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Seabridge Gold (TSX: SEA) (NYSE: SA) is contesting an application made by Tudor Gold (TSXV: TUD) to rescind a certain licence of occupation and a permit held by the company at its Kerr-Sulphurets Mitchell (KSM) project located in British Colombia’s Golden Triangle.
KSM is ranked the world’s biggest gold project, according to Mining Intelligence data.
In a press release Monday, Seabridge said that the arguments made by Tudor, which claims that the BC government did not have the power to issue this license and permit, and that they destroy the value of their own mining claims, are “without merit.”
According to Seabridge, the rights conveyed by its licence and the relevant activities authorized by this permit were initially conveyed and authorized in September 2014. These include rights and authorizations to engage in certain activities on land on which Tudor only acquired mineral rights in 2016.
Specifically, Mines Act permit M-245 allows Seabridge to conduct various activities, including on claims held by Tudor along the route of the tunnels connecting the east and west sides of the KSM project. The licence provides the company the right to occupy the area in which it intends to construct the tunnels.
Once they are constructed, the licence will be converted into a statutory right of way for the entire length of the tunnels, including the 12.5 km that would pass through mineral claims owned by Tudor, Seabridge argued.
Tudor’s flagship Treaty Creek project consists of a land package of 17,913 hectares bordering Seabridge’s KSM property to the southwest within the Golden Triangle region. It hosts one of the largest gold discoveries in the last 30 years, with 23.4 million gold-equivalent oz. in combined open pit and underground indicated resources.
“The argument that the BC government does not have the power to grant these authorizations is absurd,” Seabridge CEO Rudi Fronk said in a statement. “These types of authorizations are commonly used by the BC government to manage activities that take place on the government-owned land base.”
Fronk added that “the licence and authorization of the activities authorized by Permit M-245 to which Tudor objects have been in place for almost a decade” and were granted after a “thorough regulatory process” that included participation by First Nations as well as Tudor’s joint venture partners, American Creek Resources and Teuton Resources, who were the owners of the claims at the time.
Seabridge said it considers Tudor’s submission “particularly unjustifiable” given that the authorized activities and rights held by the company were in place and publicly known at the time Tudor acquired its interest in the Treaty Creek Property in June 2016.
Accordingly, Seabridge will actively pursue the dismissal of Tudor’s application.
KSM is considered the world’s largest undeveloped gold-copper project. Proven and probable reserves are currently estimated at 2.3 billion tonnes grading 0.64 grams gold per tonne (47.3 million oz. contained gold) and 0.14% copper (7.3 billion lb. contained copper).
A preliminary economic assessment prepared last year outlined a 39-year operation that will need a preproduction investment of $1.5 billion followed by sustaining costs of $12.8 million.
