Is Seabridge Gold (TSX:SEA) Still Undervalued Amid a 136% YTD Surge?

In the volatile world of gold equities, Seabridge Gold (TSX:SEA) has captured attention with a year-to-date surge of 136%. Yet, as the stock trades at a price-to-book (P/B) ratio of 4.00 as of December 2025-well above the Canadian Metals and Mining industry average of 2.8x-investors must ask: Is this valuation justified, or does it mask unresolved risks? The answer lies in dissecting the company's strategic moves, project economics, and financial health.

Valuation Realism: A 4x P/B in Context

Seabridge's P/B ratio of 4.00 reflects a market price per share of approximately CAD $41.40 (4.00 × CAD $10.35 book value per share) as of December 2025. While this is a moderate multiple for gold miners, it raises questions about whether the stock is overvalued relative to its tangible assets. For context, peers like Barrick Gold and Newmont trade at P/B ratios of 2.5x and 2.7x, respectively, suggesting Seabridge's premium is not entirely out of step with the sector. However, the company's lack of revenue and reliance on speculative project development-rather than cash flow-complicates the valuation equation.

The Courageous Lake Spin-Out: Unlocking Value or Overhyping Potential?

Seabridge's decision to spin out its Courageous Lake Gold Project into a new entity, Valor Gold, is a pivotal move. The project, with 11.0 million ounces of measured and indicated gold resources and 3.3 million ounces of inferred resources, is one of Canada's largest undeveloped gold projects. The spin-out aims to focus Valor Gold on advancing Courageous Lake through exploration and permitting while allowing Seabridge to concentrate on its KSM gold/copper project.

The economics of Courageous Lake are compelling. At a gold price of $2,500/oz-a plausible scenario given geopolitical tensions and central bank demand-the project's after-tax net present value (NPV) jumps to $1.1 billion, with an internal rate of return (IRR) of 38.2% and a payback period of just 1.6 years. These metrics suggest robust upside potential, particularly if gold prices continue to trend higher. However, the spin-out's success hinges on Valor Gold securing financing for 2026 and 2027 work programs, a risk that could dampen investor enthusiasm if market conditions sour.

KSM Project: A Double-Edged Sword

Seabridge's flagship KSM project in British Columbia remains a cornerstone of its strategy. The project, which has a preliminary feasibility study (PFS) outlining a 12.6-year mine life and 201,000 ounces of annual production, is still in the permitting and engineering phase. While the company has secured $103.1 million in cash reserves and raised $100.2 million through equity financing in 2025, its secured note liabilities of $583.1 million loom large.

The KSM project's viability depends on securing a joint venture partner, a process that has seen limited progress. As of Q4 2025, Seabridge had completed due diligence with three finalists but had yet to finalize terms. Without a partner, the company risks shouldering the full capital burden of a project that could require hundreds of millions in upfront investment. This uncertainty casts a shadow over Seabridge's long-term revenue potential.

Funding Pressures and the Path Forward

Seabridge's financial health is a mixed bag. While its cash reserves and recent equity raises have strengthened its balance sheet, the company's reliance on external financing for both KSM and Valor Gold introduces significant risk. Valor Gold, for instance, may need to pursue private financing in 2026 and 2027 to fund exploration and engineering work. If market conditions deteriorate or investor appetite wanes, this could delay project timelines and erode shareholder value.

Moreover, Seabridge's debt load-$583.1 million in secured notes-remains a critical vulnerability. While the company has no immediate debt maturities, rising interest rates or a drop in gold prices could strain its liquidity. The spin-out of Courageous Lake may alleviate some pressure by reducing the need to fund multiple projects in parallel, but it also dilutes Seabridge's direct exposure to a high-grade gold asset.

Conclusion: A High-Risk, High-Reward Proposition

Seabridge Gold's 136% YTD surge reflects optimism about its project pipeline and the spin-out of Courageous Lake. At a 4x P/B ratio, the stock appears reasonably valued relative to its book value, but this metric obscures the company's lack of revenue and heavy reliance on speculative development. The Courageous Lake project's economics at $2,500/oz gold are undeniably attractive, yet its success depends on Valor Gold's ability to secure financing and navigate permitting challenges.

For the KSM project, the absence of a joint venture partner remains a critical risk. While Seabridge's management has signaled progress, the lack of concrete terms suggests that the project's timeline-and its contribution to revenue-remains uncertain.

In the end, Seabridge Gold is a stock for the patient and the bold. Its valuation is not unreasonable in a gold-centric world, but investors must weigh the potential of its projects against the realities of funding pressures and operational delays. For those willing to stomach the risks, the upside is clear. For others, the lack of near-term revenue and the shadow of debt may prove too daunting.