Seabridge Gold Inc

Seabridge Gold Inc (TSX: SEA) is a mining company based out of Canada. It is engaged in the business of exploration of Gold. The Group’s principal properties include the Iskut project in British Columbia, Canada; Kerr-Sulphurets-Mitchell project in Northern British Columbia, Canada; The 3 Aces Project in Northwest Territories, Canada.

Financial Highlights – Q2 and H1 of the Financial Year 2020 (31^st March 2020, CAD, thousand)

(Source: Quarterly Report, Company Website)

In the first half of the financial year 2020, the Group is in the development stage and do not generate any revenue for the period. Due to higher administrative and corporate expenses and lower other income for the period, the Group reported LBT (loss before tax) of CAD 6,982 thousand in the first half for the financial year 2020 (H1 FY2019: LBT of CAD 6,720 thousand) and LBT (loss before tax) of CAD 3,392 thousand in the second quarter of the financial year 2020 (Q2 FY2019: LBT of CAD 2,325 thousand). Due to higher tax expenses for the period, the Net loss increased to CAD 7,266 thousand in the first half of the financial year 2020 (H1 FY2019: net loss of CAD 6,126 thousand) and a net loss of CAD 4,068 thousand in the second quarter of the financial year 2020 (Q2 FY2019: net loss of CAD 2,036 thousand). The cash balance as on 30 June 2020 stood at CAD 18,748 thousand (31 December 2019: CAD 8,793 thousand). The total assets as on 30 June 2020 stood at CAD 496,913 thousand (31 December 2019: CAD 449,372 thousand).

Share Price Performance

SEA 1 Year Daily Technical Chart. Source: Refinitiv, Thomson Reuters

Seabridge Gold Inc shares closed at CAD 24.23 at the time of writing after the market close on 19 August 2020. Stock's 52 weeks High is CAD 27.50 and Low is CAD 7.37.

Key Risks

The market conditions in which the Company operates is full of challenges and might impact the operational performance and reduce financial performance as well. Any change in regulations and government policies could affect the overall business of the Company. Liquidity and interest rate risks could affect the operations of the Company.

Conclusion

The Company has shown a decline in financial performance in the first half and the second quarter of the financial year 2020. The Group is in the development stage and hence rely on grants and cash balances to carry on all the business activities, and the bottom-line performance has declined, as operating expenses are not managed efficiently, and the profitability margins remained in the negative zone for the period. The liquidity position of the company has improved, and the balance sheet remained well-positioned. The recent increase in the gold prices in the global markets will improve financial performance and bring operational stability. The Group operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening its balance sheet and return with capital discipline. The Group continues to pursue joint venture agreement with suitable partner related to the KSM project on advantageous terms.

Based on the above rationale, we have given a “Hold” recommendation for Seabridge Gold Inc at the closing price of CAD 24.23 (as on 19 August 2020).

Disclaimer

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