Tudor drops one wrangle over BC’s biggest gold project, but other hurdles remain for Seabridge’s KSM

Tudor Gold (TSXV: TUD) has abandoned its appeal of a British Columbia regulator’s ruling, removing one legal challenge to Seabridge Gold’s (TSX: SEA; NYSE: SA) KSM project in the Golden Triangle.

The province’s Chief Gold Commissioner ruled last May that it lacked jurisdiction to hear the case against Seabridge building its Mitchell Treaty Tunnels (MTT) under Tudor’s property to access the $6.4-billion (C$8.8-billion) capex KSM. Tudor had planned to push the matter to the B.C. Supreme Court, but withdrew that process on Thursday.

“We applaud Tudor’s decision to abandon its appeal, which lacked any merit from the outset,” Seabridge chair and CEO Rudi Fronk said in a statement. “This action reinforces our position that the authorizations issued in favour of the MTT do not give Seabridge any interest in Tudor’s mineral rights.”

The move narrows, but does not end, a broader fight over infrastructure for KSM. Tudor says about 12.5 km of Seabridge’s twin tunnels would pass through its claims at Treaty Creek and sterilize ground through parts of the Goldstorm deposit, limiting mine access and development options.

Multiple suits

Tudor’s latest management discussion and analysis for the year ended December 31, says the company has launched three B.C. court proceedings over the tunnels. Along with the appeal it has now dropped, Tudor is pursuing a claim over the scope of the conditional mineral reserve and a judicial review of a licence of occupation granted to Seabridge.

Seabridge shares fell 1.4% to C$33.64 in Toronto on Friday afternoon, giving the company a market capitalization of about C$3.6 billion. The stock has gained about 95% over the past year. Tudor is up about 33% over the same time and last traded at 89¢ in Toronto. It has a market capitalization of C$350 million.

Security of tenure

In its public filings, Tudor argues the tunnels as planned would run directly through the Goldstorm deposit. The roughly 22-km twinned tunnels would each measure about 5.9 metres by 5.5 metres and Tudor says the surrounding buffer zone would block mining and exploration through part of the deposit while also constraining access and mine planning for the rest of the system. It says the same issue would extend to the Perfectstorm and CBS zones.

Tudor’s January resource estimate outlined an indicated resource at Goldstorm of 912.3 million tonnes grading 0.85 gram gold per tonne, 5.07 grams silver and 0.15% copper, containing 24.9 million oz. gold, 148.7 million oz. silver and 3.048 billion lb. copper. The inferred resource adds 86.1 million tonnes grading 1.43 grams gold, 5.22 grams silver and 0.17% copper for 4 million oz. gold, 18.6 million oz. silver and 327.7 million lb. copper.

Tudor increased its interest in Treaty Creek to 80% when it bought American Creek last September. It’s retained the Fuse Advisors consulting firm to deliver a preliminary economic assessment in the third quarter on a higher-grade underground start at Goldstorm.

Seabridge has taken the opposite view. It says the conditional mineral reserve requires current claimholders not to obstruct, endanger or interfere with the construction, operation or maintenance of the tunnels, which it considers critical infrastructure for KSM.