Seabridge plans spin-out of Courageous Lake, sharpens focus on KSM

Seabridge this weeek said it intends to spin out its wholly owned subsidiary, Seabridge Gold (NWT), to be renamed Valor Gold, with the new company holding 100% of the Courageous Lake project. Valor Gold would be focused on advancing Courageous Lake through exploration, engineering and permitting, while Seabridge would continue to concentrate primarily on advancing its flagship KSM gold/copper project in British Columbia and its other exploration assets.

The proposed transaction is expected to be completed via a plan of arrangement under the Canada Business Corporations Act, with Valor Gold shares to be distributed to Seabridge shareholders and listed on at least one major public stock exchange, subject to approvals.

Courageous Lake is one of Canada’s largest undeveloped gold projects, hosting measured and indicated resources of 11-million ounces of gold, at an average grade of 2.36 g/t, plus a further 3.3-million ounces in the inferred category. The measured and indicated resource also incorporates 2.8-million ounces of proven and probable reserves, positioning Courageous Lake as one of the highest-grade openpit gold projects in Canada.

Seabridge chairperson and CEO Rudi Fronk said the asset had long been overshadowed by the scale of the company’s KSM project.

“We have always believed, as we have shown in our recent studies, that Courageous Lake is a valuable project with enormous additional district potential in a Tier 1 jurisdiction. We also believe that Courageous Lake is being attributed little to no value in the price of Seabridge shares today,” Fronk said.

He added that the proposed spin-out would give shareholders greater flexibility and clearer exposure to the asset.

“A spin-out of Courageous Lake should give our shareholders more optionality around a gold asset that has been overshadowed for too long by KSM, which remains our primary development focus. We believe that this reorganization will bring attention to the potential of Courageous Lake and unlock additional value for Seabridge shareholders while allowing them to continue having the same exposure to all of Seabridge's assets.”

In February 2024, Seabridge filed an updated NI 43-101 technical report for Courageous Lake, incorporating a revised preliminary feasibility study (PFS) and a new preliminary economic assessment (PEA) that assessed a conceptual expansion of the openpit operation beyond the PFS mine plan.

At a gold price of $1 850/oz, the 2024 PFS outlined a 12.6-year mine life producing an average of about 201 000 oz/y of payable gold, with an after-tax net present value (NPV), using a 5% discount, of $523-million and an internal rate of return (IRR) of 20.6%. At $2 500/oz gold, the after-tax NPV increases to $1.1-billion, with an IRR of 38.2% and a payback period of 1.6 years.

Seabridge also highlighted further upside potential at Courageous Lake, including high-grade, near-surface satellite deposits such as Walsh Lake, which hosts an inferred resource of 555 000 oz at 4.18 g/t gold, and broader exploration upside across the roughly 500 km² land package, of which less than 15% has been explored to date.

Under the proposed structure, Seabridge management would continue to oversee Courageous Lake until a dedicated management team and board are appointed at Valor Gold. Seabridge said it intends to spin out Valor Gold with sufficient working capital for immediate needs, although the new company may also consider a private financing to fund work programmes in 2026 and 2027.

Seabridge cautioned that the spin-out remains subject to board, shareholder, court and regulatory approvals, and that there is no assurance the transaction will proceed on the terms or timeline outlined.