to perhaps unlock value by dividending out Courageous Lake in a separate public vehicle to our shareholders. That is where we're moving forward on. If you look at Courageous Lake today, I know RBC just kind of did an analysis looking at what valuations are development stage companies trading at relative to their NAV. They are trading at spot prices. They are trading at 30%-40%. We are trading at about 10% only on KSM with nothing to Courageous Lake.
If we can generate 30%-40% of the NAV in a market in a separate public vehicle, our shareholders will be the winner. Stay tuned on this one. This really has me excited in terms of finding a way to unlock value directly to our shareholders that hands over to them directly the interest in the ownership in Courageous Lake. The other asset that has me interested or has us interested this year is Iskut. People should ask right out of the gate, okay, you started the year with two ounces of gold per common share. You have now issued 8 million shares. To get back to even, you need to find 16 million ounces. How are you going to do that? We think that Iskut will provide that potential. We bought Iskut in 2016 with the view that this could be another KSM.
We've now done a number of years of work on here. We have now found our first large porphyry deposit here called SNIP North. Last year, we actually drilled right from surface three very wide intercepts at the SNIP North target. We now have a $15 million program underway. We have two rigs turning there. The third rig is showing up today. We expect by the end of this year to wrap our arms around an initial deposit at SNIP North. We expect that in Q1 of 2027, we'll be able to announce a 43-101 compliant initial resource at SNIP North, which will go a long way to offset the dilution we suffered in this year's financing. We remain excited about this. We're going to continue to work on it.
There is a lot of other targets we are also going to look at this year because we do not think that SNIP North is the only target there to go after. Three Aces is a project we acquired at the height of COVID from a small public company that at one time generated a market cap well in excess of $100 million. Located in the Yukon, we have done a few small programs here over the years. We are now stepping it up a bit with a $5 million program this year, looking to extend that central core zone where there is a lot of high-grade near-surface gold intercepts down towards the Sproggie target. That program is about to get underway. We are looking forward to releasing results on that.
The fifth project in the portfolio is a large land package in Nevada called Snowstorm, a project that sits on the intersection of the Getchell Trend, the Northern Nevada Rift Trend, and the Carlin Trend. It's just north of the Twin Creeks and Turquoise Ridge mines that are part of the Newmont joint venture with Barrick. We've done very little on this over the years. We've now run an AI program against our data as well as data we got from other operators in the region. We have a number of targets identified, not to drill this year, but to come back at this project at some time in the future.
When you look at Snowstorm's ability to compete for exploration dollars compared to Iskut or Three Aces, because Iskut and Three Aces are both in Canada, we're able to raise dollars for exploration through flow-through financing, which typically gives us, if there's a critical metals component as there is at Iskut and KSM, we can raise dollars at upwards of a 50% premium to market. They're going to get the best bang for the buck because of our ability to have less dilution per dollar raised. Going forward, why is Seabridge an investment opportunity? 26- year track record of outperforming gold in a meaningful way. Ownership of the world's largest undeveloped gold project and the third largest undeveloped copper project. Great progress at KSM in terms of a permitted project.
A joint venture agreement in the works now that we think we'll be able to announce to our partners before the end of the year. Still, three earlier stage exploration projects in the portfolio that will drive value as we have hopefully success there. Last but not least, it's the spin-out of Courageous Lake. We're a tightly held company. If you look at our big shareholders and insiders, over 30% of the stock, tremendous liquidity in the U.S. markets. That liquidity went up a couple of weeks ago. You probably know, John, that GDX is doing a rebalancing. We were not part of the GDX. Based on the rebalancing they're now doing, BMO estimates that there's 4.8 million shares of buying that will come in on Seabridge as we go in at a 0.35% component of the new GDX that will happen in September.
We continue.
Is Mr. Friedberg still alive and a big shareholder?
Yeah, he just, yeah, he is. In the last financing, the $80 million of the public deal we did, our three big shareholders, Copernic, Mr. Friedberg, and Sprott combined for over $50 million of the $80 million. Still active, still a largest shareholder, and still somebody that obviously we talk to on a regular basis.
The 30% includes Copernic, Friedberg, and Seabridge.
Yeah. Yeah.
It's not Rudi and Ryan.
No, it's insiders. No. It's management board, co-founders of the company, myself, Jim Anthony, existing management. Bill Threlkeld has a meaningful interest. Elseo Gonzalez Urien , who's been with us from day one, has a meaningful interest. So we got a lot of big.
I'll just root for you, Rudi.
John, that's good to have you rooting for me.
Everyone's welcome to introduce questions through the question box. Let me just check that first. It's a little hard for me to read. Just give me a moment. At your current share price, why aren't you acquiring some of your own stock?
Because we do not have cash flow. We just issued 8 million shares to do work at KSM this year. We are not going to use, turn around, and go back and buy shares from that. Our long-term plan for the company, though, is as KSM goes into production and we start to get gold flow back from that, and our interest in a joint venture is to take back our share of profits in physical gold. What we would like to be able to do, and we have already started discussions on this internally along with some of these big physical ETF providers, is actually dividend out physical gold to our shareholders instead of cash. We are looking at ways to do that. For us to go out and buy back shares now, we are not generating revenues. If we were generating revenues, it might be a different thing.
I do agree that our share price is very, very low to where we think it should be in the context of over $3,000 gold.
You've said there'll be a JV by the end of the year, and there's been timelines in the past. Why is this year better than your promises earlier over a decade? Obviously, $3,400 gold is better than $1,250.
Yeah, no, for sure. I'm not helping you out a little bit. Yeah, I also recognize why a deal didn't get done. Yeah, when we make our projections like that, we think it's our best case. It's our expectations. I mean, things happen in the marketplace. I went through a whole list of things that happened over the past 12 years that was a detriment to getting a deal done. All I'll say right now, this year it's different. Having substantially started in place and that designation we have still remains in full force even in the face of the petitions. Having the metal prices where they are, having the dialogue we have now with the big companies. I think probably the most important aspect is the big companies are getting hungry again. They have to.
Because if you look at the pipelines of the big mining companies, both in the gold copper, gold side, and the copper side, they need new projects. They do not have them internally. They need to go out and find them. The amount of cash flow these companies are now generating, they have never generated before. Hopefully they will put that cash flow to use to look for their future. That is when M&A really starts to kick off. We think KSM will be a big part of that because of the project we have there.
I want to just add from the standpoint of the listeners, in addition to gold and copper prices being higher, it is possible the NPV of KSM increases the longer that Rudi, Ryan, and the team delay because of infrastructure and economic development in the region.
When Newmont goes to a block cave underground at Red Chris, that's going to spur development. In five or ten years, when Newmont and Teck build Galore Creek, or whoever owns Teck builds Schaft Creek, which is a 75% on copper project, or Newmont advances the GT Gold acquisition, there'll be more economic development. If somebody buys Courageous Lake. I tell Rudi a story, my grandfather's best friend in Greece who went back once and was pissed off there was no progress. He wrote a $600,000 check to run a power line 30 km. Every village along the way got electricity for free by splicing into the power line. He electrified the southern half of a large island. Rudi should be the guy that gets the free ride on the infrastructure and not the one that writes the check.
We got that on the Northwest.
Because the longer you delay, I'm not sure it hurts the NPV at all. It might help it a lot.
I agree. I mean, look, I mean, when we bought this project, the Northwest Transmission Line was not even in consideration then. John, when you came up to the site 12 years ago, it was just being put in. I remember you standing there looking at it, wow, this makes this project easier. The government of Canada spent CAD 750 million bringing the transmission line to the district. We did not have to pay for any of that. That is all free infrastructure that came in. This new port facility down in Stewart, that was paid by other people's money. We do not need to build a port. A lot of these big projects elsewhere around the world that are sitting close to water have to build their own ports. We do not have to do that. That is already there. The infrastructure that has gone on here with other people's money is fantastic.
It's money we don't have to spend. You're right, John, if you look at it from back then to today, it has improved the NPVs of the project.
How are U.S. investors taxed if they own Seabridge? Of course, there's no tax if you pay no dividend and they do nothing.
I mean, there's capital gains taxes there. I know we have a lot of U.S. holders that come in for a designation known as a PFIC designation every year that they.
What is that? The question asks about it later on. What's PFIC?
I think it just allows them to not be taxable in Canada as a U.S. citizen or owner. I don't know. I mean, we get those questions a few times at the end of the year.
When I get a dividend from Canada, there's a 15% withholding tax. I file a form on my tax return, and it's credited against my IRS due. There is no net effect.
Yeah, because there's a tax treaty. I'm the same way. I'm a dual citizen. I file tax returns in both Canada and the U.S.
I'm on one side. I should be a dual citizen with Greece, but I'm not. I haven't done the paperwork. Anyway, there's another question about a potential dispute with TUD. I'm not sure who that is. Is that a stock?
No, this is a company called Tudor Gold. We have been working diligently at KSM since 2006 ourselves. During that timeline, we have approvals for the twin tunnels that run through that connect the mine to the mill side. A portion of those tunnels run through ground that is controlled by Tudor Gold. We have a license of occupation for that route. We have a mineral reserve that prohibits Tudor from doing any work and interfering with the tunnels. We have an M245 permit that we are now in for an amendment. The existing permit we have there gives us the right to construct the tunnel portals and the first 100 meters or so of the tunnels from the different portal sites. We are now filing for the amendment on that to have the full tunnel length. Tudor Gold obviously does not like that we have these tunnel authorities to their land.
Tudor came into the mix here in 2015 or 2016, I think, well after we got all these approvals. Now they're kind of complaining that we have these rights. They've gone to the government over the past few years trying to get our approvals overturned. They have not been successful there. They're still claiming that they may dispute it at some way into the future. Tudor does not have yet shown a viable project. We've said, "Look, if you have a viable project that's permitted and approved, we'd be happy to sit down and see where we might be able to flex the tunnels and you can work around it." Again, they don't have—they've got a big deposit, John. A lot of it's refractory. I'm not sure how they put it into a mine plan there.
They still have not shown anything viable that we can even look at and say, "Okay, how can we work together on this tunnel route?" We're happy to do that.
When you drive around the highways in New York or New Jersey, sometimes on 40, you pay a toll.
Yep.
If you're on the Zambian side of the border in the copper belt and you're on asphalt, every couple of km , there's some sandbags and a guy with a gun. He wants money to cross the land. I call that Zambian easy pass. Is Tudor Gold the local easy pass where you are? They want a little fee for crossing their land? Or they want you to buy them out?
I think it's probably the latter. I think if you look at that project, John, and do proper due diligence on what they've reported as a resource, you kind of scratch your head and say, "Is this really going to ever be a real project in terms of the metallurgical issues they have, the high surface if they go open pits? How could they mine this as a block cave? Where are they going to put tailings? Where are they going to put waste rock?" They're a long way from doing that. Look, they've been working there since 2015. They've promised PEAs for many, many years now, and they've yet to deliver one. If they deliver one, we can sit down with them and say, "Okay, let's look at this.
Maybe there is a solution here that avoids where you might have a mine plan going through that we can flex a portion of the tunnel. We've looked at that internally, and there is the ability to do that. Until we know what they may or may not build there, it's kind of premature to sit down and find a solution to a problem that doesn't exist today.
Rudi, you got so many balls in the air. I bet you have more guys than Ryan helping you. Could you describe the fullness of the management team?
Yeah. I mean, I pinch myself looking at the team we've assembled here over the years. Most of our team have come from the very large mining companies, both on the base metal side and the gold side. As you move up in an organization to higher and higher levels, you're more and more removed from a project, and you're dealing mostly with people and teams. A lot of the better engineers and people in the industry want to stay involved with projects. At Seabridge, they have that chance. That's allowed us to bring in people like Ryan, Bill Threlkeld, who ran exploration for Placer Dome down in Latin America in the 1980s and 1990s with big success. Peter Williams, who was head of the mining engineering practice at Newmont for a number of years, he's been with us for a long, long time.
You look at the backgrounds of our senior executive team, it's fantastic. They're the ones that do all the work, John. I'm just the face of the company that gets to go out and tell the story, which I enjoy doing, don't get me wrong. The real heavy lifting and work here is done by the team we've assembled here. I think we're now up to, Ryan, correct me if I'm wrong, but I think we're up to 45 employees.
Yeah, we've just crossed over about 55, actually, on that front. Yeah, that's correct.
We're spending a couple of hundred million dollars in our projects this year in terms of advancing them. We hire people as we need them. We use a lot as consultants. I am blessed with the team we've put together here and the commitment that they have to work on a common path forward to get the deal done. That's pretty unique. I've been involved with other companies in the past, but it's pretty unique to have a team as dedicated as we have, all working towards that same goal.
Super. We've been going 66 minutes, and I got to open up a window for Northern Dynasty at 2:45.
We'll get to have it.
I guess I should say thank you, Rudi and Ryan, and for everybody on the webcast that joined us and makes it possible.
I appreciate it, John. Appreciate you. I look forward to the next time we can get together.
All the best. Thank you. It is so great that you are making so much progress. Thank you.
Thank you, John.
Thanks, John.
Here.
Good to meet you. Ryan.
Likewise. Yep. Great to meet you, John.