A Look at Seabridge Gold (TSX:SEA)’s Valuation After Legal Setback Withdrawn at KSM Project

Seabridge Gold (TSX:SEA) just gave investors something to think about. The company announced that the Southeast Alaska Indigenous Transboundary Commission, a prominent petitioner, has withdrawn from legal action against its massive KSM project in British Columbia. With ongoing court hearings still on the horizon, this update removes some of the legal uncertainty that has clouded the project and could pave the way for smoother progress.

This legal development comes at a time when momentum appears to be building. Seabridge Gold has climbed 13% over the past month and is now up 50% year-to-date. While the stock delivered a 7% gain in the last year, the three-year return stands at 57%, even if the five-year performance has been near flat. Investors have continued to focus on the KSM project’s legal status throughout this period, so increased clarity may be contributing to recent gains.

The key question now, with legal concerns easing and shares rallying this year, is whether Seabridge Gold appears undervalued or if the current price already reflects expectations for the project’s future growth.

Price-to-Book of 2.6x: Is it justified?

Seabridge Gold is valued at a price-to-book (P/B) ratio of 2.6 times, which places it above the Canadian Metals and Mining industry average of 2.3 times. This suggests that, based on this metric, the market is assigning a premium to the company's book value relative to its domestic peers.

The price-to-book ratio compares a company's current market price to its balance sheet net asset value and is a widely used multiple for assessing resource companies, where tangible assets are a significant part of valuation. For a business like Seabridge Gold, which is still in the project development stage and generating minimal revenue, this multiple reflects the market's perception of the potential value embedded in its mineral holdings and future prospects.

Ultimately, a price-to-book above the industry average points to elevated expectations, possibly pricing in long-term development success or premium asset quality before earnings and revenues arrive. The market may be ascribing more future potential than to its peers, even as the company remains unprofitable.

Result: Fair Value of $26.06 (OVERVALUED)

See our latest analysis for Seabridge Gold.

However, Seabridge Gold remains unprofitable. Any delays in KSM development or broader shifts in gold prices could challenge the current bullish outlook.

Find out about the key risks to this Seabridge Gold narrative.

Another View: What About an Intrinsic Value Model?

Our DCF model takes a different approach by focusing on future cash flows rather than market multiples. However, there is insufficient data to calculate a fair value using this method. This leaves multiples as the main guide. So, does this strengthen or weaken the premium placed by the market?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Seabridge Gold to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Seabridge Gold Narrative

If you have a different perspective or want to dive deeper into the numbers yourself, you can easily craft your own view in just a few minutes. Do it your way.

A great starting point for your Seabridge Gold research is our analysis highlighting 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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