Update: Seabridge Gold Receives A Positive Federal EA Decision For Its KSM Project

| About: Seabridge Gold (SA)
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Summary

Seabridge Gold was pleased to announce that its KSM Project has received approval from the Federal Minister of the Environment.

This is a surprising development that I had not anticipated.

Seabridge remains a quality gold leverage vehicle, but the KSM Project will not be built at the current gold price.

Seabridge Gold (NYSEMKT:SA) just announced that Canada's Federal Minister of the Environment has determined that the company's KSM Project is not likely to have an adverse impact on the environment. This is good news, as it is a major step forward for the KSM Project, which, given its size, comes with permitting risk.

This decision further solidifies Seabridge Gold's appeal. The KSM Project is an attractive vehicle for gold bulls looking to get leverage, or as a "gold-in-the-ground ETF." As I pointed out last year, the KSM Project is not likely to get built with the gold price as low as it is, given its $6+ billion price tag. However, the project's valuation leaps dramatically higher if we price in even modest increases in the gold price. Investors looking for a sizable increase in the gold price were therefore encouraged to invest in this name.

However, gold in the ground is only valuable if it can hypothetically be extracted, and this makes permitting important for the project's credibility and the investment thesis. After all, the gold leverage is less important to the investment thesis if there are other factors determining Seabridge Gold's value. For this reason, today's announcement is especially important. While it doesn't completely eliminate other factors, it means that there is less environmental/permitting risk, and this means the risk/reward is more heavily skewed to the gold price today than it was prior to the announcement. This makes the stock inherently more valuable for gold bulls.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.