Seabridge Gold(SA) - 2024 Q1 - Quarterly Report

Unaudited Condensed Consolidated Interim Financial Statements Consolidated Statements of Financial Position As of March 31, 2024, total assets decreased to $1.343 billion from $1.351 billion at year-end 2023, driven by reduced cash, while liabilities remained stable and equity declined Consolidated Statements of Financial Position (in thousands of CAD) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | $55,693 | $82,438 | | Total current assets | $62,936 | $93,951 | | Non-current Assets | | | | Mineral interests, property and equipment | $1,151,426 | $1,128,464 | | Total non-current assets | $1,279,989 | $1,257,008 | | Total Assets | $1,342,925 | $1,350,959 | | Current Liabilities | | | | Accounts payable and accrued liabilities | $12,952 | $32,734 | | Total current liabilities | $19,748 | $39,409 | | Non-current Liabilities | | | | Secured note liabilities | $597,236 | $573,888 | | Total non-current liabilities | $604,385 | $581,627 | | Total Liabilities | $624,133 | $621,036 | | Shareholders' Equity | $718,792 | $729,923 | | Total Liabilities and Shareholders' Equity | $1,342,925 | $1,350,959 | Consolidated Statements of Operations and Comprehensive Income (Loss) For Q1 2024, the company reported a net loss of $8.2 million ($0.09 per share), an improvement from $10.8 million in Q1 2023, primarily due to a $14.6 million gain on secured note remeasurement, despite a $12.9 million foreign exchange loss Q1 2024 vs Q1 2023 Performance (in thousands of CAD, except per share amounts) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Remeasurement of secured notes | $14,640 | $(11,746) | | Corporate and administrative expenses | $(4,613) | $(3,860) | | Foreign exchange gain (loss) | $(12,901) | $587 | | Loss before income taxes | $(2,400) | $(14,264) | | Net loss for the period | $(8,173) | $(10,784) | | Total other comprehensive loss | $(15,243) | $(5,420) | | Comprehensive loss for the period | $(23,416) | $(16,204) | | Basic and diluted loss per common share | $(0.09) | $(0.13) | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity decreased to $718.8 million as of March 31, 2024, from $729.9 million at year-end 2023, primarily due to net loss and other comprehensive loss, partially offset by $11.3 million from share issuances Changes in Shareholders' Equity for Q1 2024 (in thousands of CAD) | Description | Amount | | :--- | :--- | | Equity as at December 31, 2023 | $729,923 | | Share issuance - At-The-Market offering | $11,261 | | Share issuance costs (net of tax) | $(166) | | Stock-based compensation | $1,190 | | Other comprehensive loss | $(15,243) | | Net loss for the period | $(8,173) | | Equity as at March 31, 2024 | $718,792 | Consolidated Statements of Cash Flows The company experienced a net decrease in cash of $26.7 million in Q1 2024, ending with $55.7 million, primarily due to $39.3 million in investing activities, partially offset by $1.4 million from operations and $10.8 million from financing Cash Flow Summary for Q1 2024 vs Q1 2023 (in thousands of CAD) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,353 | $(1,840) | | Net cash used in investing activities | $(39,300) | $(11,913) | | Net cash from financing activities | $10,834 | $5,191 | | Net decrease in cash and cash equivalents | $(26,745) | $(8,584) | | Cash and cash equivalents, beginning of period | $82,438 | $46,150 | | Cash and cash equivalents, end of period | $55,693 | $37,566 | Notes to the condensed consolidated interim financial statements These notes detail accounting policies and financial figures, covering business operations, basis of preparation, assets, liabilities, secured notes, shareholders' equity, fair value measurements, financial risks, and commitments Note 1: Reporting entity Seabridge Gold Inc. is a Canadian company focused on acquiring, exploring, and advancing gold mineral properties in Canada and the United States, with shares listed on TSX and NYSE - The company is engaged in acquiring, exploring, and advancing mineral properties, with an emphasis on gold resources, located in Canada and the United States[8] Note 2: Basis of preparation The unaudited condensed consolidated interim financial statements were prepared in accordance with IAS 34, Interim Financial Reporting, consistent with 2023 annual policies, and authorized by the board on May 13, 2024 - The financial statements were prepared in accordance with IAS 34, Interim Financial Reporting, and do not include all information required for a complete set of IFRS financial statements[9] - Amendments to IFRS standards effective January 1, 2024, including changes to IAS 1, IFRS 16, and IAS 7, did not have a material impact on the company's financial statements[10][11] Note 5: Long-term receivables and prepaid expenses Long-term receivables remained unchanged at $105.9 million as of March 31, 2024, primarily comprising prepayments to BC Hydro and disputed tax credits, which the company is appealing without provision Long-term Receivables Breakdown (in thousands of CAD) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | BC Hydro | $92,720 | $92,720 | | Canadian Exploration Expenses | $9,361 | $9,361 | | British Columbia Mineral Exploration Tax Credit | $3,866 | $3,866 | | Total | $105,947 | $105,947 | - The company is in a dispute with the Canada Revenue Agency (CRA) over Canadian Exploration Expenses (CEE) from 2014-2016. The company has indemnified investors and deposited $9.3 million with the Receiver General, which is recorded as a long-term receivable. The potential tax indemnification is estimated at $10.8 million plus interest, but no provision has been made as the company expects to be successful in its appeal[17] Note 6: Mineral Interests, Property and Equipment The net book value of mineral interests, property, and equipment increased to $1.151 billion as of March 31, 2024, with $23.9 million in Q1 additions, primarily for the KSM project's construction in progress Additions by Project for Q1 2024 (in thousands of CAD) | Project | Additions | | :--- | :--- | | KSM additions | $22,254 | | Courageous Lake | $330 | | Iskut | $662 | | Snowstorm | $176 | | 3 Aces | $464 | | Total Additions | $23,886 | - Construction in progress additions at the KSM project in Q1 2024 included $7.7 million of capitalized borrowing costs[20] Note 9: Secured Note liabilities The company holds two significant secured note liabilities totaling $597.2 million, valued at fair value using a discounted cash flow model, which increased in Q1 2024, resulting in a combined remeasurement loss - The company has a US$225 million secured note (2022) that will be exchanged for a 60% gross silver royalty on the KSM project upon maturity. The note bears 6.5% annual interest, payable in cash or common shares[25][26] - The company has a US$150 million secured note (2023) with Sprott that will be exchanged for a 1% to 1.5% Net Smelter Royalty (NSR) on the KSM project upon maturity. It also bears 6.5% annual interest[32][33] Fair Value of Secured Notes (in thousands of CAD) | Note | Fair Value at Dec 31, 2023 | Fair Value at Mar 31, 2024 | Total Change in Fair Value Q1 2024 | | :--- | :--- | :--- | :--- | | 2022 Secured Note | $294,363 | $304,863 | $10,500 (Loss) | | 2023 Secured Note | $279,525 | $292,373 | $12,848 (Loss) | | Total | $573,888 | $597,236 | $23,348 (Loss) | - The fair value of the secured notes is sensitive to changes in metal prices, discount rates, and forecasted production. For example, a 10% increase in future silver prices would increase the fair value of the 2022 note by $17.6 million, while a 1% increase in discount rates would decrease it by $26.0 million[31][40] Note 10: Shareholders' equity The company, in its pre-operating stage, relies on external financing, raising $11.0 million net in Q1 2024 through its ATM offering, with US$59.2 million remaining available, and details stock-based compensation tied to project advancement - The company is dependent on external financing. It utilizes an At-The-Market (ATM) offering program to raise capital. In Q1 2024, it issued 682,686 shares for net proceeds of $11.0 million[43][45] - Subsequent to the quarter end, the company raised an additional $11.5 million (net) under the ATM offering[45] - In Q1 2024, the company incurred $0.9 million of qualifying exploration expenditures related to its December 2023 flow-through share issuance, recognizing $0.2 million of the associated premium as income[46] - During the quarter, 58,067 RSUs vested and were exchanged for common shares upon the company submitting its formal application to regulators for the KSM Project to be designated as 'substantially started'[50] Note 12: Fair value of financial assets and liabilities This note details the fair value hierarchy and financial risk management, classifying $597.2 million in secured note liabilities as Level 3 instruments, and addressing liquidity risk via ATM offering and foreign currency risk from US dollar-denominated notes Fair Value Hierarchy as of March 31, 2024 (in thousands of CAD) | Financial Instrument | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | Assets | | | | | | Cash and cash equivalents | $55,693 | - | - | $55,693 | | Investment in marketable securities | $4,145 | - | - | $4,145 | | Liabilities | | | | | | Accounts payable and accrued liabilities | $12,952 | - | - | $12,952 | | Secured note liabilities | - | - | $597,236 | $597,236 | - The company is dependent on its At-the-Market (ATM) offering to fund operations and meet obligations. As of March 31, 2024, it had US$59.2 million available under the program and believes this will provide sufficient liquidity for the next 12 months[61] - The company has significant foreign currency risk as its secured note liabilities and related interest payments are denominated in US dollars[66] Note 16: Commitments and contingencies The company has significant future commitments, including interest payments on secured notes, capital expenditures, and flow-through share requirements, notably an amended Facilities Agreement with BC Hydro requiring $14.0 million in July 2024 and $40.0 million in December 2024 Summary of Commitments (in thousands of CAD) | Commitment | Total | Due in 2024 | | :--- | :--- | :--- | | 2022 Secured Note – interest | $138,061 | $19,723 | | 2023 Secured Note – interest | $101,314 | - | | Capital expenditure obligations | $29,431 | $29,431 | | Flow-through share expenditures | $18,684 | $18,684 | | Total (selected) | $287,490 | $67,838 | - On March 21, 2024, the company amended its Facilities Agreement with BC Hydro, committing to additional payments of $14.0 million in July 2024 and $40.0 million in December 2024[72]