Why Seabridge Says No to Mining Projects

Rudi Fronk has been the Chief Executive Officer and President of Seabridge Gold(SA) since 1999. In this recent interview, he talks about the company's history and two key Seabridge projects in Canada.

Tell us how Seabridge started.

Fronk: We launched Seabridge in October 1999. At the time, gold was trading for well below $300 an ounce. The dollar was strong. People wanted to buy technology stocks. Gold had fallen completely out of favor. However, we thought it would eventually rebound.

Seabridge's Advantage

With my partners at Seabridge, during this depressed gold price period, we looked to acquire uneconomic gold assets. We hoped we could convince their owners to sell these deposits to us at low prices. We wanted the gold assets to be in the ground still with low holding costs so we could wait for prices to come back. We wanted them in politically stable countries, where they weren't going to be expropriated by the government on a whim. We wanted projects that had additional exploration upside which could be exploited later. Our concept was to create a public vehicle that supplied our shareholders a high-leverage investment on the gold price.

During the early years from 1999 through 2002, we bought nine deposits after looking at more than 100. We spent $15 million on the nine deposits we purchased at which previous owners had estimated about 15 million ounces of gold still in the ground. The parties we bought the projects from had already spent $300 million to find them, so we really were getting them for pennies on the dollar.

So the approach you took with Seabridge sounds like it directly was influenced by your experience at Greenstone.

Absolutely, experience is the best teacher. I ran Greenstone from 1993 through early 1999. During that time we discovered a number of large gold deposits in Central America, totaling approximately 5 million ounces. We completed bankable feasibility studies on three projects, raised capital to build them and were going through final commissioning on two of them just when the price of gold began to collapse. To make matters worse, in 1998 hurricane Mitch came through Central America devasting our supply chain. To build these mines, we took on significant debt. In 2000, the projects were expropriated by the Honduran and Nicaraguan governments. It is interesting to note that two of these mines are still in production today.