Seabridge Gold May Change the Panorama for the Precious Metal Market

For years, Seabridge Gold was expecting a major license from the Canadian government to start working on a project that was approved back in 2014. But this isn’t an ordinary project. Seabridge’s KSM Project will be the largest gold project in the world, which is something quite remarkable.

This license allows the construction, operation, and maintenance of a water storage facility and related works, everything at the project’s strategic location in Stewart, British Columbia, only 35 kilometers from the Alaska border.

The permit will last 25 years and grants Seabridge Gold the capacity to mine the largest undeveloped gold-copper reserve. But how this could affect the gold market?

Is This Good or Bad?

Usually, physical and future gold prices are correlated with gold mining prices, which is something quite logical. If it becomes more expensive to buy gold, mining companies can have higher profits and benefit greatly from the situation. This automatically attracts investors to shares.

A project like this one could boost the stock price, making Seabridge Gold one of the leader mining companies in the market. For the first seven years of the KSM project, is expected to have an annual gold output around 1,000,000 ounces and 592,000 ounces of life of mine annual production.

Along with the gold output, Seabridge Gold expects to have 286,000 pounds of copper and 2,800,000 ounces of silver.

This massive flow of physical gold into the market could be not so good for the yellow metal price, oversupplying a slow, fragile market that is directly competing with currencies.

Financial Challenge

Yes, the Canadian government provided this license to Seabridge Gold, opening a window to a massive opportunity. But now the company faces a huge challenge. The construction costs, which aren’t quite precise so far, can be around US$5 billion for building the mine. This number was reported by the most recent preliminary study about costs, maybe causing distress for the entire board.

In fact, Barrick Gold, which is the biggest mining company by output in the world, has around US$25 billion in market cap, representing the KSM project the fifth part of that.

Environment Impact and Thoughts about Gold

In the press release, Seabridge Gold CEO Rudi Fronk expressed his satisfaction about how responsible the Government of Canada was regarding the environmental matter.

“This important permit highlights the Government of Canada’s continued support for the environmental standards incorporated into our design of the KSM project. This approval further validates the Environmental Impact Statement approval received in 2014, also from the Government of Canada, which concluded that the KSM Project would not result in ‘significant impacts’ to the environment, including those waters which flow into Alaska,” he said.

Being so close to Alaska, there may be some concerns about the real impact of Seabridge Gold’s project. Now, regarding its output, this can become difficult for the gold market to grow in price. Oversupplying this market how it happened with oil recently would push prices down.

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