Seabridge Gold (TSX: SEA) is facing a regulatory bottleneck at its flagship KSM project in British Columbia as provincial authorities hold back on key permits for a critical tunnel system. The Ministry of Mining and Critical Minerals notified the company that it will not issue construction and operation amendments for the Mitchell Treaty Tunnels (MTT) until a legal dispute with the neighboring Tudor Gold (TSX: TUD) is settled.
The delay centers on a 12.5-kilometer stretch of the proposed tunnel route that crosses mineral claims held by Tudor Gold. While Seabridge maintains a License of Occupation for the path, Tudor is challenging the validity of a conditional mineral reserve that Seabridge relies on to protect its infrastructure. The core of the legal debate is whether this reserve can legally bind third-party claims that existed before the reserve was established.
British Columbia’s Ministry had previously backed Seabridge in writing, asserting that the reserve does indeed apply to Tudor’s claims. However, the decision-maker for the permit amendments has now opted for a “wait-and-see” approach, deferring the authorization until the courts or a designated tribunal resolve the underlying property rights.
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The Mitchell Treaty Tunnels are designed as a pair of parallel passages to link mining operations in the Mitchell Valley with processing facilities in the Treaty Valley. Despite the current permit freeze, Seabridge remains authorized to work on tunnel portals at three specific sites and can excavate roughly 100 meters at each location.
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Seabridge Chief Executive Officer Rudi Fronk expressed confidence that the provincial government has the authority to reserve land for infrastructure, even when it overlaps with third-party claims. He noted that the company has no plans to start full-scale construction until a final feasibility study is wrapped up.
“We are confident that the CMR is a means by which the BC government can legally reserve land for construction of infrastructure like the MTT over government owned lands, including lands subject to third-party mineral claims such as Tudor’s,” commented Fronk.
In a nod to a potential truce, Fronk suggested the company is open to an amicable solution if Tudor presents an approved mine plan for its own Goldstorm project. For now, however, Seabridge argues that moving the multi-billion-dollar infrastructure route without a defined conflict is a non-starter.
Seabridge Gold last traded at $44.82 on the TSX.
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