Form 40-F SEABRIDGE GOLD INC For: Dec 31

March 30, 2020 11:56 AM EDT

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

 

Commission file number: 001-32135

 

Seabridge Gold Inc.

(Exact name of Registrant as specified in its charter)

 

Canada   1040   Not Applicable
(Province or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

106 Front Street East, Suite 400

Toronto, Ontario Canada M5A 1E1

(416) 367-9292

(Address and telephone number of Registrant’s principal executive offices)

Corporation Service Company

1180 Sixth Avenue

New York, New York 10036

(212) 299-5656

(Name, address and telephone number of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Shares   SA   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

For annual reports, indicate by check mark the information filed with this form: 

☒ Annual Information Form                       ☒ Audited Annual Financial Statements

Indicate the number of outstanding shares of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 63,510,487 Common Shares (as at December 31, 2019). 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company ☐ 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐ 

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. 

The annual report on Form 40-F shall be incorporated by reference into or as an exhibit to, as applicable, the Registrant’s Registration Statements under the Securities Act of 1933, as amended: Form F-10 (File No. 333-229373) and Form S-8 (File No. 333-211331).

 

 

 

 

 

 

EXPLANATORY NOTE

 

Seabridge Gold Inc. (the “Registrant” or “we” or “us”) is a Canadian issuer eligible to file its annual report pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on Form 40-F (“Form 40-F”) pursuant to the multi-jurisdictional disclosure system of the Exchange Act. We are a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Accordingly, our equity securities are exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3.

 

PRINCIPAL DOCUMENTS

 

The following documents have been filed as part of this Annual Report on Form 40-F and incorporated by reference herein:

 

A. Annual Information Form

 

For our Annual Information Form (the “AIF”) for the year ended December 31, 2019, see Exhibit 99.1 of this Annual Report on Form 40-F.

 

B. Audited Annual Financial Statements

 

For our audited annual financial statements (“Audited Financial Statements”), for the years ended December 31, 2019 and December 31, 2018, including the Report of Independent Registered Public Accounting Firm, see Exhibit 99.2 of this Form 40-F. The Audited Financial Statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

 

C. Management’s Discussion and Analysis

 

For our management’s discussion and analysis (the “MD&A”) for the year ended December 31, 2019, see Exhibit 99.3 of this Form 40-F.

 

FORWARD-LOOKING STATEMENTS

 

This Form 40-F and the exhibits attached hereto contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, and forward-looking information within the meaning of Canadian securities laws concerning our projects, business approach and plans, including estimated production, capital, operating and cash flow estimates and other matters at our projects. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements and forward-looking information (collectively referred to in the following information simply as “forward-looking statements”). In addition, statements concerning mineral reserve and mineral resource estimates constitute forward-looking statements to the extent that they involve estimates of the mineralization expected to be encountered if a mineral property is developed and the economics of developing a property and producing minerals.

 

Forward-looking statements are necessarily based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments. In making the forward-looking statements in this Form 40-F and the exhibits attached hereto, we have applied several material assumptions including, but not limited to, the assumption that: (i) market fundamentals will result in sustained demand and prices for gold and copper, and to a much lesser degree, silver and molybdenum; (ii) the potential for production at our mineral projects will continue operationally, legally and economically; (iii) any additional financing needed will be available on reasonable terms; and (iv) estimated resources at our projects have merit and there is continuity of mineralization as reflected in such estimates.

 

1

 

 

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

 

  our history of net losses and negative cash flows from operations and expectation of future losses and negative cash flows from operations;
  risks related to our ability to continue our exploration activities and future advancement activities, and to continue to maintain corporate office support of these activities, which are dependent on our ability to enter into joint ventures, to sell property interests or to obtain suitable financing;
  uncertainty of whether the reserves estimated on our mineral properties will be brought into production;
  uncertainty relating to the assumptions underlying our resource and reserve estimates;
  uncertainty of estimates of capital costs, operating costs, production and economic returns;
  risks related to commercially producing precious metals from our mineral properties;
  risks related to fluctuations in the market price of gold, copper and other metals;
  risks related to fluctuations in foreign exchange rates;
  mining, exploration and development risks that could result in damage to mineral properties, plant and equipment, personal injury, environmental damage and delays in mining, which may be uninsurable or not insurable in adequate amounts;
  risks related to obtaining all necessary permits and governmental approvals, or extensions/renewals thereof, for exploration and development activities, including in respect of environmental regulation;
  uncertainty related to title to our mineral properties and rights of access over or through lands subject to third party rights, interests and mineral tenures;
  risks related to unsettled First Nations rights and title and settled Treaty Nations’ rights and uncertainties relating to the application of the United Nations Declaration on the Rights of Indigenous Peoples to the laws in Canadian jurisdictions;
  risks related to increases in demand for exploration, development and construction services equipment, and related cost increases;
  increased competition in the mining industry;
  our need to attract and retain qualified management and personnel;
  risks related to conflicts of interest due to some of our directors’ and officers’ involvement with other natural resource companies;
  our classification as a “passive foreign investment company” under the United States tax code;
 

risks associated with impacts from the reaction to and measures taken to address the spread of the COVID-19 virus;

  risks surrounding an audit with the use of information technology systems and cybersecurity;
  uncertainty surrounding an audit by the Canada Revenue Agency (“CRA”) of Canadian exploration expenses incurred by the Issuer during the 2014, 2015 and 2016 financial years which the Issuer has renounced to subscribers of flow-through share offerings and the CRA’s decision to reduce such renunciations to such subscribers; and
  the reassessment by the CRA of the Issuer’s refund claim for the 2010 and 2011 financial years in respect of the British Columbia Mining Exploration Tax Credit.

 

This list is not exhaustive of the factors that may affect any of our forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in our AIF attached hereto as Exhibit 99.1 under the heading “Risk Factors” and elsewhere in the AIF, and in the documents incorporated by reference in this Form 40-F and the AIF. In addition, although we have attempted to identify important factors that could cause actual achievements, events or conditions to differ materially from those identified in the forward-looking statements, there may be other factors that cause achievements, events or conditions not to be as anticipated, estimated or intended. It is also noted that while we engage in exploration and development of our properties, we will not undertake production activities by ourselves.

 

These forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made and we do not assume any obligation to update forward-looking statements, except as required by applicable securities laws, if circumstances or management’s beliefs, expectations or opinions should change. For the reasons set forth above, persons should not place undue reliance on forward-looking statements.

 

2

 

 

CURRENCY

 

Unless otherwise indicated, all dollar amounts in this Form 40-F are in Canadian dollars.

 

NOTE TO UNITED STATES READERS-

DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

 

We are permitted under the multi-jurisdictional disclosure system adopted by the United States Securities and Exchange Commission (the “SEC”), to prepare this Form 40-F in accordance with Canadian disclosure requirements, which differ from those of the SEC. We have prepared our financial statements, which are filed as Exhibit 99.2 to this Form 40-F, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and they are not comparable with financial statements of U.S. and other companies prepared in accordance with U.S. generally accepted accounting principles.

 

RESOURCE AND RESERVE ESTIMATES

 

We prepared the AIF for the fiscal year ended December 31, 2019 attached as Exhibit 99.1 to this Form 40-F and incorporated by reference herein in accordance with the requirements of Canadian securities laws, which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all Mineral Reserve and Mineral Resource estimates contained in or incorporated by reference in this Form 40-F have been prepared in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining Metallurgy and Petroleum (the “CIM”) Classification System “Standards on Mineral Resources and Mineral Reserves”, adopted by the CIM Council, as amended. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ significantly from the requirements of the SEC, including Industry Guide 7 issued by the SEC. Mineral Resource information contained herein and incorporated by reference herein may not be comparable to similar information disclosed by U.S. companies.

 

Without limiting the foregoing, this Form 40-F, including the documents incorporated by reference herein, uses the terms “measured”, “indicated” and “inferred” resources. U.S. investors are cautioned that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. U.S. investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves.

 

U.S. investors should also understand that “inferred resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of the “inferred resources” exist, are economically or legally mineable or will ever be upgraded to a higher category. Therefore, U.S. investors are also cautioned not to assume that all or any part of the inferred resources exist, or that they can be mined legally or economically. Disclosure of “contained ounces” in a mineral resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report “resources” as in place tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization and resources contained in the AIF, or in the documents incorporated by reference to this Form 40-F and the AIF, may not be comparable to information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.

 

3

 

 

DISCLOSURE CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

At the end of the period covered by this annual report on Form 40-F, an evaluation was carried out under the supervision of, and with the participation of our management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO and the CFO have concluded that as of the end of the period covered by this annual report, our disclosure controls and procedures were adequately designed and effective in ensuring that: (i) information required to be disclosed by us in reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including the CEO and the CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

For management’s report on internal control over financial reporting, see “Internal Controls over Financial Reporting” in our MD&A attached as Exhibit 99.3 to this annual report on Form 40-F and incorporated by reference herein.

 


Attestation Report of the Independent Registered Public Accounting Firm

 

Our independent registered public accounting firm has issued an attestation report on our internal control over financial reporting as of December 31, 2019, which immediately precedes the audited consolidated financial statements included as part of Exhibit 99.2 to this annual report on Form 40-F and incorporated by reference herein.

 

Changes in Internal Controls over Financial Reporting

 

During the fiscal year ended December 31, 2019, no changes occurred in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Certifications

 

See Exhibits 31.1, 31.2, 32.1 and 32.2 to this Form 40-F.

 

CORPORATE GOVERNANCE

 

We are subject to a variety of corporate governance guidelines and requirements of the Toronto Stock Exchange, the NYSE (the “NYSE”), the Canadian Securities Administrators and the SEC. We believe that we meet or exceed the applicable corporate governance requirements. According to the NYSE Rules, a listed company must adopt and disclose a set of corporate governance guidelines with respect to specified topics. Such guidelines are required to be posted on the registrant’s website. Although we are listed on the NYSE, we are not required to comply with all of that exchange’s corporate governance rules which are applicable to U.S. corporations. The significant ways in which the NYSE governance rules differ for us, as a foreign company, are a reduced quorum requirement for shareholder meetings, shareholder approval for issuance of common shares that could result in a 20% increase in the number of outstanding common shares and shareholder approval of certain compensation plans. The guidelines are available for viewing on our website at http://seabridgegold.net/pdf/ManCorpPolPrac.pdf and are available without charge in print to any shareholder who requests them. Requests for copies of the guidelines should be made to the Secretary of our company at 106 Front Street East, Suite 400, Toronto, Ontario, Canada M5A 1E1, Telephone (416) 367-9292.

 

We review our governance practices and monitor developments in Canada and the United States on an on-going basis to ensure we remain in compliance with applicable rules and standards. The Board is committed to sound corporate governance practices which are both in the interest of our shareholders and contribute to effective and efficient decision making.

 

4

 

 

AUDIT COMMITTEE

 

Audit Committee

 

The Board has a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of our Audit Committee are identified under the heading “Audit Committee Information” in the AIF which is attached as Exhibit 99.1 to this annual report on Form 40-F and incorporated by reference herein. In the opinion of the Board, all members of the Audit Committee are financially literate and independent, as such terms are defined by the NYSE’s corporate governance listing standards applicable to us and as determined by Rule 10A-3 under the Exchange Act.

 

Audit Committee Financial Expert

 

The Board has determined that Mr. Richard Kraus, Chairman of the Audit Committee, has the necessary qualifications to be designated as an “audit committee financial expert” within the meaning of applicable SEC Rules and is an “independent director”, as defined pursuant to Item 407(d)(5) of SEC Regulation S-K and Section 303A.02 of the New York Stock Exchange Listed Company Manual. Mr. Kraus is a Certified Public Accountant and an accomplished business leader with a broad range of experience as an investor, board director, senior executive and business consultant across multiple industries with an emphasis on mining and natural resources. From 1981-1997 he served in various senior executive roles (including CEO, COO and CFO) of Echo Bay Mines, a major gold mining company that was acquired by Kinross Gold Corporation in 2003. Mr. Kraus is currently Executive Chairman of The RMH Group, Inc., a privately owned engineering consulting firm with more than 100 employees. He is a graduate of LaSalle University where he earned his degree in Business Administration. The SEC has indicated that the designation of an audit committee financial expert does not make that person an “expert” for any purpose, impose any duties, obligations, or liability on that person that are greater than those imposed on members of the audit committee and board of directors who do not carry this designation, or affect the duties, obligations, or liabilities of any other member of the audit committee or board of directors.

 

Audit Committee Charter

 

Our Audit Committee Charter is available on our website at http://www.seabridgegold.net/governance.php, and is provided in Schedule A to the AIF, which is attached as Exhibit 99.1 to this annual report on Form 40-F and incorporated by reference herein. The Charter also is available in print to any shareholder that provides us with a written request. Requests for copies should be made to the Secretary of our company at 106 Front Street East, Suite 400, Toronto, Ontario, Canada M5A 1E1, Telephone (416) 367-9292.

 

PRINCIPAL ACCOUNTING FEES AND SERVICES – INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

KPMG LLP acted as our independent registered public accounting firm for the fiscal years ended December 31, 2019 and 2018. For a description of the total amount billed by KPMG LLP to us for services performed in the last two fiscal years by category of service (audit fees, audit-related fees, tax fees and all other fees), see Item 9 “Audit Committee Information - External Auditor Service Fees (by Category)” in the AIF, which is attached as Exhibit 99.1 to this Form 40-F and incorporated by reference herein.

 

5

 

 

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

 

For a description of our pre-approval policies and procedures related to the provision of non-audit services, see Item 9 “Audit Committee Information- Pre-Approval of Audit and Non-Audit Services Provided by Independent Auditors” in the AIF, which is attached as Exhibit 99.1 to this Form 40-F and incorporated by reference herein.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet financing arrangements or relationships with unconsolidated special purpose entities.

 

CODE OF BUSINESS ETHICS

 

We have adopted a Code of Business Ethics (the “Code”) covering our executive officers and directors. The Code is available on our website at http://seabridgegold.net/pdf/ManCorpPolPrac.pdf and from our office at the address listed on the cover of this Form 40-F.

 

All amendments and all waivers of the Code to the officers covered by it will be posted on our website, furnished to the SEC as required, and provided to any shareholder who requests them. During the fiscal year ended December 31, 2019, we did not grant any waiver, including an implicit waiver, from a provision of the Code to any executive officer or director.

 

CONTRACTUAL OBLIGATIONS

 

The required disclosure is included under the heading “Contractual Obligations” in our MD&A attached as Exhibit 99.3 to this annual report on Form 40-F and incorporated by reference herein. Amounts shown for mining leases include estimates of option payments, mineral lease payments, work commitments and tax levies that are required to maintain our interest in the mineral projects.

 

MINE SAFETY DISCLOSURE

 

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities under the regulation of the Federal Mine safety and Health Administration under the Federal Mine Safety and Health Act of 1977. During the fiscal year ended December 31, 2019, we were not an operator, of a coal or other mine in the United States.

 

NOTICES PURSUANT TO REGULATION BTR

 

We did not send any notices required by Rule 104 of Regulation BTR during the fiscal year ended December 31, 2019 concerning any equity security subject to a blackout period under Rule 101 of Regulation BTR.

 

ADDITIONAL INFORMATION

 

Additional information relating to us, including the Audited Financial Statements, the MD&A and the AIF, can be found on SEDAR at www.sedar.com, on the SEC website at www.sec.gov, or on our website at www.seabridgegold.net. Shareholders may also contact the Secretary of our company by phone at (416) 367-9292 or by e-mail at info@seabridgegold.net to request copies of these documents and this annual report on Form 40-F.

 

6

 

 

CONTACTING THE BOARD

 

Shareholders, employees and other interested parties may communicate directly with the Board by:

 

  writing to:

Rudi Fronk

Chairman and CEO

Seabridge Gold, Inc.

106 Front Street, East, 4th Floor

Toronto, Ontario, Canada M5A 1E1

  calling: (416) 367-9292
  emailing:

rudi@seabridgegold.net

 

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

 

  A.

Undertaking

 

We undertake to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

 

  B.

Consent to Service of Process

 

We have previously filed with the SEC a written consent to service of process and power of attorney on Form F-X. Any change to the name or address of our agent for service shall be communicated promptly to the SEC by amendment to the Form F-X referencing our file number.

 

7

 

 

SIGNATURES

 

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

 

  Seabridge Gold Inc.
     
  By: /s/ Rudi P. Fronk
    Rudi P. Fronk
    Chairman and Chief Executive Officer

 

Date: March 27, 2020

 

8

 

 

EXHIBITS

 

Consents

 

23.1 Consent of KPMG LLP, Independent Registered Public Accounting Firm
23.2(a) Consent of Tetra Tech Inc. and John Huang
23.2(b) Consent of Tetra Tech Inc. and Sabry Abdel Hafez
23.2(c) Consent of Tetra Tech Inc. and Hassan Ghaffari and Kevin Jones
23.2(d) Consent of Tetra Tech Inc. and Nigel Goldup
23.3 Consent of Moose Mountain Technical Services and J. H. Gray
23.4 Consent of W.N. Brazier Associates Inc. and Neil Brazier
23.5 Consent of ERM Consultants Canada Ltd. and Rolf Schmitt
23.6 Consent of Klohn Crippen Berger Ltd. and J. Graham Parkinson
23.7 Consent of Resource Modeling Inc. and Michael Lechner
23.8 Consent of McElhanney Consulting Services Ltd. and Robert W. Parolin
23.9 Consent of BGC Engineering Inc. and Derek Kinakin
23.10(a) Consent of Golder Associates Ltd. and Ross D. Hammett
23.10(b) Consent of Golder Associates Ltd. and Albert Victor Chance
23.11 Consent of Wood Canada Limited and Greg Gosson
23.12 Consent of SRK Consulting (Canada) Inc. and Stephen Day*
23.13 Consent of William Threlkeld

 

Certifications

 

31.1 Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Annual Information

 

99.1 Annual Information Form for the year ended December 31, 2019
99.2 Audited Financial Statements for the year ended December 31, 2019
99.3 Management’s Discussion and Analysis for the year ended December 31, 2019
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

 

 

*To be filed by amendment.

 

 

9

 

Exhibit 23.1

 

 

KPMG LLP

Bay Adelaide Centre

333 Bay Street, Suite 4600

Toronto, ON M5H 2S5

Canada

Tel 416-777-8500

Fax 416-777-8818

 

Consent of Independent Registered Public Accounting Firm

 

The Board of Directors of Seabridge Gold Inc.

 

We consent to the inclusion in this annual report on Form 40-F of:

 

our Report of Independent Registered Public Accounting Firm dated March 26, 2020, addressed to the shareholders and directors of Seabridge Gold Inc. (the “Company”), on the consolidated financial statements of the Company comprising of the consolidated statements of financial position of the Company as at December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive loss, changes in shareholder’s equity and cash flows for each of the years then ended, and the related notes; and

 

our Report of Independent Registered Public Accounting Firm dated March 26, 2020 on the effectiveness of internal control over financial reporting as of December 31, 2019,

 

each of which is contained in this annual report on Form 40-F of the Company for the fiscal year ended December 31, 2019.

 

We also consent to the incorporation by reference of such reports in the Registration Statement No. 333-229373 on Form F-10 and the Registration Statement No. 333-211331 on Form S-8 of the Company.

 

 

Chartered Professional Accountants, Licensed Public Accountants

 

Toronto, Canada

March 27, 2020

 

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.KPMG Canada provides services to KPMG LLP.

 

Exhibit 23.2(a)

 

Tetra Tech Inc.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following reports:

 

  Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014
     
  2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (collectively, the “Reports”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Jianhui (John) Huang, Ph.D., P.Eng., on behalf of myself and Tetra Tech Inc., hereby:

 

  1. consent to the public filing of the Reports and the use of any extracts from or a summary of the Reports in the 40-F;
     
  2. consent to the use of my name and Tetra Tech Inc.’s name and references to the Reports, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Reports in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Reports for which I am responsible; and’
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Reports or that are within my knowledge as a result of the services performed by me in connection with the Reports.

 

  Yours truly,
   
  /s/ Jianhui (John) Huang
  Jianhui (John) Huang, Ph.D., P.Eng.

 

Exhibit 23.2(b)

 

Tetra Tech Inc.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following report:

 

  Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014 (the “Report”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Sabry Abdel Hafez, Ph.D., P.Eng., on behalf of myself and Tetra Tech Inc., hereby:

 

  1. consent to the public filing of the Report and the use of any extracts from or a summary of the Reports in the 40-F;
     
  2. consent to the use of my name and Tetra Tech Inc.’s name and references to the Reports, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Report in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Report for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Report or that are within my knowledge as a result of the services performed by me in connection with the Report.

 

  Yours truly,
   
  /s/ Sabry Abdel Hafez
  Sabry Abdel Hafez, Ph.D., P.Eng.

 

Exhibit 23.2(c)

 

Tetra Tech Inc.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following reports:

 

  Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014
     
 

2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016

 

(collectively the “Reports”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Hassan Ghaffari, P.Eng., on behalf of myself and Tetra Tech Inc., hereby:

 

  1. consent to the public filing of the Reports and the use of any extracts from or a summary of the Reports in the 40-F;
     
  2. consent to the use of my name and Tetra Tech Inc.’s name and references to the Reports, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Reports in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Reports for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Reports or that are within my knowledge as a result of the services performed by me and Kevin Jones in connection with the Report

 

  Yours truly,
   
  /s/ Hassan Ghaffari
  Hassan Ghaffari, P.Eng.

 

Exhibit 23.2(d)

 

Tetra Tech Inc.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following report:

 

  Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014 (the “Report”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Nigel Goldup, P.Eng., on behalf of myself and Tetra Tech Inc., hereby:

 

  1. consent to the public filing of the Report and the use of any extracts from or a summary of the Report in the 40-F;
     
  2. consent to the use of my name and Tetra Tech Inc.’s name and references to the Report, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Report in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Report for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Report or that are within my knowledge as a result of the services performed by me in connection with the Report.

 

  Yours truly,
   
  /s/ Nigel Goldup
  Nigel Goldup, P.Eng.

 

Exhibit 23.3

 

Moose Mountain Technical Services

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following reports:

 

  Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014
     
  2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (collectively, the “Reports”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, James H. Gray, P.Eng., on behalf of myself and Moose Mountain Technical Services, hereby:

 

  1. consent to the public filing of the Reports and the use of any extracts from or a summary of the Reports in the 40-F;
     
  2. consent to the use of my name and Moose Mountain Technical Services’ name and references to the Reports, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Reports in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Reports for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Reports or that are within my knowledge as a result of the services performed by me in connection with the Reports.

 

  Yours truly,
   
  /s/ James H. Gray
  James H. Gray, P.Eng.

 

Exhibit 23.4

 

W.N. Brazier Associates Inc.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following reports:

 

  Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014
     
  2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (collectively, the “Reports”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Neil Brazier, P.Eng., on behalf of myself and W.N. Brazier Associates Inc., hereby:

 

  1. consent to the public filing of the Reports and the use of any extracts from or a summary of the Reports in the 40-F;
     
  2. consent to the use of my name and W.N. Brazier Associates Inc.’s name and references to the Reports, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Reports in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Reports for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Reports or that are within my knowledge as a result of the services performed by me in connection with the Reports.

 

  Yours truly,
   
  /s/ Neil Brazier
  Neil Brazier, P.Eng.

 

Exhibit 23.5

 

ERM Consultants Canada Ltd.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following reports:

 

  Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014
     
  2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (collectively, the “Reports”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Rolf Schmitt, M.Sc., P.Geo, on behalf of myself, Pierre Pelletier, P.Eng and ERM Consultants Canada Ltd., hereby:

 

  1. consent to the public filing of the Reports and the use of any extracts from or a summary of the Reports in the 40-F;
     
  2. consent to the use of my name, the name of Pierre Pelletier, P.Eng. and ERM Consultants Canada Ltd.’s name and references to the Reports, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Reports in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Reports for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Reports or that are within my knowledge as a result of the services performed by me in connection with the Reports.

 

  Yours truly,
   
  /s/ Rolf Schmitt
  Rolf Schmitt, M.Sc., P.Geo

 

Exhibit 23.6

 

Klohn Crippen Berger Ltd.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following report:

 

  2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (the “Report”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, J. Graham Parkinson, P.Geo., on behalf of myself and Klohn Crippen Berger Ltd., hereby:

 

  1. consent to the public filing of the Report and the use of any extracts from or a summary of the Report in the 40-F;
     
  2. consent to the use of my name and Klohn Crippen Berger Ltd.’s name and references to the Report, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Report in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Report for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Report or that are within my knowledge as a result of the services performed by me in connection with the Report.

 

  Yours truly,
   
  /s/ J. Graham Parkinson
  J. Graham Parkinson, P.Geo.

 

Exhibit 23.7

 

Resource Modeling Inc.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following reports:

 

  Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014
     
  2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (collectively, the “Reports”).

 

Reference is also made to the disclosure in the 40-F (defined below) regarding the following resource estimates:

 

  updated Deep Kerr inferred resource estimate as of February, 2017
     
  new resource estimate at Iron Cap as at March 12, 2019
     
  inferred resource estimate for Walsh Lake as of March, 2014
(such disclosure collectively, the “Estimates”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Michael J. Lechner, P.Geo., RPG, CPG, on behalf of myself and Resource Modeling Inc., hereby:

 

  1. consent to the public filing of the Reports and the Estimates and the use of any extracts from or a summary of the Reports in the 40-F;
     
  2. consent to the use of my name and Resource Modeling Inc.’s name and to the:

 

  (a) the references to the Reports, or portions thereof, in the 40-F and inclusion or incorporation by reference of information derived from the Reports; and
     
  (b) the inclusion of the Estimates, in the 40-F;

 

  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Reports for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Reports or the Estimates or that are within my knowledge as a result of the services performed by me in connection with the Reports and the Estimates.

 

  Yours truly,
   
  /s/ Michael J. Lechner
  Michael J. Lechner, P.Geo., RPG, CPG

 

Exhibit 23.8

 

McElhanney Consulting Services Ltd.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following report:

 

  2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (the “Report”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Robert. W. Parolin, P.Eng., on behalf of myself and McElhanney Consulting Services Ltd., hereby:

 

  1. consent to the public filing of the Report and the use of any extracts from or a summary of the Report in the 40-F;
     
  2. consent to the use of my name and McElhanney Consulting Services Ltd.’s name and references to the Report, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Report in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Report for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Report or that are within my knowledge as a result of the services performed by me in connection with the Report.

 

  Yours truly,
   
  /s/ Robert. W. Parolin
  Robert. W. Parolin, P.Eng.

 

Exhibit 23.9

 

BGC Engineering Inc.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following report:

 

 

2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (the “Report”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Derek Kinakin, M.Sc., P.Geo., P.G., on behalf of myself and BGC Engineering Inc., hereby:

 

  1. consent to the public filing of the Report and the use of any extracts from or a summary of the Report in the 40-F;
     
  2. consent to the use of my name and BGC Engineering Inc.’s name and references to the Report, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Report in the 40-F;
     
  3. confirm that I have read the 40-F and that it fairly and accurately represents the information in the sections of the Report for which I am responsible; and
     
  4. confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the Report or that are within my knowledge as a result of the services performed by me in connection with the Report.

 

  Yours truly,
   
  /s/ Derek Kinakin
  Derek Kinakin, M.Sc., P.Geo., P.G.

 

Exhibit 23.10(a)

 

Golder Associates Ltd.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following report:

 

2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (the “Report”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Ross Hammett, Ph.D., P.Eng., on behalf of myself and Golder Associates Ltd., hereby:

 

  1. consent to the public filing of the Report and the use of any extracts from or a summary of the Report in the 40-F;
     
  2. consent to the use of my name and Golder Associates Ltd.’s name and references to the Report, or portions thereof, in the 40-F and to the inclusion or incorporation by reference of information derived from the Report in the 40-F;

 

  Yours truly,
   
  /s/ Ross Hammett
  Ross Hammett, Ph.D., P.Eng.

 

Exhibit 23.10(b)

 

Golder Associates Ltd.

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following report:

 

Courageous Lake Prefeasibility Study dated as of September 5, 2012 and revised and reissued November 11, 2014 (the “Report”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Albert Victor Chance, P.Eng., hereby consent to the quotations or summary of the portions prepared by me of the Report in the 40-F; and the use and public filing of such quotations or summary in the 40-F.

 

  Yours truly,
   
  /s/ Albert Victor Chance
  Albert Victor Chance, P.Eng.

 

Exhibit 23.11

 

Wood Canada Limited, formerly known as Amec Foster Wheeler Americas Limited

 

March 27, 2020

 

TO:

Seabridge Gold Inc.

United States Securities and Exchange Commission

   
Re:

Seabridge Gold Inc. (the “Company”)

Consent of Expert

 

Ladies and Gentlemen:

 

Reference is made to the following report:

 

2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment dated October 6, 2016 (the “Report”)

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, Greg Gosson, the undersigned, on behalf of Wood Canada Limited, formerly known as Amec Foster Wheeler Americas Limited (Wood), hereby:

 

1.consent to the use of any extracts from or a summary of content prepared by Wood from the Report in the 40-F;

 

2.consent to the use of Wood’s name and references to the Report, or portions thereof prepared by Wood, in the 40-F and to the inclusion or incorporation by reference of information derived from content prepared by Wood from the Report in the 40-F.

 

  Yours truly,
   
  /s/ Greg Gosson
 

Greg Gosson, Manager, Consulting Canada

Wood Canada Limited

 

Exhibit 23.13

 

March 27, 2020

 

TO: Seabridge Gold Inc.
United States Securities and Exchange Commission
   
Re: Seabridge Gold Inc. (the “Company”)
Consent of Expert

 

Ladies and Gentlemen:

 

In connection with the Company’s Annual Report on Form 40-F (the “40-F”), to be filed with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, I, William Threlkeld, the Senior Vice President, Exploration of the Company and a Registered Professional Geologist, consent to the use of my name and authorize the use of the information represented in the 40-F as having been prepared by or under my supervision.

 

I confirm that I have read the 40-F and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the information represented in the 40-F as having been prepared by me or under my supervision or within my knowledge as a result of the services performed by me in connection with such information.

 

  Yours truly,
   
  /s/ William Threlkeld
  William Threlkeld, P.Geo

 

Exhibit 31.1

 

CERTIFICATIONS PURSUANT TO SECTION 302

OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Rudi P. Fronk, Chairman and CEO, certify that:

 

  1. I have reviewed this Annual Report on Form 40-F of Seabridge Gold Inc. (the “Issuer”):
     
  2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer as of, and for, the periods presented in this report;
     
  4. The Issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Issuer and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the Issuer’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
     
  d) Disclosed in this annual report any change in the Issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Issuer’s internal control over financial reporting; and

 

  5. The Issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Issuer’s auditors and the audit committee of the Issuer’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Issuer’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Issuer’s internal control over financial reporting.

 

Date: March 27, 2020 By: /s/ Rudi P. Fronk
    Rudi P. Fronk
    Chairman and CEO

 

Exhibit 31.2

 

CERTIFICATIONS PURSUANT TO SECTION 272

OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Christopher J. Reynolds, VP Finance and CFO, certify that:

 

  1. I have reviewed this Annual Report on Form 40-F of Seabridge Gold Inc. (the “Issuer”):
     
  2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer as of, and for, the periods presented in this report;
     
  4. The Issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Issuer and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the Issuer’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
     
  d) Disclosed in this annual report any change in the Issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Issuer’s internal control over financial reporting; and

 

  5. The Issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Issuer’s auditors and the audit committee of the Issuer’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Issuer’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Issuer’s internal control over financial reporting.

 

Date: March 27, 2020 By: /s/ Christopher J. Reynolds
    Christopher J. Reynolds
    VP Finance and CFO

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. §1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Annual Report of Seabridge Gold Inc. (the “Company”) on Form 40-F for the period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), I, Rudi P. Fronk, Chief Executive Officer of the Company, certify, pursuant to U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: March 27, 2020 By: /s/ Rudi P. Fronk
    Rudi P. Fronk
    Chief Executive Officer

 

This certification accompanies the Annual Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and may not be used or relied upon for any other purpose including Section 18 of the Securities Exchange Act of 1934.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. §1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Annual Report of Seabridge Gold Inc. (the “Company”) on Form 40-F for the period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), I, Christopher J. Reynolds, Vice President Finance and Chief Financial Officer of the Company, certify, pursuant to U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: March 27, 2020 By: /s/ Christopher J. Reynolds
    Christopher J. Reynolds
    Vice President Finance and CFO

 

This certification accompanies the Annual Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and may not be used or relied upon for any other purpose including Section 18 of the Securities Exchange Act of 1934.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

ANNUAL

 

INFORMATION

 

FORM

 

 

 

FOR THE YEAR ENDED

DECEMBER 31, 2019

 

 

 

 

 

DATED MARCH 27, 2020

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

Contents  
   
PRELIMINARY NOTES i
Date of Information i
Reporting Currency i
Units of Measure i
Cautionary Note to United States Investors Regarding Resource Estimates ii
ITEM 1: CORPORATE STRUCTURE 1
Incorporation of the Issuer 1
Incorporate Relationships 1
ITEM 2: GENERAL DEVELOPMENT OF THE BUSINESS 2
Overview 2
Three Year History 5
ITEM 3: DESCRIPTION OF THE ISSUER’S BUSINESS 8
General 8
Cautionary Note Regarding Forward-Looking Statements 9
KSM Project 11
Courageous Lake Project 48
Iskut Project 66
Glossary of Technical Terms 69
ITEM 4: RISK FACTORS 73
Risks Related to the Issuer and its Industry 73
Risks Related to the Common Shares 83
ITEM 5: DIVIDENDS 85
ITEM 6: GENERAL DESCRIPTION OF CAPITAL STRUCTURE 85
ITEM 7: MARKET FOR SECURITIES 86
Trading Price and Volume 86
ITEM 8: DIRECTORS AND OFFICERS 86
ITEM 9: AUDIT COMMITTEE INFORMATION 90
Audit Committee Charter 90
Composition of the Audit Committee 90
Relevant Education and Experience 90
External Auditor Services Fees (by Category) 91
Pre-Approval of Audit and Non-Audit Services Provided by Independent Auditors 91
ITEM 10: CONFLICTS OF INTEREST 91
ITEM 11: LEGAL PROCEEDINGS AND REGULATORY ACTIONS 92
Legal Proceedings 92
Regulatory Actions 92
ITEM 12: INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS 93
ITEM 13: TRANSFER AGENTS AND REGISTRARS 93
ITEM 14: MATERIAL CONTRACTS 93
ITEM 15: INTERESTS OF EXPERTS 93
ITEM 16: ADDITIONAL INFORMATION 94

 

I

 

 

PRELIMINARY NOTES

 

 

Date of Information

 

 

The information in this Annual Information Form (“AIF”) is presented as of December 31, 2019 unless specified otherwise.

 

Reporting Currency

 

 

All dollar amounts are expressed in Canadian dollars unless otherwise indicated. The Issuer’s quarterly and annual financial statements are presented in Canadian dollars.

 

Units of Measure

 

 

In this AIF a combination of Imperial and metric measures are used with respect to the Issuer’s mineral properties. Conversion rates from Imperial measure to metric and from metric to Imperial are provided below:

 

Imperial Measure = Metric Unit Metric Measure = Imperial Unit
2.47 acres 1 hectare (h) 0.4047 hectares 1 acre
3.28 feet 1 meter (m) 0.3048 meters 1 foot
0.62 miles 1 kilometer (km) 1.609 kilometers 1 mile
0.032 ounces (troy) (oz) 1 gram (g) 31.1035 grams 1 ounce (troy)
1.102 tons (short) 1 tonne (t) 0.907 tonnes 1 ton
0.029 ounces (troy)/ton 1 gram/tonne (g/t) 34.28 grams/tonne 1 ounce (troy/ton)

 

Abbreviations of unit measures are used in this AIF in addition to those in brackets in the table above as follows:

 

Bt - Billion tonnes Ga – Giga-annum kWh - Kilowatt hours Mlb - Million pounds
Mm³ - Million cubic meters Moz - Million ounces m/s - Meters per second Mt - Million tonnes
MWh - Megawatt hours ppm - Parts per million tpd – tonnes per day W/m²- Watt per square meter

 

See “Glossary of Technical Terms” for a description of some important technical terms used in this AIF.

 

i

 

 

Cautionary Note to United States Investors Regarding Resource Estimates

 

 

National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all resource and reserve estimates contained in or incorporated by reference in this AIF have been prepared in accordance with NI 43-101 and the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Standards on Mineral Resource and the Mineral Reserves, adopted by the CIM Council (the “CIM Standards”).

 

United States investors are cautioned that the requirements and terminology of NI 43-101 and the CIM Standards differ significantly from the requirements of the SEC, including Industry Guide 7 under the US Securities Act of 1933. Accordingly, the Issuer’s disclosures regarding mineralization may not be comparable to similar information disclosed by companies subject to the SEC’s Industry Guide 7. Without limiting the foregoing, while the terms “measured resources”, “indicated resources” and “inferred resources” are recognized and required by Canadian securities laws, they are not recognized by the SEC and are not permitted to be used in documents filed with the SEC by companies subject to Industry Guide 7. Under U.S. Standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Mineral resources which are not mineral reserves do not have demonstrated economic viability and investors are cautioned not to assume that all or any part of a mineral resource will ever be converted into reserves.

 

U.S. investors should also understand that “inferred resources” are based on limited geologic evidence and sampling and have great uncertainty as to their economic and legal feasibility. Although it is reasonably expected that the majority of “inferred resources” could be upgraded to “indicated resources” with continued exploration, U.S. investors are also cautioned not to assume that all or any part of an “inferred resource” exists, is economically mineable or will ever be upgraded to a higher category. Disclosure of “contained ounces” in a mineral resource is permitted disclosure under Canadian regulations. In contrast, under U.S. rules, companies are normally only permitted to report “resources” as in place tonnage and grade without reference to unit measures.

 

ii

 

 

Seabridge Gold Inc.

 

ANNUAL INFORMATION FORM

 

ITEM 1:CORPORATE STRUCTURE

 

 

Incorporation of the Issuer

 

 

Seabridge Gold Inc. (the “Issuer” or “Seabridge”) was incorporated under the Company Act (British Columbia) on September 14, 1979 under the name of Chopper Mines Ltd., which was subsequently changed to Dragoon Resources Ltd. on November 9, 1984, and then changed again to Seabridge Resources Inc. on May 20, 1998. On June 20, 2002, the Issuer changed its name to “Seabridge Gold Inc.” and on October 31, 2002, the Issuer was continued under the Canada Business Corporations Act.

 

The Issuer’s corporate offices are located at 106 Front Street East, 4th Floor, Toronto, Ontario, Canada M5A 1E1. The Issuer’s telephone number is (416) 367-9292. The Issuer’s Shares are currently listed for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “SEA” and on the New York Stock Exchange (the “NYSE”) under the symbol “SA”. The Issuer’s registered office is located at 10th Floor, 595 Howe Street, Vancouver, British Columbia, Canada V6C 2T5.

 

Incorporate Relationships

 

 

The Issuer presently has ten wholly-owned subsidiaries: KSM Mining ULC, Seabridge Gold (KSM) Inc., SnipGold Corp., Hattrick Resources Corp. (“Hattrick”) and Tuksi Mining & Development Company Ltd. (“Tuksi”), companies incorporated under the laws of British Columbia, Canada; Seabridge Gold (NWT) Inc., a company incorporated under the laws of the Northwest Territories of Canada; and Seabridge Gold Corporation, Pacific Intermountain Gold, Corporation, 5555 Gold Inc. and 555 Silver Inc., each Nevada Corporations. The following diagram illustrates the inter-corporate relationship between the Issuer, its active subsidiaries and its projects as of December 31, 2019.

 

 

 

Notes:1.Certain of the Issuer’s subsidiaries have been omitted from the diagram above as they own no property.
2.Snipgold, through one of its subsidiaries, owns 95% of certain of the claims.
3.The Issuer has entered into option agreements under which a 100% interest in the Quartz Mountain Project may be acquired by a third party.

 

1

 

 

ITEM 2:GENERAL DEVELOPMENT OF THE BUSINESS

 

 

Overview

 

 

Since 1999, Seabridge has taken steps to achieve its goal of providing strong returns to shareholders by maximizing leverage to the price of gold. The Issuer’s strategy to achieve this goal is to optimize gold ownership per Common share by increasing gold resources more rapidly than shares outstanding. This ratio of gold ownership per Common share has provided a simple but effective measure for evaluating dollars spent on behalf of shareholders.

 

In 1999, management decided that Seabridge’s strategic focus would be on acquiring, exploring and advancing gold deposits. Seabridge determined it would not build or operate mines, but that it would look to partner or sell assets that were advancing toward production. In the Issuer’s view, building mines adds considerable technical and financial risks and requires a different set of skills and resources. Seabridge also decided it would focus on exploration projects with known gold deposits but exploration upside to reduce risk in terms of trying to achieve a growing ratio of gold ownership per Common share. The Issuer therefore narrowed the activities it would undertake to the following three phases, which phases it planned to progress through in the order set forth and in response to increases in the price of gold: (i) acquiring known gold deposits, (ii) expanding the deposits, and (iii) advancing its deposits towards a construction decision by defining the economic parameters of the deposits through engineering studies, upgrading mineral resources to reserves, securing permits for undertaking mining operations and building relationships with local communities and aboriginal groups. The Issuer believed this was a relatively lower-risk and less capital-intensive strategy consistent with the goal of optimizing gold ownership per Common share.

 

In 1999, Seabridge set out to buy gold deposits in North America that were not economic in a low gold price environment. North America was selected as the preferred jurisdiction because of its established mineral tenure and permitting procedures, political stability and infrastructure advantages. At that time, many projects were for sale at distressed prices as producers struggled to stay in business. Seabridge decided it would acquire projects with three main characteristics:

 

1.Proven resources with quality work done by reputable companies;
2.Upside exploration potential; and
3.Low holding costs to conserve cash in the event that a higher gold price was not achieved.

 

From 1999 to 2002, Seabridge acquired eight deposits with gold resources in North America, paying less than US$1.00 per ounce of resource (using aggregate ounces from all resource categories) and has been paying less than US$0.10 per ounce per year in holding costs. Previous owners had spent an estimated US$300 million exploring and developing these deposits.

 

By 2002, with the gold price on the rise, the Issuer believed that it was becoming more expensive to acquire existing resources, and the cost-benefit equation tilted in favor of increasing gold ownership through exploration. Seabridge’s strategy entered its second phase, which was to expand the Issuer’s resource base by carefully targeted exploration. It has continued exploring even after it moved to the third phase and these efforts have proved highly successful, with measured and indicated gold resources now totaling 61.5 million ounces with an additional 61.3 million ounces of gold in the inferred resource category (see Mineral Resources Table on page 8) against a backdrop of only 63.92 million shares outstanding.

 

2

 

 

By 2008, the gold price had risen sufficiently to make Seabridge think that a number of its projects might be economic. Therefore Seabridge began work on the third phase of its strategy: defining the economics of its projects through engineering studies, upgrading resources to reserves, securing permits and building support for the KSM Project in local communities. This effort focused on the KSM Project, which, during the exploration phase, had emerged as the Issuer’s most important asset. The permitting process began and the Issuer undertook substantial infill drilling programs to raise the confidence level in the project’s resources. The Issuer completed its initial Preliminary Feasibility Study for the KSM Project in March 2010, which was updated in June, 2011. The Issuer then undertook further optimization work at the KSM Project and revised its project design based on input received from regulatory authorities and local aboriginal groups during a joint harmonized environmental assessment process managed by the Province of British Columbia and Canada, but which also included participation of Alaskan State and Federalregulators. This work is reflected in the third Preliminary Feasibility Study for the KSM Project completed in June 2012. The Issuer submitted its Environmental Impact Statement/Environmental Assessment Application (the “EA Application and EIS”) in the first quarter of 2013, it was accepted for formal review by British Columbia in August, 2013 and it was approved by both the federal and provincial authorities in 2014. The provincial EA certificate was originally approved for a five year term and was renewed for a further five years on March 21, 2019. The EA Application and EIS is based on the KSM Project design in the 2012 KSM Preliminary Feasibility Study.

 

In conjunction with advancing the EA Application and EIS, the Issuer worked to build its relationships with the Nisga’a Nation and other First Nations, including pursuing impacts and benefits agreements with potentially impacted aboriginal groups. In June, 2014, the Issuer and the Nisga’a Nation entered into a formal Benefits Agreement. In September, 2013, the Gitxsan Treaty Society, representing the Gitxsan Hereditary Chiefs, delivered a letter to regulators expressing its support of Seabridge Gold’s KSM Project. In June, 2014 the Issuer announced it had reached an environmental agreement with the Gitanyow Hereditary Chiefs Office and the wilps represented by Gitanyow Hereditary Chiefs Office. Although these were important for the Issuer’s success in getting its environmental assessment approvals, work to maintain and improve these relationships, as well as relationships with the other aboriginal groups in the area is ongoing. Regular meetings are held with aboriginal groups to update them on KSM Project matters, including future plans, and the Issuer observes a process of review of each permit application with aboriginal groups both before submission of the application and with the relevant regulator after permit submission. In addition, in 2019, the Issuer entered into an impacts and benefits agreement with the Tahltan Nation. Alaskan State and federal regulators also participated in the EA Application and EIS review process, providing input throughout, and continue to be involved in permitting review associated with the KSM Project.

 

In September, 2014, the Issuer received early-stage construction permits for its KSM Project from the Province of British Columbia. The permits issued include: (1) authority to construct and use roadways along Coulter Creek and Treaty Creek; (2) rights-of-way for the proposed Mitchell-Treaty tunnels connecting project facilities; (3) permits for constructing and operating numerous camps required to support constructions activities; and (4) permits authorizing early-stage construction activities at the mine site and tailings management facility.

 

In 2010 the Issuer also turned its attention to its second-largest asset, the Courageous Lake Project. A preliminary economic assessment of this project was completed in early 2008 and indicated that the project’s economics were marginal at the then prevailing gold price. However, with the increase in the gold price by 2010, the Issuer decided to start taking the Courageous Lake Project along a similar advancement path to the KSM Project, including additional drilling and further engineering work, and completed a preliminary feasibility study in September, 2012.

 

3

 

 

In 2012 the Issuer refocused its exploration activities and began undertaking drilling of new targets at both the KSM Project, in search of higher grade core zones, and the Courageous Lake Project, in search of deposits of higher grade material, that could improve the economics of each project. The exploration programs in the 2012 to 2018 seasons were very successful, with the generation of successive resource estimates for the Kerr deposit and the Iron Cap deposit at the KSM Project and a resource estimate at the Walsh Lake deposit at the Courageous Lake Project. After its successful drill programs in 2013, 2014 and 2015 that dramatically increased inferred resources below the Kerr deposit, the Issuer decided to update its 2012 PFS to use current costs and incorporate commitments from the EA Application and EIS and to include in the report a preliminary economic assessment of the KSM Project presenting an alternative development plan incorporating the expanded Kerr deposit into a conceptual project design. The updated report was completed in 2016 and showed a modest decline in the economics of the PFS development plan but improved economics from the alternative development plan that incorporated the new mineral resources at Kerr. Exploration programs in 2016, 2017 and 2018 have led to a dramatic increase in mineral resources at Iron Cap, which now total 423 million tonnes in the indicated category and 1.9 billion tonnes in the inferred category. Now the Issuer believes that, due to the Iron Cap deposit’s proximity to the MTT and its higher grade, Iron Cap could potentially improve KSM’s economics by mining it before the Kerr deposit. Work began in 2019 on preparing an updated technical report for the KSM Project, examining another alternative development plan incorporating the new mineral resources at Iron Cap, which should be completed in the second quarter of 2020.

 

After several years of declines in the price of gold, in late 2015 the Issuer decided to look once again for opportunities to acquire gold properties as they were becoming available at more attractive prices. Since the Issuer had become much larger than it was in the 1999-2002 period when it was first acquiring properties, it has focused on identifying properties with potential for major deposits. In April, 2016, the Issuer reached an agreement to acquire SnipGold Corp., the owner of the highly prospective Iskut Project, and completed the acquisition in June 2016. In February, 2017, the Issuer announced that it had entered into a letter of intent to acquire the Snowstorm Project in Northern Nevada and completed the acquisition in June, 2017. In June, 2019, the Issuer reach an agreement for the acquisition of the Goldstorm Project, located about 3 km to the east of its Snowstorm Project. The Issuer continues to look for opportunities to acquire gold properties.

 

In 2017, 2018 and 2019 the Issuer completed programs at its Iskut and Snowstorm Projects. At Iskut, its recent work suggests the presence of a large porphyry system, which will be the target of its drilling program planned for 2020. At Snowstorm, detailed target generation work has underway with drilling of the first target in 2019 and follow-up drilling on the next two targets in 2020. Drilling in 2019 confirmed the presence of structures and stratigraphy similar to the Turquoise Ridge and Twin Creeks mines, which are located a few kilometers to the south.

 

To date, work on the KSM Project and the Courageous Lake Project has been funded in part by the sale of, or the optioning of, non-core assets, consistent with the Issuer’s strategy of limiting share dilution. The Issuer has sold the Noche Buena Project and its early-stage Nevada properties and entered into option agreements in respect of each of the Grassy Mountain, Red Mountain, Quartz Mountain and Castle Black Rock projects under which the respective optionees could acquire a 100% interest in such properties. The Grassy Mountain project was sold in February, 2013 upon exercise of the option to acquire a 100% interest in the Grassy Mountain property granted by the Issuer in 2011. In February, 2017, the option to acquire a 100% interest in the Castle Black Rock Project was exercised and the Project was sold. In May, 2017, the holder of the option on the Red Mountain Project acquired the Project from the Issuer. In addition to the proceeds received on the sale of these Projects, the Issuer has the potential to receive additional payments in respect of the Grassy Mountain, Quartz Mountain and Red Mountain Projects in the form of a net profits royalty (Grassy Mountain), an option payment and either $15 million or a net smelter returns royalty (Quartz Mountain) and a metal stream (Red Mountain).

 

4

 

 

Seabridge intends to seek a sale or joint venture of its two core assets, the KSM Project and the Courageous Lake Project, or a sale of the Issuer, while the current phase of finding and delineating higher grade zones to improve the economics of these projects and additional de-risking of these projects is being advanced. One of the goals of the search for high grade core zones at the KSM Project was to change its economic profile. Before finding the higher grade mineralized zones below the Kerr deposit, KSM was a gold project with a robust copper credit that would appeal primarily to gold miners as prospective partners. Now, KSM has a much stronger copper profile which opens up the potential for a joint venture with a large base metal producer. Realizing value for the Issuer’s shareholders will depend on the potential financial return for a prospective purchaser or partner, successfully addressing regulatory and aboriginal concerns as well as market conditions at the time, especially gold and copper prices. The timing of sales or partnership agreements, if any, cannot be determined at this juncture.

 

The continuing success of the Issuer is dependent on (1) the Issuer being able to raise capital as needed (2) strength in the price of gold and copper (3) exploration success on projects it is exploring on its own account and/or (4) advancing its projects through optimization work, regulatory reviews and permitting.

 

Three Year History

 

 

During the 2017 and 2018 financial years, the Issuer principally focused its exploration and advancement efforts on its core project, KSM, in British Columbia. Limited work was undertaken at Courageous Lake over those years. In addition, since 2016 the Issuer has been doing exploration and reclamation work at the Iskut Project, and since 2017, it has been reviewing data to develop drill targets at its Snowstorm Project. In 2019, advancement efforts continued at KSM at a similar pace to previous years, however exploration efforts were more evenly split amongst the KSM, the Iskut and the Snowstorm Projects.

 

The 2016 exploration program at KSM successfully extended the Kerr deposit in a manner that is expected to allow the expansion of block cave designs in a new mine plan and drilling at the Iron Cap deposit not only successfully found the down plunge extension of Iron Cap Lower Zone but also intersected a new shallower mineralized zone in a 61m interval that averaged 1.2 g/t gold, 0.95% copper and 4.4 g/t silver. A new resource estimate for the Kerr deposit was announced in February, 2017.

 

In 2017, the Issuer’s exploration program at KSM followed up on the exciting results from drilling at the Iron Cap deposit in 2016. There were two targets; the down plunge projection of the Lower Iron Cap Zone and the shallower high grade zone discovered in 2016 in hole IC-16-62. The Issuer completed 10,383m of drilling in 11 holes at Iron Cap, all of which encountered wide zones of significant grade. In some holes the Issuer encountered some of the best grades to date over long intervals at the Project. A new resource estimate was announced for Iron Cap in February, 2018, that incorporated all previous drilling results at Iron Cap and increased gold and copper resources at Iron Cap by more than 300%.

 

5

 

 

At the Iskut Project, in 2017 drilling focused on the Quartz Rise target where 4,459 m of drilling was completed in 10 core holes. Drilling found evidence of a gold-bearing intermediate sulfidation epithermal system beneath the Quartz Rise lithocap, as anticipated. Gold was intercepted over short intervals. Sampling of a cliff face north of Quartz Rise returned very high grades ranging from 1.49 to 125.3 g/t gold. A source for these gold concentrations was not found in the 2017 drilling. Exploration activities continued at Iskut in 2018 with the results suggesting the potential for a porphyry system, which was the target of its exploration work in 2019.

 

Progress was also made in 2017 on permitting at KSM, remediation at the old Johnny Mountain mine site (on the Iskut Project), and relations with indigenous groups in the area of the KSM Project. Amongst other permitting advances, the federal government approved an amendment to Schedule 2 of the Metal Mining Effluent Regulations under the Fisheries Act (Canada) authorizing aspects of the proposed tailings management facility for the KSM Project. At the Johnny Mountain mine the Issuer also completed structural work on the tailings pond, removed a tank farm, closed old mine portals and progressed clean-up of the mill, amongst other things.

 

In accordance with its initiative to acquire new larger properties with potential for major deposits, the Issuer completed the acquisition of a 100% interest in the Snowstorm Project in June, 2017. The Snowstorm Project consists of 31 square miles of land holdings strategically located at the projected intersection of three of the most important gold trends in Northern Nevada: the Carlin Trend, the Getchell Trend and the Northern Nevada Rift Zone. Snowstorm is contiguous and on strike with several large, successful gold producers including the Getchell/Turquoise Ridge Joint Venture operated by Barrick Gold, Newmont Mining’s Twin Creeks and Hecla Mining’s Midas operations. The Snowstorm acquisition also includes an extensive package of data generated by previous operators. Although potential targets are hidden under Tertiary cover, the existing data supports the project’s outstanding exploration potential. Geological and geochemical evaluations of Snowstorm have documented hydrothermal alteration zones consistent with large Northern Nevada deposit types. Geophysical surveys have confirmed the structural settings which host large Northern Nevada deposit types. Limited drilling has demonstrated that some of the target areas are at a depth amenable to surface exploration and resource delineation.

 

The Issuer continued to realize proceeds from the sale of its non-core assets in 2017. The Castle Blackrock property was sold in February, 2017 and the holder of the option on the Red Mountain Project completed the exercise of its option and acquired this property in May, 2017. The Issuer also sold its residual interest in the KSP Project, which is adjacent to its Iskut Project, as the holder of an option to acquire an 80% interest in the KSP property was close to completing its earn-in.

 

In 2018 at the KSM Project, the Issuer completed 20,341 m of drilling at the Iron Cap deposit that included testing the down plunge and up dip projections of the high-grade core zone of the Iron Cap deposit and drilling encountered large widths down plunge at gold and copper grades exceeding the KSM average. The Issuer announced a resource update for Iron Cap on March 12, 2018 which incorporated all drilling at Iron Cap to date. The drilling also included confirmation work that substantiated the KSM reserve model, waste characterization drilling and geotechnical drilling.

 

A winter 2018 drill program at the Courageous Lake Project was conducted to test targets for additional satellite deposits and successfully identified two gold zones, Marsh Pond and Olsen, with characteristics similar to the Walsh Lake discovery that warrant follow-up work.

 

6

 

 

Exploration at the Iskut Project in 2018 focused on testing the Quartz Rise Lithocap for high-grade epithermal precious metal occurrences associated with the uppermost portion of a porphyry mineral system. Results confirmed that much of the Quartz Rise lithocap had been eroded, leaving little opportunity for a sizeable high-grade epithermal occurrence in this area. However, the discovery of a hydrothermal breccia (diatreme) in holes QR-18-14 and 17 confirmed that a porphyry source for the lithocap is nearby. Extensive review of the available data indicates the source for the diatreme is south and southwest of Quartz Rise, where glacial erosion has exposed rocks deeper in the mineralizing system. This erosional window provides the opportunity to explore into the heart of the porphyry system with much shorter drill holes than originally anticipated from a lower elevation.

 

Work on the Snowstorm Project in 2018 included the analysis of historic core, geochemical sampling and a magnetotelluric survey (CSAMT) to target Getchell-style mineralization and define drill targets.

 

In March, 2019, the Issuer’s environmental assessment certificate (the “EAC”) for its KSM Project was extended to July 29, 2024 by the British Columbia Environmental Assessment Agency. The EAC was issued for an initial five-year term on July 24, 2014. The extended EAC imposes no new terms and conditions on the KSM Project, reflecting the strong environmental protections of the proposed development plan for the KSM Project.

 

In June, 2019, the Issuer announced that it had reached agreement with the Tahltan Nation on the terms of a Co-operation and Benefits Agreement in respect of the development and operation of the KSM Project. The more than 3 year process for reaching agreement culminated in a vote by the Tahltan Nation that approved the agreement by a majority of 77.8%. The agreement represents another important milestone for the KSM Project and sets forth a thorough and co-operative framework for the parties to work together on the KSM Project.

 

The Issuer’s search for large new porphyry targets within the KSM Project in 2020 identified four prospects which can be tested from the surface but are likely to be evaluated as bulk underground opportunities. In addition, 6,121 m of drilling was completed in 26 holes within the proposed Sulphurets pit limits at the margins of the deposit. Of the 26 holes drilled, 24 intersected over 1.0 g/t gold material in areas of epithermal occurrences not captured in the existing deposit resource model and the intersections are being evaluated for inclusion in the resource model.

 

At the Iskut Project, 2019 exploration work included geophysical surveys, geochemical sampling and detailed mapping, which identified a large intrusive system at relatively shallow depth and confirmed the presence of gold and copper. An aggressive drill testing program is planned at this target in 2020. Work continued on the remediation of the former Johnny Mountain mIne in 2019 with the continuation of in-situ hydrocarbon remediation at the former tank farm location; relocation of unapproved landfill waste to the approved landfill location; continued clean-up of the interior of the former mill building; as well as ongoing water quality sampling. A significant waste rock disposal program at the site will be implemented in 2020.

 

The Issuer’s first drill program at the Snowstorm Project was undertaken in 2019 to test for an extension of the Getchell Trend and the distinctive structural and stratigraphic features found at the Twin Creeks and Turquoise Ridge mines. The program encountered technical difficulties but did identify the favourable stratigraphic host for a Getchell-style deposit as well as structures similar to those which fed the deposits to the south.

 

7

 

 

The Issuer acquired the Goldstorm Project in August, 2019. The Goldstorm Project is in northern Nevada, only about 3 km from its Snowstorm Project. It consists of 134 mining claims and 1,160 acres of leased land in the Northern Nevada Rift, a geologic feature hosting many high-grade gold-silver mines. Goldstorm has had limited previous exploration, but surface trenching on a northwest trending vein yielded 3.0 meters of 9.0 g/t gold and 44.0 g/t silver.

 

At the date of this AIF, the Issuer’s plans exploration work at each of its Iskut and Snowstorm Projects in 2020. At the Iskut Project, the work will focus on drilling the porphyry target below the Quartz Rise lithocap and the third year of its five-year planned reclamation and closure plan for the Johnny Mountain Mine. At Snowstorm, the Issuer plans to complete drilling of two target concepts in 2020. At the KSM Project, proposed work involves advancing development of the Project to maintain a schedule that would allow a partner to reach a construction decision and have construction substantially started before expiry of the EAC on July 29, 2024.

 

ITEM 3:DESCRIPTION OF THE ISSUER’S BUSINESS

 

 

General

 

 

The Issuer owns 6 properties, 4 of which have gold resources, and its material properties are its KSM Project and its Courageous Lake Project. The Issuer holds a 100% interest in each of its properties other than a small portion of the Iskut Project, in which it owns a 95% interest. The Quartz Mountain project is subject to an option agreement under which the optionee may acquire a 100% interest in such project. At the date of this AIF, the estimated gold resources at the Issuer’s properties are set forth in the following table and are broken down by project and resource category.

 

Mineral Resources (Gold and Copper)

PROJECT Cut-Off
Grade
(g/t)
Measured Indicated Inferred
Tonnes
(000’s)
Gold
Grade
(g/t)
Gold
(000’s ozs)
Copper
Grade
(%)
Copper
(million
lbs)
Tonnes
(000’s)
Gold
Grade
(g/t)

Gold
(000’s ozs)
Copper
Grade
(%)
Copper
(million
lbs)
Tonnes
(000’s)
Gold
Grade
(g/t)

Gold
(000’s ozs)
Copper
Grade
(%)
Copper
(million
lbs)
KSM                                
Mitchell See Note 1 750,100 0.63 15,127 0.17 2,844 1,044,600 0.57 19,183 0.16 3,794 478,400 0.38 6,414 0.10 1,232
Iron Cap See Note 1 -- -- -- -- -- 423,000 0.41 5,576 0.22 2,051 1,899,000 0.45 27,474 0.30 12,556
Sulphurets See Note 1 -- -- -- -- -- 381,600 0.58 7,116 0.21 1,766 182,300 0.46 2,696 0.14 563
Kerr See Note 1 -- -- -- -- -- 378,400 0.22 2,692 0.41 3,445 2,001,500 0.31 19,746 0.40 17,672
KSM Total² --  750,100 0.63 15,127 0.17 2,844 2,227,200 0.48 34,567 0.23 11,056 4,561,000 0.38 56,330 0.32 32,023
Courageous Lake:                                
Fat Deposit² 0.83 13,401 2.53 1,090 -- -- 93,914 2.28 6,884 -- -- 48,963 2.18 3,432 -- --
Walsh Lake² 0.60 -- -- -- -- -- -- -- -- -- -- 4,624 3.24 482 -- --
Quartz
Mountain3
0.34 3,480 0.98 110 -- -- 54,330 0.91 1,591 -- -- 44,800 0.72 1,043 -- --
Iskut (Bronson Slope) See Note 4 84,150 0.42 1,140 0.15 280 102,740 0.31 1,020 0.10 222 -- -- -- -- --

 

Note:The resource estimates have been prepared in accordance with the standards and guidance referenced in NI 43-101. See “Cautionary Note to United States Investors Regarding Resource Estimates” in the Preliminary Notes.
1.The cut-off grade for KSM is CDN$9 in net smelter return (NSR) for the open pits and CDN$16 in NSR for the underground mining.

 

8

 

 

2.The effective dates of the KSM and Courageous Lake resource estimates above are as follows: KSM (Mitchell and Sulphurets) May 31, 2016; KSM (Kerr) February, 2017; KSM (Iron Cap) March, 2019; Courageous Lake (Fat), September 2012; and Courageous Lake (Walsh Lake), March, 2014.
3.Seabridge has entered into an option agreement under which a 100% interest in the Quartz Mountain project may be acquired.
4.The cut-off grade for the Iskut Project resource is CDN$9.00 in NSR.

 

The measured and indicated mineral resources at the KSM Project and Courageous Lake Project are inclusive of mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability.

 

Cautionary Note Regarding Forward-Looking Statements

 

 

This AIF contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws concerning future events or future performance with respect to the Issuer’s projects, business approach and plans, including production, capital, operating and cash flow estimates; business transactions such as the potential sale or joint venture of the Issuer’s KSM Project and Courageous Lake Project (each as defined herein) and the acquisition of interests in mineral properties; requirements for additional capital; the estimation of mineral resources and reserves; and the timing of completion and success of exploration and advancement activities, community relations, required regulatory and third party consents, permitting and related programs in relation to the KSM Project, Courageous Lake Project, Iskut Project or Snowstorm Project. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements and forward-looking information (collectively referred to in the following information simply as “forward-looking statements”). In addition, statements concerning mineral reserve and mineral resource estimates constitute forward-looking statements to the extent that they involve estimates of the mineralization expected to be encountered if a mineral property is developed and the economics of developing a property and producing minerals.

 

Forward-looking statements are necessarily based on estimates and assumptions made by the Issuer in light of its experience and perception of historical trends, current conditions and expected future developments. In making the forward-looking statements in this AIF the Issuer has applied several material assumptions including, but not limited to, the assumption that: (1) market fundamentals will result in sustained demand and prices for gold and copper, and to a much lesser degree, silver and molybdenum; (2) the potential for production at its mineral projects will continue operationally, legally and economically; (3) any additional financing needed will be available on reasonable terms; and (4) estimated reserves and resources at the Issuer’s projects have merit and there is continuity of mineralization as reflected in such estimates.

 

9

 

 

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

 

the Issuer’s history of net losses and negative cash flows from operations and expectation of future losses and negative cash flows from operations;

risks related to the Issuer’s ability to continue its exploration activities and future advancement activities, and to continue to maintain corporate office support of these activities, which are dependent on the Issuer’s ability to enter into joint ventures, to sell property interests or to obtain suitable financing;

uncertainty of whether the reserves estimated on the Issuer’s mineral properties will be brought into production;

uncertainties relating to the assumptions underlying the Issuer’s reserve and resource estimates;

uncertainty of estimates of capital costs, operating costs, production and economic returns;

risks related to commercially producing precious metals from the Issuer’s mineral properties;

risks related to fluctuations in the market price of gold, copper and other metals;

risks related to fluctuations in foreign exchange rates;

mining, exploration and development risks that could result in damage to mineral properties, plant and equipment, personal injury, environmental damage and delays in mining, which may be uninsurable or not insurable in adequate amounts;

risks related to obtaining all necessary permits and governmental approvals, or extensions/renewals thereof, for exploration and development activities, including in respect of environmental regulation;

uncertainty related to title to the Issuer’s mineral properties and rights of access over or through lands subject to third party rights, interests and mineral tenures;

risks related to unsettled First Nations rights and title and settled Treaty Nations’ rights and uncertainties relating to the application of the United Nations Declaration on the Rights of Indigenous Peoples to the laws in Canadian jurisdictions;

risks related to increases in demand for exploration and development services equipment, and related cost increases;

increased competition in the mining industry;

the Issuer’s need to attract and retain qualified management and personnel;

risks related to some of the Issuer’s directors’ and officers’ involvement with other natural resource companies;

risks associated with impacts from the reaction to and measures taken to address the spread of the COVID-19 virus;

the Issuer’s classification as a “passive foreign investment company” under the United States tax code;

risks associated with the use of information technology systems and cybersecurity;

uncertainty surrounding an audit by the Canada Revenue Agency (“CRA”) of Canadian exploration expenses incurred by the Issuer during the 2014, 2015 and 2016 financial years which the Issuer has renounced to subscribers of flow-through share offerings and the CRA’s decision to reduce such renunciations to such subscribers; and

the reassessment by the CRA of the Issuer’s refund claim for the 2010 and 2011 financial years in respect of the British Columbia Mining Exploration Tax Credit.

 

This list is not exhaustive of the factors that may affect any of the Issuer’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Issuer or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in this AIF under the heading “Risk Factors” and elsewhere in this AIF. In addition, although the Issuer has attempted to identify important factors that could cause actual achievements, events or conditions to differ materially from those identified in the forward-looking statements, there may be other factors that cause achievements, events or conditions not to be as anticipated, estimated or intended. Many of the foregoing factors are beyond the Issuer’s ability to control or predict. It is also noted that while Seabridge engages in exploration and advancement of its properties, it will not undertake production activities by itself.

 

10

 

 

These forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made and the Issuer does not assume any obligation to update forward-looking statements, except as required by applicable securities laws, if circumstances or management’s beliefs, expectations or opinions should change. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

 

KSM Project

 

 

Overview

 

The KSM Project is located within the Iskut-Stikine region of British Columbia, approximately 21 kilometers south-southeast of the former Eskay Creek Mine and approximately 65 kilometers north-northwest of Stewart, British Columbia. (See Figure 1.) The provincial government has recognized the significance of historical mining activity in this area, which includes the past producing Eskay Creek, Snip, Granduc, and Premier mines. Recently the Red Chris Mine and the Brucejack Mine commenced mining operations.

 

Access to the property is by helicopter from Bell II Crossing on the Stewart Cassiar Highway or Stewart, British Columbia. Mobilization of equipment and personnel is staged from kilometer 54 on the private Eskay Creek Mine Road (about 25 km from the Project) and from Bell II Crossing on the Stewart Cassiar Highway (about 40 km from the Project).

 

At the time the Issuer acquired the KSM Project in 2001, the project consisted of two distinct zones (Kerr and Sulphurets) which had been modeled separately by Placer Dome (CLA) Limited (“Placer Dome”). Subsequent drilling and engineering work by the Issuer has defined two new very large zones, the Mitchell Zone and the Iron Cap Zone, as well as dramatically expanding the mineralized zone beneath the Kerr zone.

 

From 2008 to 2012 Seabridge focused on further exploration and advancement of the four known deposits at the KSM Project and generated successive resource estimates and three preliminary feasibility studies, the last of which being the 2012 KSM PFS Report (as defined herein) with an effective date of June 22, 2012. In 2012 Seabridge continued advancement efforts, including work required for the submission of its EA Application and EIS, but changed its exploration focus at KSM to a search for higher temperature core zones that typically concentrate high-grade metals within very large porphyry systems such as KSM. Exploration since 2011 has resulted in the discovery of two core zones, Deep Kerr (a down dip continuation of Kerr deposit mineralization) and Iron Cap Lower Zone (a down dip continuation of Iron Cap deposit mineralization), an extension of the Mitchell zone and other promising core targets. (See “Core Zone Exploration”)

 

11

 

 

After completing drilling in 2019 the resource drill hole database for the KSM Project now includes 742 drill holes totaling approximately 291,880 meters. More than 95% of the holes at Mitchell and 95% of the holes at Iron Cap were drilled by Seabridge between 2006 and 2019.

 

In July, 2014, the Issuer’s provincial EA Application for the KSM Project under the British Columbia Environmental Assessment Act was approved. The Canadian Environmental Assessment Agency (CEAA) issued its Comprehensive Study Report in July 2014, as required by the Canadian Environmental Assessment Act, which concluded that the KSM Project would not have significant impacts to the environment. The EA Application and EIS review process involved Alaskan regulators throughout and the CEAA Study Report also concluded that the KSM Project would not have significant impacts to the environment situated downstream of the Alaska border. In December 2014 the Federal Minister of the Environment issued a positive project decision which endorsed the conclusions of the Comprehensive Study Report. The provincial EA approval was for a term of five years and was extended for a further five year term in March, 2019, but lapses after ten years unless the province determines the Issuer has substantially started construction of the Project. The federal approval is for an indefinite term. The Issuer believes that the EA Application and EIS materials and subsequent approvals demonstrate that the KSM project, as designed, is an environmentally responsible and a generally socially accepted Project.

 

Figure 1 - KSM Project Location Map

 

 

12

 

 

The Project received a license under the International Rivers Improvement Act (Canada) on October 21, 2016, authorizing the construction, operation and maintenance of the Water Storage Facility (WSF) and ancillary water works for the KSM Project within the Unuk River watershed in northwestern British Columbia.

 

In June, 2017, the Issuer also announced it had been given a regulatory amendment to Schedule 2 of the Metal Mining Effluent Regulations under the Fisheries Act (Canada) which authorizes the use of North Treaty Creek for the discharge from the KSM tailings management facility, subject to strict bonding and fishery habitat compensation.

 

After completion of the 2015 exploration season the Issuer announced a resource estimate for the Kerr/Deep Kerr zone that exceeded 1 billion tonnes and at higher grade than much of the material in the mine plan used for the 2012 KSM PFS Report. This new deposit presented great potential for improving Project economics if it was incorporated into the Issuer’s development plan at the Project. In addition, in the course of the EA Application and EIS review process, the Issuer made commitments to enhance the environmental mitigation and protection offered by the Project, which the Issuer knew would increase the cost of building KSM Project infrastructure. Since the 2012 KSM PFS Report did not incorporate the Deep Kerr deposit or these increased infrastructure costs and given the change in the market prices used in the 2012 KSM PFS Report, the Issuer decided in early 2016 to update the 2012 KSM PFS Report. In November, 2016, the Issuer completed a new pre-feasibility study report which reflected more current market conditions and included the costs associated with the Issuer’s EA Application and EIS commitments, but otherwise used essentially the same construction plan and mine plan as in the 2012 KSM PFS Report. The report also presented an alternative development plan for the Project, at a preliminary economic assessment level, that incorporated material from the Deep Kerr deposit. Overall, this new report showed that the projected economics of the original development plan had declined since 2012, but that the projected economics of the development plan that incorporated the Kerr deposit in its entirety showed meaningful improvement.

 

Additional drilling was completed at the Iron Cap deposit in 2017 and 2018 with great success. In March, 2019, an updated resource estimate was completed for the Iron Cap deposit which increased inferred resources at the deposit by more than four times the number of tonnes in the inferred resource estimate used in the 2016 update to the 2012 KSM PFS Report.

 

Land Status

 

The KSM property is comprised of four discrete claim blocks (see Figure 2) and a group of placer claims. Claim blocks of the KSM Property include mineral leases and both cell and legacy claims. The claim blocks are referred to as:

 

(a)the KSM claims containing 20 mineral claims totalling 6,097.42 Ha and 2 Mineral leases of 11,247.00 Ha;

 

(b)the Seabee claims covering 18,674.30 Ha within 46 mineral claims;

 

(c)the Tina claims composed of 11 mineral claims covering 2,052.44 Ha;

 

(d)the Treaty Creek Switching Station claims with 2 claims totalling 160,25 Ha; and

 

13

 

 

The four claim blocks include 79 mineral claims (cell and legacy) and 2 mining leases with a combined area of 40,784.97 ha. The mineral resources are positioned within the KSM Claims and include the original claims purchased from Placer Dome and the BJ claims.

 

The Seabee and Tina claim blocks are located about 19 km northeast of the Kerr-Sulphurets-Mitchell-Iron Cap mineralized zones. These claim blocks are currently being considered for proposed infrastructure siting. The Treaty Creek Switching Station claims, adjacent to the NTL and to the east of the Seabee claims, are considered for power infrastructure siting.

 

Placer claims only cover areas on part of the westernmost KSM Claims covering an area of 1,554 hectares. The Issuer placer claims lie along Sulphurets Creek and Mitchell Creek in areas where certain of the Project’s proposed infrastructure will be located.

 

Figure 2 - KSM Project Claim Map

 

14

 

 

These claims are 100% owned by the Issuer through its wholly-owned subsidiary, KSM Mining ULC. Newmont Corporation retains a 1% net smelter returns (“NSR”) royalty that is capped at $4.5 million. Two of the pre-converted claims at the Sulphurets property (Xray 2 and 6) are also subject to an effective 1% NSR royalty capped at US$650,000. One group of BJ legacy claims is subject to a 2.5% NSR royalty, which can be reduced to a 1.25% NSR royalty upon payment of $1,500,000, but only a portion of the Iron Cap deposit lies within the BJ legacy claims. In addition, the Issuer has granted two options to a subsidiary of Royal Gold, Inc. under which such subsidiary can acquire a 1.25% NSR Royalty and a 0.75% NSR Royalty in gold and silver produced from the KSM Property for $100 million and $60 million, respectively, subject to certain conditions. Under the Benefits Agreement with the Nisga’a Nation and the Co-operation and Benefits Agreement with the Tahltan Nation, the Issuer has agreed to pay each Nation annual payments. The combined annual payments to these Nations are payable in two forms; payments that are a percentage of the tax payable (the “Mineral Tax”) under the Mineral Tax Act (British Columbia) (the “Mineral Tax Act”), which is a tax on net operating profit, and payments that are based on net smelter returns. The combined payments payable to both Nations are as follows:

 

(a)with respect to years 1-7 of mining operations, a 0.1% NSR royalty and either (i) 5% of the amount of Mineral Tax payable in respect of any Capital Recovery Year (defined below), or (ii) 11% of the amount of Mineral Tax payable in respect of any Post-Capital Recovery Year (defined below);

 

(b)with respect to years 8-20 of mining operations, a 0.4% NSR royalty and either (i) 7.75% of the amount of Mineral Tax payable in respect of any Capital Recovery Year, or (ii) 13.75% of the amount of Mineral Tax payable in respect of any Post-Capital Recovery Year; and

 

(c)with respect to period after 20 years of mining operations, a 0.5% NSR royalty and either (i) 7.75% of the amount of Mineral Tax payable in respect of any Capital Recovery Year, or (ii) 13.75% of the amount of Mineral Tax payable in respect of any Post-Capital Recovery Year.

 

For the purposes of the description above, a “Capital Recovery Year” is a year in which the Issuer is able to apply sufficient amounts in the KSM Capital Account (as determined under the Mineral Tax Act) to fully offset operating profit, and a “Post-Capital Recovery Year” is a year in which the Issuer is unable to apply sufficient amounts in the KSM Capital Account (as determined under the Mineral Tax Act) to fully offset operating profit.

 

In addition, a sale of the original claims that were purchased in 2001 is subject to a right of first refusal held by Glencore Canada Corporation.

 

The property is located on Crown land; therefore, all surface and access rights are granted under, and subject to, the Land Act (British Columbia) and the Mineral Tenure Act (British Columbia). Approximately 13 km of the proposed 23 km Mitchell-Treaty tunnels (the “MTT”) pass under Crown Land subject to mineral claims held by third parties. The Issuer has been granted a licence of occupation, a form of land tenure that grants it rights to occupy the area through which the proposed MTT will pass, subject to the rights of the third party mineral claims holders. In the Issuer’s opinion, these rights are addressed by the Issuer’s obligations, under the management plan associated with the licence of occupation, to segregate and deliver to such claims holders all earth and rock material removed from the third party claims during construction of the MTT.

 

The four gold-copper deposits, and the proposed waste rock storage areas, lie within the Unuk River drainage in the area covered by the Cassiar-Iskut-Stikine Land and Resource Management Plan approved by the British Columbia Government in 2000. A part of the proposed ore transport tunnel lies within the boundaries of the Nass South Sustainable Resource Management Plan that was completed in 2012. The proposed sites for the tailing management and plant facilities lie outside of the boundaries of any provincial land-use planning process.

 

15

 

 

Relationships with Aboriginal Groups in KSM Region

 

The KSM Project site is located in a region historically used by several aboriginal groups. Part of the Project, including the proposed plant and TMF but excluding the mineral deposits and their immediately-related infrastructure, lies within the boundaries of the Nass Area, as defined in the Nisga’a Final Agreement. In this area, consultation, led by the federal and provincial governments, is required with the Nisga’a Lisims Government under the terms of the Final Agreement. Similarly, the Tahltan Nation has asserted rights and title over the area of the proposed plant and tailings management facility but excluding the mineral deposits. Tsetsaut Skii km Lax Ha (“TSKLH”), an aboriginal group asserting independent nation status which the Issuer understands is viewed by the Crown as being a wilp of the Gitxsan Nation (as opposed to an independent nation on its own), assert aboriginal rights and title over the entire KSM Project footprint. This territorial assertion by the TSKLH is inconsistent with the boundaries asserted by them in the proceedings relating to the Supreme Court of Canada decision in Delgamuukw v. British Columbia. This previously asserted territory had a northern boundary to the south of the KSM Project infrastructure on the eastern side of the KSM Project and therefore does not overlap the KSM Project footprint at all. Additionally, the Gitanyow Huwilp (the collective houses of the Gitanyow Nation) may have some interests within the broader region potentially affected by the KSM Project, in particular downstream of the plant site and TMF. Accordingly, the Issuer has been directed to engage with the Tahltan Nation, as well as with both the Tsetsaut Ski km Lax Ha as a wilp of the Gitxsan Nation and the Gitanyow Nation on the basis of potential effects of the plant site and TMF and related downstream effects.

 

On June 16, 2014, the Issuer entered into a comprehensive Benefits Agreement with the Nisga’a Nation in respect of the KSM Project. The Benefits Agreement establishes a long-term co-operative relationship between Seabridge and the Nisga’a Nation under which the Nisga’a Nation will support development of the Project, participate in economic benefits from the Project and provide ongoing advice. Highlights of the Benefits Agreement include:

 

Nisga’a Nation agreement to provide letters in support of the KSM Project to British Columbian and Canadian regulators, as well as potential investors in Seabridge or the Project.
Financial payments upon the achievement of certain Project milestones and annual production payments based on a percentage of net profits, with the percentage of net profits payable increasing when the KSM Project is not recovering capital costs, as determined under the terms of the Agreement.
Strong commitments to education and training of Nisga’a citizens so that they will be better able to take advantage of the economic benefits the KSM Project offers.
Mutual co-operation on completing the operational permitting process for the Project.
A framework for the Nisga’a Nation and Seabridge to work together to achieve employment targets and to ensure Nisga’a businesses will have preferred access to certain contracting opportunities.
Mutual co-operation on responding to social impacts which Nisga’a Villages may experience as a result of the Project.

 

The Agreement with the Nisga’a Nation will remain in effect throughout the life of the KSM Project and will apply to future partners in the Project. This Agreement was signed on behalf of the Nisga’a Nation by the Nisga’a Lisims Government Executive.

 

In June, 2014, the Issuer entered into an agreement with the Gitanyow Huwilp in respect of the KSM Project. Under the agreement, Seabridge agrees to provide funding for certain programs relating to wildlife, fish and water quality monitoring to address some of the concerns raised by the Gitanyow Huwilp, as well as for a committee to establish a means of maintaining communications about KSM Project related issues. This Agreement was signed by seven of the eight wilps of the Gitanyow Nation and by the Gitanyow Hereditary Chiefs Office.

 

16

 

 

In September, 2013, the Gitxsan Hereditary Chiefs Office provided a letter to British Columbia and federal regulators expressing support for the KSM Project. The Issuer has engaged directly with the TSKLH with respect to the KSM Project and it is making efforts to establish a good relationship with the TSKLH. However, the ongoing disagreement between the government and the TSKLH regarding their status as a Nation and their territorial boundary has created a difficult environment in which to build a good relationship.

 

In July, 2019, the Issuer entered into a Co-operation and Benefits Agreement (the “CBA”) with the Tahltan Central Government, the Iskut band and the Tahltan Band in respect of the KSM Project. The CBA establishes a comprehensive framework for the parties to work together on the KSM Project, including detailed provisions on environmental management of the land, robust participation by the Tahltan Nation in the economic opportunities offered by the KSM Project and financial payments related to the performance of the Project. It includes commitments to fund education of Tahltan members, commitments to work to achieve employment targets, processes for awarding contracts on a preferred basis to Tahltan businesses and a procedure for resolving disputes, including disputes on permitting issues. The CBA with the Tahltan Nation will apply to future partners in the Project.

 

The Issuer believes that, after considering:

 

the location of the KSM Project in relation to areas of asserted aboriginal rights and title,
the consultation the Issuer and the governments have undertaken with aboriginal groups,
the agreements the Issuer has negotiated with aboriginal groups, and
the information the Issuer has learned about historic aboriginal use of the area on which KSM Project infrastructure is located,

 

the Supreme Court of Canada decision of June 26, 2014 in Tsilhqot’in Nation v. British Columbia, which declares aboriginal title for the first time in a certain area in Canada and outlines the rights associated with aboriginal title, is unlikely to significantly impact the KSM Project.

 

Updated and Revised 2016 Preliminary Feasibility Study at the KSM Project

 

In June 2012, an updated Preliminary Feasibility Study for the KSM Project (the “2012 KSM PFS Report”) was completed. The development plan in the 2012 KSM PFS Report was the one approved in the EA Application and EIS review processes, with certain enhancements to the Project infrastructure to improve environmental protection and various mitigation measures. Since the date of the 2012 KSM PFS Report Seabridge has continued exploration activities at KSM which led to the discovery of the large higher-grade zones below the Kerr and Iron Cap deposits. In early 2016, the Issuer decided to update the 2012 KSM PFS Report to present the same development plan as in the 2012 KSM PFS Report at a pre-feasibility level using more current market values in the financial analysis but, in addition, to incorporate into that development plan the infrastructure enhancements committed to in the EA Application and EIS processes and to incorporate other design improvements identified by the Issuer. Accordingly, the prefeasibility study level development plan (the “2016 PFS Plan”) does not include material from recent higher-grade discoveries at Kerr and Iron Cap. Given the positive impact the new higher grade material was expected to have on Project economics, the Issuer also decided to complete a study that would present an analysis of the integration of the additional material into the proposed KSM Project design as an alternative development plan (the “2016 PEA Plan”) at a preliminary economic assessment level and include the results in the new prefeasibility report. The new report, which presents both the 2016 PFS Plan and the 2016 PEA Plan, was completed in November, 2016, is entitled “2016 KSM (Kerr-Sulphurets-Mitchell) Prefeasibility Study Update and Preliminary Economic Assessment” (the “2016 KSM PFS/PEA Report”), has an effective date of October 6, 2016, and is available among Seabridge’s documents at www.sedar.com.

 

17

 

 

The overall 2016 KSM PFS/PEA Report was coordinated by Tetra Tech Canada Inc. (formerly Tetra Tech, Inc.) (“Tetra Tech”) and incorporates the work of a number of industry-leading consulting firms. The principal consultants who contributed to the 2016 PFS Plan, and their Qualified Persons are listed below along with their areas of responsibility:

 

Tetra Tech, under the direction of Hassan Ghaffari (surface and underground infrastructure, TMF costs, WSF costs, construction schedule, capital estimate and financial analysis), John Huang (metallurgical testing review, permanent water treatment, mineral process design and operating cost estimation for process, G&A and site services, and overall report preparation), Kevin Jones (winter access road);
Moose Mountain Technical Services under the direction of Jim Gray (open pit Mineral Reserves, open pit mining operations, mine capital and mine operating costs, MTT and rail ore conveyance design);
W.N. Brazier Associates Inc. under the direction of W.N. Brazier (power supply, energy recovery plants, underground electrical systems and associated costs);
ERM (Environmental Resources Management) under the direction of Pierre Pelletier (environment and permitting);
Klohn Crippen Berger Ltd. under the direction of Graham Parkinson (design of surface water diversion, diversion tunnels and seepage collection ponds, tailing dam, water treatment dam and rock storage facility (RSF) and tunnel geotechnical);
Resource Modeling Inc. under the direction of Michael Lechner (Mineral Resources);
Golder Associates Ltd. under the direction of Ross Hammett (underground Mineral Reserves, block caving assessments, mine design and associated costs);
BGC Engineering Inc. under the direction of Derek Kinakin (rock mechanics and mining pit slopes);
McElhanney Consulting Services Ltd. under the direction of Robert Parolin (permanent access roads and associated costs).

 

The 2016 PEA Plan was prepared by Amec Foster Wheeler Americas Limited, now known as Wood Canada Limited (“Wood”) and the principal consultants who contributed to the 2016 PEA Plan, and their Qualified Persons are listed below along with their areas of responsibility:

 

Wood under the direction of Simon Allard P.Eng., Mark Ramirez RM SME and Tony Lipiec P.Eng (Underground and open pit design, RSF design, process design and capital and operating costs).
Klohn Crippen Berger Ltd. under the direction of Graham Parkinson P. Geo. (Design of surface water diversion, diversion tunnels and seepage collection ponds, tailing dam, water storage dam and tunnel geotechnical). Graham Parkinson has been to the site.
Resource Modeling Inc. under the direction of Michael Lechner P.Geo (Mineral Resources). Michael Lechner has been to site.
Golder Associates Ltd. under the direction of Ross Hammett P. Eng (Block caving assessments). Ross Hammett has been to the site.

 

18

 

 

The following (to “2016, 2017, 2018 and 2019 Exploration”) summarizes information from the 2016 KSM PFS/PEA Report.

 

Location and Climate

 

The KSM Project is situated about 950 km northwest of Vancouver, 65 km by air north-northwest of Stewart, BC and 21 km south-southeast of the former Eskay Creek Mine. The property is located at latitude 56.50° North and longitude 130.30° West (see Figure 1).

 

The proposed pit areas lie within the headwaters of Sulphurets Creek, which is a tributary of the Unuk River and flows into the Pacific through Alaska. The proposed process plant and TMF will be located within the tributaries of Teigen and Treaty creeks. Teigen and Treaty creeks are tributaries of the Bell-Irving River, which is itself a major tributary of the Nass River. The Nass river flows to the Pacific Ocean entirely within Canada.

 

The climate is generally typical of a temperate or northern coastal rainforest, with sub-arctic conditions at high elevations. Precipitation at the mine site has an estimated average of 1,652 mm and at the process plant and TMF area has an estimated average of 1,371 mm. The length of the snow-free season varies from about May through November at lower elevations, and from July through September at higher elevations.

 

Local Resources, Infrastructure and Physiography

 

The KSM property lies in the rugged Coastal Mountains of northwest British Columbia, with elevations ranging from 520 meters in Sulphurets Creek valley to over 2,300 meters at the highest peaks. Valley glaciers fill the upper portions of the larger valleys from just below tree line and upwards.

 

Deep-water loading facilities for shipping bulk mineral concentrates exist in Stewart, and are currently utilized by the Red Chris Mine. Historically they have been used by several other mines in northern, BC. The nearest railway is the CNR Yellowhead route, which is located approximately 220 km southeast of the Property. This line runs east-west, and can deliver concentrate to deep-water ports near Prince Rupert and Vancouver, BC.

 

There are no settlements or privately owned land in the area of the Project; there is limited commercial recreational activity in the form of helicopter skiing and guided fishing adventures. The closest power transmission lines run along Highway 37, 40 km east of the Project.

 

Stewart, a town of approximately 500 inhabitants, is the closest population center to the KSM Project. It is connected to the provincial highway system via paved, all weather Highway 37A. The larger population centers of Prince Rupert, Terrace, and Smithers, with a total population of about 32,000, are located approximately 270 km to the southeast.

 

Exploration History

 

There is evidence that prospectors were active in the area prior to 1935. The modern exploration history of the area began in the 1960’s, with brief programs conducted by Newmont Mining Corp., Granduc Mines Ltd., Phelps Dodge Corp., and the Meridian Syndicate. All of these programs were focused towards gold exploration. The Sulphurets Zone was first drilled by Esso Minerals in 1969; Kerr was first drilled by Brinco Ltd. in 1985 and Mitchell Creek by Newhawk Gold Mines Ltd. in 1991.

 

19

 

 

There is no recorded mineral production, nor evidence of it, from the property. Immediately west of the property, small-scale placer gold mining has occurred in Sulphurets and Mitchell Creeks. On the Brucejack property immediately to the east and currently owned by Pretium Resources Inc., limited underground development and test mining was undertaken in the 1990’s on narrow, gold-silver bearing quartz veins at the West Zone.

 

During 2003-2005, under its option to earn up to a 65% interest in the project from Seabridge, Falconbridge conducted geophysics, surface mapping, surface sampling and completed approximately 4,100 m of drilling at the project.

 

Since 2006, Seabridge has been conducting exploration and advancement activities at the project.

 

Geology

 

The region lies within “Stikinia”, a terrane of Triassic and Jurassic volcanic arcs that were accreted onto the Paleozoic basement. Stikinia is the largest of several fault bounded, allochthonous terranes within the Intermontane belt, which lies between the post-accretionary, Tertiary intrusives of the Coast belt and continental margin sedimentary prisms of the Foreland (Rocky Mountain) belt. In the Kerr-Sulphurets area, Stikinia is dominated by variably deformed, oceanic island arc complexes of the Triassic Stuhini and Jurassic Hazelton groups. Backarc basins formed eastward of the KSM Property in the Late Jurassic and Cretaceous were filled with thick accumulations of fine black clastic sediments of the Bowser Group. Folding and thrusting due to sinistral transpression tectonics in the mid-Cretaceous followed by extensional conditions generated the area’s current structural features. The most important structure is the north-northeast striking, moderately west-northwest dipping Sulphurets Thrust Fault (STF), which transects the Property and is spatially and genetically related to mineralization at KSM. Remnants of Quaternary basaltic eruptions occur throughout the region.

 

Early Jurassic sub-volcanic intrusive complexes are common in the Stikinia terrane, and several host well-known precious and base metal rich hydrothermal systems. These include copper-gold porphyry deposits such as Galore Creek, Red Chris, Kemess, Mt. Milligan, and Kerr-Sulphurets. In addition, there are a number of related polymetallic deposits including skarns at Premier, epithermal veins and subaqueous vein and replacement sulfide deposits at Eskay Creek, Snip, Brucejack, and Granduc.

 

The Kerr deposit is a strongly-deformed copper-gold porphyry, where copper and gold grades have been upgraded due to remobilization of metals during later and/or possibly syn-intrusive deformation. Alteration is the result of a relatively shallow, long lived hydrothermal system generated by intrusion of monzonite. Subsequent deformation along the STF was diverted into the Kerr area along pre-existing structures. The mineralized area forms a fairly continuous, north-south trending west dipping irregular body measuring about 1,700 m long and up to 200 m thick. Deep drilling since 2012 has identified two sub-parallel, north-south trending, steep west-dipping mineralized zones that appear to coalesce near the topographic surface. After significant deep drilling was completed at the Kerr deposit, an updated geological interpretation and subsequent updated Mineral Resource model were completed. That new model forms the basis for the 2016 Mineral Resources and Mineral Reserves.

 

20

 

 

The Sulphurets deposit comprises two distinct zones referred to as the Raewyn Copper-Gold Zone and the Breccia Gold Zone. The Raewyn Copper-Gold Zone hosts mostly porphyry style disseminated chalcopyrite and associated gold mineralization in moderately quartz stockworked, chlorite-biotite-sericite-magnetite altered volcanics. The Raewyn Copper-Gold Zone strikes north-easterly and dips about 45° to the northwest. The Breccia Gold Zone hosts mostly gold-bearing pyritic material mineralization with minor chalcopyrite and sulfosalts in a potassium-feldspar-siliceous hydrothermal breccia that apparently crosscuts the Raewyn Copper-Gold Zone. The Breccia Gold Zone strikes northerly and dips westerly.

 

The Mitchell Zone is underlain by foliated, schistose, intrusive, volcanic, and clastic rocks that are exposed in an erosional window below the shallow north dipping Mitchell Thrust Fault (MTF). These rocks tend to be intensely altered and characterized by abundant sericite and pyrite with numerous quartz stockwork veins and sheeted quartz veins (phyllic alteration) that are often deformed and flattened. Towards the west end of the zone, the extent and intensity of phyllic alteration diminishes and chlorite-magnetite alteration becomes more dominant along with lower contained metal grades. In the core of the zone, pyrite content ranges between 1 to 20%, averages 5%, and typically occurs as fine disseminations. Gold and copper tends to be relatively low-grade but is dispersed over a very large area and related to hydrothermal activity associated with Early Jurassic hypabyssal porphyritic intrusions. In general, within the currently drilled limits of the Mitchell Zone, gold and copper grades are remarkably consistent between drill holes, which is common with a large, stable, and long-lived hydrothermal systems.

 

The Iron Cap Zone, which is located about 2,300 m northeast of the Mitchell Zone, is well exposed and consists of intensely altered intrusive, sedimentary, and volcanic rocks. The Iron Cap deposit is a separate, distinct mineralized zone within the KSM district. It is thought to be related to the other mineralized zones but differs in that much of the host rock is hydrothermally altered intrusive (porphyritic monzonite to diorite) rather than altered volcanic and sedimentary rocks. There is a high degree of silicification that overprints earlier potassic and chloritic alteration. Intense phyllic alteration and high density of stockwork veining, which are pervasive at the nearby Mitchell Zone, are less pervasive at Iron Cap. The surface expression of the Iron Cap Zone measures about 1,500 m (northeast-southwest) by 600 m (northwest-southeast). Significant drilling has been completed at the Iron Cap deposit since the 2012 KSM PFS Report, which resulted in an updated geological interpretation and subsequent updated Mineral Resource model that forms the basis for the 2016 Mineral Resources and Mineral Reserves.

 

Security of Samples

 

The Issuer follows an ongoing and rigorous sample preparation, security, quality control/quality assurance protocol for its exploration programs, including blank and reference standards in every batch of assays. Cross-check analyses are conducted at a second external laboratory on no less than 10% of the samples. The details of these procedures are outlined in the 2016 KSM PFS/PEA Report.

 

Mineral Resources

 

RMI constructed 3D block models for the Kerr, Sulphurets, Mitchell, and Iron Cap Zones using various 3D wireframes. Inverse distance estimation methods were used for all Mineral Resource models. In the case of the Sulphurets and Mitchell deposits, a multi-pass interpolation strategy was used, using a combination of grade shells or specific geological lithological/alteration assemblages to constrain the estimate. 3D search ellipses oriented with the trend of mineralization were used to find drill hole composites. Similar strategies were used for the more recent models constructed for the Kerr and Iron Cap deposits. Deeper exploration in those two areas has demonstrated that higher-grade mineralization is associated with various structures. Instead of using conventional search ellipses to collect drill hole composites for block grade estimation, a trend plane search was used for the Kerr and Iron Cap models. That search method appears to do a better job of honoring the currently recognized structural controls in those deposits.

 

The measured and indicated mineral resources estimated by RMI are set forth in the Table below and are inclusive of mineral reserves.

 

21

 

 

KSM Undiluted Mineral Resources as of May 31, 2016

Zone Type of
Constraint
NSR
Cut-off
(Cdn$/t)
Tonnes
(000 t)
Grades Contained Metal
Au
(g/t)
Cu
(%)
Ag
(g/t)
Mo
(ppm)
Au
(000 oz)
Cu
(Mlb)
Ag
(000 oz)
Mo
(Mlb)
Measured Mineral Resources
Mitchell Conceptual LG Pit 9 698,800 0.63 0.17 3.1 59 14,154 2,618 69,647 91
Conceptual Block Cave 16 51,300 0.59 0.20 4.7 41 973 226 7,752 5
Total Mitchell Measured n/a 750,100 0.63 0.17 3.2 58 15,127 2,844 77,399 96
Total Measured n/a n/a 750,100 0.63 0.17 3.2 58 15,127 2,844 77,399 96
Indicated Mineral Resources
Kerr Conceptual LG Pit 9 355,000 0.22 0.41 1.1 4 2,511 3,208 12,555 3
Conceptual Block Cave 16 24,400 0.24 0.48 2.0 14 188 258 1,569 1
Total Kerr Indicated n/a 379,400 0.22 0.41 1.2 5 2,699 3,466 14,124 4
Sulphurets Conceptual LG Pit 9 381,600 0.58 0.21 0.8 48 7,116 1,766 9,815 40
Mitchell Conceptual LG Pit 9 919,900 0.57 0.16 2.8 61 16,858 3,244 82,811 124
Conceptual Block Cave 16 124,700 0.58 0.20 4.7 38 2,325 550 18,843 10
Total Mitchell Indicated n/a 1,044,600 0.57 0.16 3.0 58 19,183 3,794 101,654 134
Iron Cap Conceptual Block Cave 16 346,800 0.51 0.23 4.5 14 5,686 1,758 50,174 11
Total Indicated n/a n/a 2,152,400 0.50 0.23 2.5 40 34,684 10,784 175,767 189
Measured + Indicated Mineral Resources
Kerr Conceptual LG Pit 9 355,000 0.22 0.41 1.1 4 2,511 3,208 12,555 3
Conceptual Block Cave 16 24,400 0.24 0.48 2.0 14 188 258 1,569 1
Total Kerr M+I n/a 379,400 0.22 0.41 1.2 5 2,699 3,466 14,124 4
Sulphurets Conceptual LG Pit 9 381,600 0.58 0.21 0.8 48 7,116 1,766 9,815 40
Mitchell Conceptual LG Pit 9 1,618,700 0.60 0.16 2.9 60 31,012 5,862 152,458 215
Conceptual Block Cave 16 176,000 0.58 0.20 4.7 39 3,298 776 26,595 15
Total Mitchell M+I n/a 1,794,700 0.60 0.16 3.1 58 34,310 6,638 179,053 230
Iron Cap Conceptual Block Cave 16 346,800 0.51 0.23 4.5 14 5,686 1,758 50,174 11
Total M + I n/a n/a 2,902,500 0.54 0.21 2.7 44 49,811 13,628 253,166 285
Inferred Mineral Resources
Kerr Conceptual LG Pit 9 80,200 0.27 0.21 1.1 6 696 371 2,836 1
Conceptual Block Cave 16 1,609,000 0.31 0.43 1.8 25 16,036 15,249 93,115 89
Total Kerr Inferred n/a 1,689,200 0.31 0.42 1.8 24 16,732 15,620 95,951 90
Sulphurets Conceptual LG Pit 9 182,300 0.46 0.14 1.3 28 2,696 563 7,619 11
Mitchell Conceptual LG Pit 9 317,900 0.37 0.09 3.0 56 3,782 631 30,662 39
Conceptual Block Cave 16 160,500 0.51 0.17 3.5 44 2,632 601 18,061 16
Total Mitchell Inferred n/a 478,400 0.38 0.10 3.0 55 6,414 1,232 48,723 55
Iron Cap Conceptual Block Cave 16 369,300 0.42 0.22 2.2 21 4,987 1,791 26,121 17
Total Inferred n/a n/a 2,719,200 0.35 0.32 2.0 29 30,829 19,206 178,414 173

 

Note: This table does not include the results of the exploration programs at the KSM Project in 2016, 2017, 2018 and 2019. These resource estimates have been prepared in accordance with NI 43-101. See “Cautionary Note to United States Investors”. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. Inferred resources are based on limited geologic evidence and sampling.  It is reasonably expected that the majority of inferred resources could be upgraded to indicated resources with continued exploration.

 

22

 

 

The estimated block grades were classified into Measured (Mitchell only), Indicated, and Inferred categories using mineralized continuity, proximity to drilling, and the number of holes used to estimate the blocks. Mineral Resources for the Project were determined by using a combination of conceptual open pit and underground mining methods. Lerchs-Grossmann (LG) conceptual pits were generated for the Kerr, Sulphurets, and Mitchell deposits using metal prices of US$1,300.00/oz of gold, US$3.00/lb of copper, US$20.00/oz of silver, and US$9.70/lb of molybdenum. Mining, processing, general and administrative (G&A), and metal recoveries were used to generate conceptual Mineral Resource pits that demonstrate reasonable prospects for eventual economic extraction. Conceptual block cave shapes were generated by Golder using GEOVIA’s PCBC™ Footprint Finder software.

 

Metallurgical Test Review

 

Several wide-ranging metallurgical test programs were carried out between 2007 and 2016 to assess the metallurgical responses of the mineral samples from the KSM deposits, especially the samples from the Mitchell deposit.

 

The metallurgical tests to date include:

 

mineralogy, flotation, cyanidation, and grindability testwork;
semi-autogenous grinding (SAG) mill comminution (SMC) grindability tests to determine the grinding resistance of the mineralization to SAG/ball milling;
crushing resistance parameters to high-pressure grinding rolls (HPGR) crushing of the Mitchell and Sulphurets ore samples by SGS, and pilot plant scale HPGR testing on the Mitchell ore sample; and
dewatering tests on the samples of heads, copper concentrates, sulphide leach products, and tailing pulps.

 

The test results indicate that the mineral samples from the four separate mineralized deposits are amenable to the flotation-cyanidation combined process. The process consists of:

 

copper-gold-molybdenum bulk rougher flotation followed by gold-bearing pyrite flotation;
regrinding the bulk rougher concentrate followed by three stages of cleaner flotation to produce a copper-gold-molybdenum bulk cleaner flotation concentrate;
molybdenum separation of the bulk cleaner flotation concentrate to produce a molybdenum concentrate and a copper/gold concentrate containing associated silver; and
cyanide leaching of the gold-bearing pyrite flotation concentrate and the scavenger cleaner tailing to further recover gold and silver values as doré bullion.

 

The samples from the Mitchell deposit produced better metallurgical results with the chosen flotation and cyanide leach extraction circuits when compared to the metallurgical results from the samples taken from the Sulphurets, Iron Cap, and Kerr (upper zone) deposits. The locked cycle tests showed that, on average, approximately 85% of copper and 60% of gold in the Mitchell samples, which contain 0.21% Cu and 0.72 g/t Au, were recovered into a concentrate containing 24.8% Cu. The cyanidation further recovered approximately 18% of the gold from the gold bearing products consisting of the cleaner flotation tailing and the gold bearing pyrite flotation concentrate.

 

For the Sulphurets, Iron Cap, and upper Kerr samples, the average head grades of the tested samples fluctuated from 0.25 to 0.62% for copper and 0.23 to 0.60 g/t for gold. The average recoveries reporting to flotation concentrates ranged from 78% to 85% for copper and 41 to 60% for gold. The average copper grades of the concentrates varied from 24 to 28%. The cyanidation further recovered approximately 15 to 29% of the gold from the gold-bearing products.

 

23

 

 

Mineral Processing

 

The proposed flotation process is projected to produce a copper-gold concentrate containing approximately 25% copper. Copper and gold flotation recoveries will vary with changes in head grade and mineralogy. For the life of mine (LOM) mill feed containing 0.55 g/t gold and 0.21% copper, the average copper and gold recoveries to the concentrate are projected to be 81.6% and 55.3%, respectively. As projected from the testwork, the cyanidation circuit (carbon-in-leach [CIL]) will increase the overall gold recovery to a range of 60% to 79%, depending on gold and copper head grades. Silver recovery from the flotation and leaching circuits is expected to be 62.7% on average. A separate flotation circuit will recover molybdenite from the copper-gold-molybdenum bulk concentrate when higher-grade molybdenite mineralization is processed.

 

The Process Plant will consist of three separate facilities: ore primary crushing and handling facilities at the mine site, a 23 km ore transportation tunnel system between the mine site and the processing facility, and a main process facility at the Treaty ore processing complex (OPC), adjacent to the TMF.

 

Gyratory crushers in the comminution plants located at the mine site will reduce the mill feed from 80% passing 1,200 mm to 80% passing 150 mm. The crushed ore will be conveyed to a 30,000 t surge bin (two pockets, each 15,000 t) located underground at a train car loading area, prior to being transported by train cars to the Treaty OPC.

 

A 23 km MTT system has been designed to connect the Mine Site and the PTMA. The crushed ore will be transported through the tunnels by electric train. This tunnel will also be used for electrical power transmission sourced from the Northwest Transmission Line and for the transport of personnel and supplies for mine operating and water management activities. The proposed tunnel route is through Crown land and approximately 13 kilometers of its length passes through ground subject to mineral claims held by third parties.

 

The Process Plant at the Treaty OPC will consist of secondary and tertiary crushing, primary grinding, flotation, concentrate regrinding, concentrate dewatering, cyanide leaching, gold recovery, tailing delivery, and concentrate loadout systems. The crushed ore transported from the mine site will be sent to a 60,000 t coarse ore stockpile adjacent to the tunnel portal. The ore will then be reclaimed and crushed by cone crushers, followed by an HPGR comminution circuit. There is a 30,000 t fine ore stockpile located ahead of the tertiary crushing circuit. The crushing systems will be operated in closed circuits with screens.

 

The ore from the HPGR comminution circuits will be ground to a product size of 80% passing 150 μm by four conventional ball mills in closed circuit with hydrocyclones. The ground ore will then have copper/gold/molybdenum minerals concentrated by conventional flotation to produce a copper-gold-molybdenum concentrate and gold bearing pyrite products for gold leaching. Depending on molybdenum content in the copper-gold-molybdenum concentrate, the concentrate may be further treated to produce a copper-gold concentrate and a molybdenum concentrate. The molybdenum concentrate will be leached to reduce levels of copper and other impurities. The concentrates will be dewatered and shipped to copper and molybdenum smelters.

 

24

 

 

The gold-bearing pyrite products which consist of the bulk cleaner flotation tailing from the copper-gold-molybdenum cleaner flotation circuit and the gold-bearing pyrite concentrate will be leached with cyanide using CIL treatment for additional gold and silver recovery. Prior to storage in the lined pond within the TMF, the leach residues from the cyanide leaching circuits will be washed, and subjected to cyanide recovery and destruction. The water from the residue storage pond will be recycled back to the cyanide leach circuit. Any excessive water will be further treated prior to being sent to the flotation tailing storage pond.

 

The flotation tailing and the washed leach residues would be sent to the TMF for storage in separate tailing areas. Two water reclaim systems for the flotation tailing pond and the CIL residue pond have been designed to separately reclaim the water from the TMF.

 

Tailing Management

 

The TMF would be constructed in three cells: the North and South cells for flotation tailing, and a lined cell for CIL tailing. The cells are confined between four dams (North, Splitter, Saddle, and Southeast dams) located within the Teigen-Treaty Creek cross-valley. In total, the TMF is designed to have a capacity of 2.3 Bt.

 

De-pyritized flotation tailing is to be stored in the North and South cells. The pyrite bearing CIL tailing is to be stored in a lined central cell.

 

The North and CIL cells would be constructed and operated first; they would store tailing produced in the first 25 years. The North Cell would then be reclaimed while the CIL and South cells are in operation.

 

The North, Splitter, and Saddle earth-fill starter dams will be constructed over a two-year period, in advance of the start of milling, to form the North and Central cells and will provide start-up tailing storage for two years. Cyclone sand dams will be progressively raised above the starter dams over the operating LOM. The North Starter Dam will be constructed with a low-permeability glacial till core and raised with compacted cyclone sand shells, using the centerline geometry method. The Splitter and Saddle starter dams will form the CIL pond. These dams will also subsequently be raised with cyclone sand shells, but the CIL pond and the Splitter and Saddle dams will incorporate high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) liners in the core and basin floor in order to surround the CIL tailing within a completely lined impoundment.

 

Cyclone sand dam raises would be constructed from April through October each year, starting with the North Cell. To reach the capacity of 2.3 billion tonnes, an ultimate dam crest elevation of 1,068 m will be required for the North Cell dams and 1,068 m for the South Cell. This will require a dam height of up to 240 m for the Southeast dam, which is the highest dam of the TMF.

 

Process water collected in the North and South tailing cells will be reclaimed by floating pump barges and recycled separately to the Process Plant, either for use in the process, for treatment, or to be discharged. Water from the Central Cell will only be directed to the Process Plant for recycling purposes and will not be discharged directly to the receiving environment. Diversions will be constructed to route non-contact runoff from the surrounding valley slopes around the TMF. The diversion channels are sized to allow passage of 200-year peak flows, and are large enough to allow space for passage of snow removal machinery. Buried pipe sections paralleling the channels will be installed in areas of active snow avalanche paths to enhance diversion operability during avalanche periods.

 

25

 

 

Each of the cells are expected to have surplus water. Surplus water is proposed to be managed during operations using a combination of storage, discharge to Treaty Creek during freshet if water quality meets standards, or treatment at the Treaty process plant water treatment facility (if required) and discharge.

 

Mine Site Water Management

 

The overall site water management strategy, including the discharge from the Water Storage Facility (WSF) via the High-density Sludge (HDS) water treatment plant (WTP) was the strategy that was reviewed and approved during the EA Application and EIS review process.

 

Three diversion tunnel routes totalling approximately 22.4 km will be required to route glacial melt water and non-contact valley runoff from the Mitchell and McTagg valleys around the mine area. The open pit phase of the Mitchell Diversion Tunnel (MDT) and the twinned McTagg Diversion Tunnels (MTDTs) are sized to convey flows from an average 200-year storm. When the Mitchell block cave operation commences, an additional MDT paralleling the open pit phase tunnel will be driven to protect the underground workings, which are more sensitive to inflows than the open pits.

 

The second tunnel of each set of twinned tunnels provides redundancy against blockage as each individual tunnel can carry typical freshet flows. The provision of twin tunnels also allows switching base flows between adjacent tunnels if access for maintenance is required.

 

The MDT will route water from Mitchell Creek/Mitchell Glacier to the Sulphurets Valley, away from the open pit, primary crushing facility, open pit area, and Mitchell rock storage facility. The MDT would collect melt water from beneath the base and toe of the Mitchell Glacier via separate surface and sub-glacial inlet structures, which improves redundancy. Both surface and subglacial inlets are designed to protect the inlet of the diversion from being blocked by snow avalanches. The MDT is proposed to generate hydroelectric power as Sulphurets Valley is lower than Mitchell Valley. In Year 23, the MDT will be augmented with a second (twin) tunnel to provide protection against the 1,000-year storm flow to the underground workings.

 

The McTagg valley tunnels collect flows from east and west McTagg valleys and feed into the main diversion tunnel route, around the west side of the McTagg RSF, and discharge into Sulphurets Valley. These tunnels would have three staged inlets as the McTagg RSF raises in elevation. Hydropower is proposed to be generated by the McTagg tunnels only in Stages 2 and 3.

 

To facilitate construction in the Mitchell Valley and the staging of water management as the Mitchell and McTagg RSFs rise and fill the valley areas, an approximately 5.4 km long Mitchell Valley Drainage Tunnel will be constructed under Mitchell Valley to carry the existing flows from Mitchell Creek, which are naturally affected by contact with surface mineralization. When the mine is in operation the tunnel will convey contact water from the Mitchell workings and the mineralized area upstream of the deposit, around the RSFs into the WSF.

 

An in-rock spillway would be constructed at the southwest corner of the McTagg RSF to convey surface diversion flows down to diversion pipelines and channels on the west and east sides of the WSF pond.

 

26

 

  

Contact water from the mine areas (open pits, RSFs, roads, infrastructure) would be directed to the WSF, located in the lower Mitchell Creek area. The WSF would be formed with a 165 m-high rock fill asphalt core dam built to full height by Year -1. The WSF dam is founded on competent sedimentary rock foundations. Seepage will be controlled by the asphalt core in the dam and the dam foundation will be grouted. A seepage collection pond will return seepage water to the WSF.

 

During operations, secondary diversion ditches and pipelines would be implemented within the mine area to reduce contact water volumes. Open pit contact water and discharge from pit dewatering wells would be routed from the pit rims, via ditches or direct drainage, and via pipelines or tunnels to the WSF.

 

Mine area contact water is to be treated with a high density sludge lime water treatment plant (“WTP”).

 

Additional hydropower is to be generated in an energy recovery facility from the flow of treatment water from the WSF to the WTP.

 

Permitting

 

As of June 2016, the Project has successfully gone through the provincial and federal environmental assessment processes, and the appropriate certificates/approvals have been obtained. Additionally, permits for early stage constructions activities for the first two and half years of site activity were obtained. These permits covered the following mine components:

 

KSM Project Mines Act and Environmental Management Act Permit Application for Limited Site Construction – May 2013
Special Use Permits for the Coulter Creek Access Road (CCAR) and TCAR
KSM construction camps
KSM Project Treaty Transmission Line
MTT Permit Application.

 

Seabridge is currently in the process of obtaining numerous provincial and federal permits to allow for the construction of parts of the Project, as well as expanding exploration activities, including but not limited to the following:

 

Fisheries Authorization application, including draft Compensation Plans
Metal Mining Effluent Regulations (MMER) Schedule 2 Amendment Application (which was approved in 2017)

 

Mine Planning (2016 PFS Plan)

 

The proposed mine uses conventional large-scale open pit and block cave underground mining methods. Pit phases at the Mitchell, Kerr, and Sulphurets deposits have been engineered based on the results of an updated economic pit limit analysis. Starter pits have been selected in higher-grade areas. Underground mining has been proposed for the Iron Cap deposit and below the Mitchell open pit to reduce the volume of waste generated from the potential open pits.

 

Mining Limits

 

Lerchs-Grossman (“LG”) pit shell optimizations were used to define open pit mine plans in the 2012 KSM PFS Report and the same limits were confirmed using LG for the 2016 KSM PFS/PEA Report. Ultimate open pits have been modified slightly to implement design changes from the EA Application and EIS process and updated geotechnical study.

 

27

 

 

The underground block caving mine designs for both the Mitchell and Iron Cap deposits are based on modeling using GEOVIA’s PCBC™ and Footprint Finder software. The ramp-up and maximum yearly mine production rates were established based on the rate at which the drawpoints are constructed, and the initial and maximum production rates at which individual drawpoints can be mucked. The values chosen for these inputs were based on industry averages adjusted to suit the anticipated conditions.

 

Mineral Reserve Estimate

 

Waste to ore open pit cut-offs and underground shut-offs, including process recovery, were determined using metal prices of US$1,200.00/oz of gold, US$2.70/lb of copper, US$17.50/oz of silver, and US$9.70/lb of molybdenum for NSR calculations.

 

Open pit Mineral Reserves have been calculated using the updated pit designs and the 2016 Mineral Resource models. These calculations include mining loss and dilution that varies by pit ranging from 2.2 to 5.3% for loss, and 0.8 to 3.9% for dilution. A dynamic cut-off grade strategy has been applied with a minimum NSR of CDN$9.00/t.

 

The mining NSR shut-off is Cdn$15.00/t for the Mitchell underground mine and CDN$16.00/t for the Iron Cap underground mine. The Mitchell Mineral Reserves include 59 Mt of non-mineralized dilution at zero grade (13%) and 7 Mt of mineralized dilution (2%). The Iron Cap Mineral Reserves include 20 Mt of dilution at zero grade (9%) and 25 Mt of mineralized dilution (11%).

 

Proven and Probable Mineral Reserves for the KSM Project as of July 31, 2016 are estimated as:

 

KSM Proven and Probable Mineral Reserves as of July 31, 2016

 

Zone Mining Method

Reserve

Category

Tonnes (millions) Average Grades Contained Metal
Gold (gpt)

Copper

(%)

Silver

(gpt)

Moly

(ppm)

Gold

(million

ounces)

Copper

(million

pounds)

Silver

(million

ounces)

Moly

(million

pounds)

Mitchell Open Pit Proven 460 0.68 0.17 3.1 59.2 10.1 1,767 45 60
Probable 481 0.63 0.16 2.9 65.8 9.7 1,677 44 70
Block Cave Probable 453 0.53 0.17 3.5 33.6 7.7 1,648 51 34
Iron Cap Block Cave Probable 224 0.49 0.20 3.6 13.0 3.5 983 26 6
Sulphurets Open Pit Probable 304 0.59 0.22 0.8 51.6 5.8 1,495 8 35
Kerr Open Pit Probable 276 0.22 0.43 1.0 3.4 2.0 2,586 9 2
Totals Proven 460 0.68 0.17 3.1 59.2 10.1 1,767 45 60
Probable 1,738 0.51 0.22 2.5 38.2 28.7 8,388 138 147
Total 2,198 0.55 0.21 2.6 42.6 38.8 10,155 183 207

 

Note: The Mineral Reserves tabulated above are included in the tabulated Mineral Resources. All Mineral Reserves stated above account for mining loss dilution.

 

Mineral Reserves are derived from a total undiluted Measured plus Indicated Mineral Resource of 49.8 million ounces of gold and 13.6 billion pounds of copper contained in 2.9 billion tonnes at an average grade of 0.54 grams of gold per tonne and 0.21% copper per tonne. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. Most of the Deep Kerr and Lower Iron Cap Mineral Resources are classified as Inferred Mineral Resources and are excluded from the reserves.

 

28

 

 

Mine Production Plan (2016 PFS Plan)

 

During the initial 33 years of mine life, the majority of ore is derived from open pits, with the tail end of this period supplemented by the initial development of underground block cave mines. After Year 1 ramp up, ore delivery to the mill during Year 2 to Year 35 is designed to be maintained at an average of 130,000 t/d. After depletion of the open pits, the mill processing rate will be reduced to about 96,000 t/d for 10 additional years, before ramping down to just over 61,000 t/d. The change in throughput matches the production levels from the block cave with appropriate ramp ups and ramp downs applied. The remaining few years use stockpile reclaim to supplement the declining production from the block caves at the end of the mine life.

 

Ore is mined from Mitchell open pit from Years 1 to 24. Mitchell transitions to block cave mining as the Mitchell pit is mined out. Ore is mined from Sulphurets open pit from Years 1 to 17. Kerr open pit supplements block cave mining from Year 25 to Year 34, and during these years, ore will be transported by an overland conveyor and rope conveyor system starting at the Kerr pit. Mitchell block cave is estimated to have a production ramp-up period of six years, steady state production at 20 Mt/a for 17 years, and then ramp-down production for another 7 years. Iron Cap is estimated to have a production ramp-up period of four years, steady state production at 15 Mt/a for 10 years, and then ramp-down production for another 9 years. The underground pre-production period would be six years, with first underground ore production from Mitchell and Iron Cap in Years 23 and 32, respectively.

 

All ore will be transported by train from the mine area through the MTT to the Treaty processing plant. The ore transport system will also include:

 

A conveyor through the Sulphurets-Mitchell Conveyor Tunnel (SMCT) and a connecting conveyor to transport ore from the Sulphurets pit to an ore stockpile at the Mitchell site.
A separate rope conveyor built to connect the Kerr pit to the SMCT conveyor across the Sulphurets Valley. Waste rock from the Kerr open pit is backfilled into the mined out Sulphurets pit. Ore from the Kerr open pit is transferred to the SMCT to deliver ore to the Mitchell pit site. Both the ore and waste rock that are primary crushed at the Kerr site will use the same rope conveyor transport system.

 

Infrastructure (2016 PFS Plan)

 

In Figure 3 below, the location of the proposed infrastructure is shown.

 

Site access will be established from three fronts:

 

the 30 km Treaty Creek access road from Highway 37 to the Saddle Area and the Treaty processing plant;
the 35 km Coulter Creek access road that extends the Eskay Creek mine road to the Unuk River and on to the Mine Site;
the Winter access road from the Granduc mine to the Ted Morris Creek Valley to be used in the first few years of construction.

 

29

 

 

Copper concentrates produced at the Treaty plant will be transported by contract trucking firms via Highway 37 and 37A to one of the port vendors in Stewart, BC. A concentrate storage building (approximately 100 m by 66 m) will be required. Copper concentrates will be loaded via ship loader and shipped via ocean transport to overseas smelters.

 

Multiple staging areas will be used in the Project, with the majority of equipment and materials anticipated to be delivered to the Port of Stewart, supplemented by overland freight delivered to Terrace or Stewart.

 

Figure 3 – KSM Project Layout

 

 

 

Trains will travel through the MTT on a conventional ballasted track structure, be electrically driven by an overhead catenary system, and be controlled by an automated train control system managed from a remote control room without an on-board operator. The trains will transport personnel, freight and fuel and the train staging areas will be accessible by road.

 

The tunnels will be driven in accordance with the BC Mines Act and Regulations using mechanized drill and blast techniques and will follow the conditions contained within the License of Occupation. The MTT are on the critical path of the construction schedule and have therefore been broken into two segments to allow for concurrent development workplaces resulting in a shorter total tunnel construction period. This will be accomplished with headings at the Treaty Valley, an adit as the saddle of a transecting valley, located 6.1 km from the Treaty portals, and by headings in the Mitchell Valley thus creating six active headings. During construction, rail will be installed in both the North and South tunnels for the future operations rail haulage system; however, only the North Tunnel will be used for hauling tunnel muck during construction.

 

30

 

 

Electric service for the Project will be from BC Hydro’s Northern Transmission Line (NTL) that was completed in 2014 and parallels Highway 37. The NTL provides an economic and reliable source of power at a cost of US$0.05/kWh.

 

The new 344 km long, 287 kV, NTL runs from the Skeena Substation on the BC Hydro 500 kV grid near Terrace, BC, to Cranberry Junction, from which point it roughly parallels BC Highway 37 to its terminus at Bob Quinn. A 30 km long, 287 kV transmission extension from the NTL will be constructed, originating at the Treaty Creek Switching Station (BC Hydro designation TCT) and terminating at the Treaty processing plant. This spur line will parallel the Treaty Creek access road in a common corridor. Land tenure for the right-of-way has been obtained. The Treaty Creek Switching Station on the NTL will be approximately 20 km south of Bell II. The Project will take electrical service from the new NTL as a Transmission Service Customer under Schedule 1823 as published in the BC Hydro tariffs.

 

Seabridge commissioned BC Hydro to carry out a Facilities Study for the Project, following the previously completed BC Hydro System Impact Study. The Facilities Study is the final evaluation required by the utility to define connection costs and terms of electric service. A draft version of the Facilities Study has been issued. Upon the final issue of the study, the parties will be in a position to sign a Facilities Agreement that, in conjunction with the Electricity Supply Agreement (ESA), forms the standard contract for the supply of electric power for a large bulk Transmission Service Customer such as Seabridge. The Project, on the basis of the current application, has priority for service from the new NTL. Currently there is a reservation of 150 MVA for the Project, but an application has been made to increase this to 200 MVA.

 

Several energy recovery and mini-hydro plants have been included in the Project development plan. These plants generate electric power by making use of facilities already included in the Project and will result in significant net project energy savings.

 

It was assumed for the 2016 KSM PFS/PEA Report that the Project will be constructed using the engineering, procurement, and construction management (EPCM) approach with a management team located at both the Mine Site and the Treaty OPC. The Owner will supply all the temporary construction camps and service contractors to manage daily activities on site.

 

Mine Site construction begins with the development of the site access roads to the water treatment plant area, WSF, tunnel entrances, Coulter Creek access road, and building locations. Early works material and equipment will be mobilized via the Winter Access Road and the pioneering road along the Coulter Creek access road alignment. Major equipment, general construction materials, and heavy earth moving equipment will be mobilized via the Coulter Creek access road. Construction material and equipment for the plant and tailings management area will be transported using the Treaty Creek access road. Helicopter support is planned to be used prior to Treaty Creek access road pioneering road completion. The construction schedule for both sites is coordinated around the development of the MTT.

 

31

 

 

Capital Cost Estimate (2016 PFS Plan)

 

An initial capital cost of US$5.005 billion is estimated for the project. Costs in the 2016 KSM PFS/PEA Report are expressed in US Dollars, unless otherwise stated. Costs have been converted using a fixed currency exchange rate of US$0.80 to CDN$1.00. The expected accuracy range of the capital cost estimate is +25%, -10%. This estimate includes only initial capital, defined as all capital expenditures required to produce concentrate and doré. A summary of the major capital costs is shown in the following table.

 

Capital Costs (US$ million)

 

Direct Costs:  
Mine Site 1,218
Process 1,336
Tailing Management Facility 441
Environmental 15
On-site Infrastructure 23
Off-site Infrastructure 120
Permanent Electrical Power Supply and Energy Recovery 159
Total Direct Costs 3,311
Indirect Costs:  
Construction Indirect Costs 449
Spares 34
Initial Fills 20
Freight and Logistics 99
Commissioning and Start-up 6
Engineering Procurement and Construction Management (EPCM) 231
Vendor’s Assistance 23
Total Indirect Costs 862
Owner’s Cost 160
Contingency 671
TOTAL INITIAL CAPITAL 5,005

 

This 2016 PFS estimate is prepared with a base date of Q2 2016. The estimate does not include any escalation past this date. Budget quotations were obtained for major equipment. The vendors provided equipment prices, delivery lead times, freight costs to a designated marshalling yard, and spares allowances. The quotations used in this estimate were obtained in Q1/Q2 2016, and are budgetary and non-binding. Pricing for all major equipment is based on budgetary quotations provided by vendors obtained in Q1/Q2 2016. For non-major equipment, pricing is based on in-house data or recent quotes from similar projects.

 

All equipment and material costs are based on FCA (Free Carrier) Ex-works (Incoterms 2010). Other costs such as spares, taxes, duties, freight, and packaging are covered separately in the indirect costs section of the capital cost estimate.

 

Sustaining capital costs were also estimated leveraging the same basis of information applied to the initial capital estimate with respect to vendor quotations, labour, and material costs. The sustaining capital costs total US$5.503 billion and consist of:

 

open pit mine development, principally mobile fleet replacement
underground mine development at Mitchell and Iron Cap block cave mines
process improvements, principally at Mitchell and Treaty OPC, MTT, and SMCT
TMF expansions, mainly comprising dam raises and CIL basin expansions
permanent electrical power supply and energy recovery systems
Project indirect costs, including construction indirects, spares, freight and logistics, EPCM, vendor assistance, and contingency.

 

32

 

 

Operating Cost Estimate (2016 PFS Plan)

 

The average operating cost for the Project is estimated at US$12.03/t milled at the nominal process rate of 130,000 t/d or US$12.33/t for the LOM average as shown in the table below. The cost estimates in this table are based upon budget prices in Q1/Q2 2016 or based on the data from the database of the consulting firms involved in the cost estimates. When required, costs in this report have been converted using a three-year average currency exchange rate of CDN$1.00 to US$0.80. The expected accuracy range of the operating cost estimate is +25%/-10%.

 

The estimates do not include energy recovery credit (approximately US$0.12/t milled LOM) from mini hydropower stations and the cost (approximately US$0.15/t milled LOM) related to Provincial Sales Tax (PST).

 

LOM Average Unit Operating Costs (US$ Per Tonne Milled)

 

  At the Nominal Feed
Rate of 130,000 t/d
LOM Average
 (US$/t milled)
(US$/a) (US$/t
milled)*
Mine      
Mining Costs – Mill Feed 190,223,000** 4.59** 4.59
Open Pit – Mill Feed - 4.40** 4.40
Block Caving – Mill Feed - 4.99** 4.99
Mill
Process 251,066,000 5.29 5.34
G&A and Site Service
G&A 43,272,000 0.91 1.03
Site Service 18,914,000 0.40 0.44
Tailing and Site Water Management
Tailing Dam Management 6,065,000 0.13 0.13
Selenium Water Treatment 9,469,000 0.20 0.21
HDS Water Treatment 22,033,000 0.46 0.53
Mine Site Water Pumping 2,453,000 0.05 0.06
Total Operating Cost 543,495,000 12.03 12.33

 

Notes:* - The estimates, excluding mining operating costs, are based on a mill feed rate of 130,000 t/d; the costs do not reflect higher unit costs late in mine life when the mill feed rates are lower.

** - Mining operating costs are LOM average unit costs calculated by total LOM operating costs divided by LOM process tonnages; mining operating costs exclude mine pre-production costs. The annual cost is the LOM average cost.

 

Power will be supplied by BC Hydro at an average cost of US$0.050/kWh at the plant 25 kV bus bars, based on the BC Hydro credits for energy conservation by use of HPGR and similar, and the cost of “peaking” power to avoid a BC Hydro contract demand of over 150 MVA. Process power consumption estimates are based on the Bond work index equation for specific grinding energy consumption and estimated equipment load power draws for the rest of the process equipment. The power cost for the mining section is included in the mining operating costs. Power costs for site services, water treatment plants, TMF seepage water pumping, and the Mine Site water pumping are included in their area costs separately.

 

33

 

 

The estimated electrical power costs are based on the 2016 BC Hydro Tariff 1823 – Transmission Service Stepped Rate and Schedule 1901 – Deferred Account Rate Rider. The electrical power costs also account for local system losses and include 7% PST, which is not treated as an Input Tax Credit (ITC). The rates take advantage of the implementation of BC Hydro-approved energy conservation measures in the plant design phase, including the HPGR circuit, which will greatly reduce the costlier Tier 2 power in the BC Hydro stepped-rate Schedule 1823. The 5% Goods and Services Tax (GST) is not included in the power rates as it is an ITC.

 

The operating costs are defined as the direct operating costs including mining, processing, tailing storage, water treatment, and G&A. The hydropower credit from recovered hydro-energy during mining operations is not accounted for directly against operating cost estimate, but is included in the economic financial analysis. Sustaining capital costs including all capital expenditures after the process plant has first been put into production are excluded from the operating cost estimate.

 

Economic Evaluation (2016 PFS Plan)

 

The economic evaluation was prepared on both a pre-tax financial and a post-tax financial model.

 

Metal revenues projected in the KSM Project cash flow models were based on the average metal production values as follows:

 

  Years 1 to 7 Life of Mine
Total Tonnes to Mill (000s) 322,750 2,198,559
Annual Tonnes to Mill (000s) 46,107 41,484
Average Grades
Gold (g/t) 0.82 0.55
Copper (%) 0.24 0.21
Silver (g/t) 2.8 2.6
Molybdenum (ppm) 48.3 42.6
Total Production
Gold (000s oz) 6,259 28,597
Copper (000s lb) 1,434,560 8,270,423
Silver (000s oz) 18,224 114,671
Molybdenum (000s lb) 11,154 62,080
Average Annual Production
Gold (000s oz) 933 540
Copper (000s lb) 204,937 156,052
Silver (000s oz) 2,603 2,164
Molybdenum (000s lb) 1,593 1,171

 

A cash flow analysis was prepared using four metals price scenarios. In the base case scenario, the three-year trailing average (as of July 31, 2016) prices for gold, copper, silver and molybdenum were used, consistent with industry standard and in compliance with the guidance of the United States Securities and Exchange Commission and NI 43-101. In addition to the base case, three metal price/exchange rate scenarios were also developed: the first uses the metal prices and exchange rate used in mine optimization and design (2016 Design Case); the second uses the spot metal prices and closing exchange rate on July 1, 2016 (Recent Spot Price Case); the third uses higher metal prices to indicate upside potential (Alternate Case). The input parameters and results of all four scenarios on a pre- and post-tax basis can be found in the following table.

 

34

 

 

Summary of the Pre- and Post-Tax Economic Evaluations (2016 PFS Plan)

 

  Unit Base Case 2016 Design
Case
Recent Spot
Price Case
Alternate Case
Metal Price
Gold US$/oz 1,230.00 1,200.00 1,350.00 1,500.00
Copper US$/lb 2.75 2.70 2.20 3.00
Silver US$/oz 17.75 17.50 20.00 25.00
Molybdenum US$/lb 8.49 9.70 7.00 10.00
Exchange Rate US:Cdn 0.80 0.83 0.77 0.80
Pre-Tax Economic Results
NPV (at 0%)* US$ M 15,933 13,727 16,101 26,319
NPV (at 3%) US$ M 6,217 5,128 6,461 11,138
NPV (at 5%) US$ M 3,263 2,510 3,507 6,541
NPV (at 8%) US$ M 960 475 1,175 2,928
IRR % 10.4 9.2 11.1 14.6
Payback Years 6.0 6.5 5.6 4.1
Cash Cost/oz Au US$/oz 277 311 404 183
Total Cost/oz Au US$/oz 673 720 787 580
Post-Tax Economic Results
NPV (at 0%)* US$ M 9,983 8,537 10,109 16,721
NPV (at 3%) US$ M 3,513 2,789 3,691 6,696
NPV (at 5%) US$ M 1,539 1,028 1,718 3,663
NPV (at 8%) US$ M -2 -343 161 1,282
IRR % 8.0 7.0 8.5 11.4
Payback Years 6.8 7.4 6.4 4.9

 

*undiscounted cash flow

 

Sensitivity analyses were carried out on gold, copper, silver, and molybdenum metal prices, exchange rate, capital expenditure and operating costs. The analyses are presented in the 2016 KSM PFS/PEA Report graphically as financial outcomes in terms of pre-tax NPV, IRR and payback period. The Project NPV is most sensitive to gold price and exchange rate followed by operating costs, copper price and capital costs. The IRR is most sensitive to exchange rate, capital costs and gold price followed by operating costs and copper price. The payback period is most sensitive to gold price and exchange rate followed by capital costs, copper price and operating costs. Since the majority of costs are in Canadian dollars and the economic analysis is developed in American dollars, a significant increase in the exchange rate by 30% will result in a significant increase in the costs when converted to American dollars and this leads to sharp increase in the payback period. Also, when gold price decreases by 30%, the revenue side decreases significantly and this results in sharp increase in the payback period. Financial outcomes are relatively insensitive to silver and molybdenum prices.

 

Recommendations

 

2016 PFS Plan Recommendations

 

The key recommendations for advance studies emanating from the 2016 PFS focus on improving both open pit and underground mine design through additional drilling and testing; water related topics to further refine the inputs and results of site wide water balance analyses from the construction period through closure; and tunnels to develop more design-specific information to assist in reducing Project and operational risk and associated construction and operating costs. Other recommendations address data collection needs for RSFs, ore transportation, TMF, metallurgical testing, and process engineering.

 

35

 

 

Other Relevant Data and Information – 2016 PEA Plan

 

The 2016 PEA Plan was undertaken to evaluate a different approach to developing the Project by emphasizing low-cost block cave mining and reducing the number and size of the open pits, which significantly reduces the surface disturbances in the re-designed Project. The 2016 PEA Plan is a conceptual level of study based on the same Mineral Resource estimates used in the 2016 PFS Plan, except the inferred mineral resources are included in the 2016 PEA Plan, which assesses the potential impacts of incorporating these inferred resources into project design, capital and operating cost estimates and projected economics. The results of the 2016 PFS remain valid and represent a viable option for developing the KSM Project, with the PEA assessing an alternative development option at a conceptual level.

 

The 2016 PEA Plan is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the results of the 2016 PEA Plan will be realized. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

 

The 2016 PEA Plan envisages a combined open pit/underground block cave mining operation that is planned to operate for 51 years. The proposed Process Plant for the 2016 PEA Plan mine design will have an average process rate of 170,000 t/d and produce a gold/copper/silver concentrate for transport by truck to a nearby sea port at Stewart, B.C. Metallurgical testing indicates that KSM can produce a clean concentrate with an average copper grade of 25% with a high gold and silver content, making it readily saleable. Separate gold-silver doré would be produced at the KSM processing facility.

 

Mine Design

 

The 2016 PEA Plan is based on the same Mineral Resources estimates that were estimated in the 2016 KSM PFS/PEA Report. The 2016 PEA Plan utilizes Measured, Indicated and Inferred Mineral Resources in mine planning. Material that is mined in the 2016 PEA Plan is based on open pit mining and underground block caving for the Mitchell deposit, open pit mining for the Sulphurets deposit and underground block caving for the Kerr and Iron Cap deposits. The Mitchell open pit and Kerr underground mines will be the main source of mill feed, supplemented by the Sulphurets open pit along with the Mitchell and Iron Cap underground mine production. Approximately 22% of the mill feed would come from open pit operations and 78% from underground block caving. Waste to mill feed cut-offs were determined using a Net Smelter Return (“NSR”) for each block in the model for the open pit mines, and a NSR shut-off for the block cave underground mines. NSR is calculated using prices and process recoveries for each metal accounting for all off-site losses, transportation, smelting and refining charges. Metal prices of US$1,200 per ounce gold, US$2.70 per pound copper, and US$17.50 per ounce silver are used in the NSR calculations.

 

Lerchs-Grossman (“LG”) pit shell optimizations were used to define open pit mine plans in the 2016 PEA Plan. The pit limits of the 2016 PEA Plan are contained inside the pit limits of the 2016 PFS Plan. The mine design for the 2016 PEA Plan focuses on reducing waste and selecting higher block value. As a result the 2016 PEA Plan mine plan contains 2.4 billion tonnes less waste in the open pit mine plan.

 

36

 

 

The underground block caving mine designs for Mitchell, Iron Cap, and Kerr are based on modeling using GEOVIA’s Footprint Finder and PCBC software. The ramp-up and maximum yearly mine production rates were established based on the rate at which the drawpoints are constructed, and the initial and maximum production rates at which individual drawpoints can be mucked. The values chosen for these inputs were based on industry averages adjusted to suit the anticipated conditions.

 

Mitchell is estimated to have a production ramp-up period of 5 years, steady state production at 21.9 million tonnes per year for 28 years, and then ramp-down production for another 3 years. Iron Cap is estimated to have a production ramp-up period of 3 years, steady state production at 14.6 million tonnes per year for 11 years, and then ramp-down production for another 4 years. Kerr is estimated to have a production ramp-up period of 6 years, steady state production at 25.5 million tonnes per year for 38 years with some variations during years where the operation transitions from first to second lift and second to third lift. Ramp down lasts 4 years.

 

The underground pre-production period is 5 years for Mitchell and Iron Cap and 3 years for Kerr. The first underground mill feed production from Mitchell, Iron Cap and Kerr comes in years 9, 10 and 4, respectively. The mining NSR shut-off is CDN$20 per tonne for the Mitchell underground mine, CDN$23 per tonne for the Iron Cap underground mine and CDN$22 per tonne for Kerr.

 

Mineral Resources contained in the mine plans for the 2016 PEA Plan are stated as follows.

 

Mineral Resources in the PEA Mine Plan

Zone Mining Method Classification

Tonnes

(millions)

Average Grades Contained Metal
Gold
(gpt)

Copper
(%)

Silver
(gpt)

Gold

(million

ounces)

Copper

(million

pounds)

Silver

(million

ounces)

Mitchell Open Pit Measured 223.7 0.79 0.20 3.0 5.7 966 21.9
Indicated 194.6 0.75 0.19 2.8 4.7 817 17.7
Inferred 11.6 0.47 0.20 5.2 0.2 50 1.9
Block Cave Measured 244.9 0.68 0.21 4.2 5.4 1,134 33.1
Indicated 361.0 0.65 0.20 4.1 7.5 1,592 47.6
Inferred 87.5 0.40 0.13 3.1 1.1 259 8.7
Iron Cap Block Cave Indicated 121.5 0.64 0.24 4.1 2.5 643 15.8
Inferred 77.4 0.46 0.22 3.5 1.1 384 8.7
Sulphurets Open Pit Indicated 91.8 0.70 0.29 0.6 2.1 584 1.7
Inferred 11.1 0.59 0.25 0.8 0.2 60 0.3
Kerr Block Cave Indicated 24.4 0.26 0.54 1.1 0.2 290 0.8
Inferred 931.5 0.31 0.49 1.7 9.3 9,962 52.0
Total Open Pit M+I 510.1 0.76 0.21 2.5 12.4 2,367 41.2
Inferred 22.7 0.53 0.22 3.1 0.4 111 2.2
Total Block Cave M+I 751.8 0.64 0.22 4.0 15.6 3,659 97.3
Inferred 1,096.4 0.33 0.44 2.0 11.6 10,605 69.3
Total Material Mined M+I 1,261.8 0.69 0.22 3.4 28.0 6,026 138.6
Inferred 1,119.1 0.33 0.43 2.0 12.0 10,716 71.6

 

37

 

 

Production

 

The PEA mining study took a different approach to the 2016 PFS. The PEA mine plan was carried out with the aim of reducing the amount of waste rock produced in the open pits with the mill feed drawing more on the underground resources. The mine production plan starts in lower-cost open pit areas using conventional large scale equipment before transitioning into block cave underground bulk mining later in the mine life. Starter pits have been selected in higher grade areas and cutoff grade strategy optimizes revenues to minimize the payback duration.

 

After initial ramp-up the throughput averages of 170,000 tonnes per day (“tpd”) for the first 20 years, after the rate is reduced to 130,000 tpd for the following 15 years and then is further reduced to around 77,000 tpd for 12 years; during the remaining 3 years of production, throughput averages 28,000 tpd. In the 2016 PEA Plan, KSM’s mine life is estimated at approximately 51 years. Production starts from open pits at Mitchell and Sulphurets and lasts until years 8 and 5 of production, respectively. During that period the Kerr block cave is developed and first mill feed is produced in year 4 of production. In year 9 and 10 Mitchell and Iron Cap caves enter into production. Underground production ends first at Iron Cap in year 27, then at Mitchell in year 44 and finally at Kerr in year 51 of production.

 

At Mitchell, a near-surface higher grade gold zone outcrops allowing for gold production in the first seven years that is substantially above the mine life average grade. The mine plan is specifically designed for mining highest gold grade first to facilitate an early capital investment payback. The project’s post-tax payback period is approximately 6.3 years for the Base Case or less than 12% of mine life.

 

Metal production for the first seven years, compared to life of mine average production, is estimated as follows:

 

Average Annual Metal Production (metal recovered)

  Years 1-7
Average
Life of Mine
Average
Average Grades:    
Gold (grams per tonne) 0.78 0.52
Copper (%) 0.26 0.32
Silver (grams per tonne) 2.7 2.7
Annual Production:    
Gold (000 ounces) 1,150 592
Copper (000 pounds) 306,603 286,217
Silver (000 ounces) 3,290 2,761

 

Capital Costs

 

Initial capital costs (including contingency of US$927 million and preproduction mining costs) are estimated at US$5.5 billion, approximately 9.7% higher than the initial capital estimate in the 2016 PFS Plan. Most of the cost increase in initial capital is related to the higher throughput that required a bigger mining fleet at the start of production, larger size of equipment at the mill and changes in the tailing management facility due to a higher mill rate. Also, contingency is higher to reflect the lower level of cost accuracy of the 2016 PEA Plan compared to the 2016 PFS Plan.

 

Sustaining capital over the 51 year mine life is estimated at US$10.0 billion and is dominated by capitalizing the underground mine expansions at Kerr, Mitchell and Iron Cap block caves. In addition to sustaining capital, a further US$540 million has been charged against the project including US$454 million set aside in a sinking fund during the production period to pay for estimated water treatment obligations which continue after closure and US$86 million for physical reclamation and other uses after mining operations have ceased. 

 

38

 

 

Initial capital and sustaining capital estimates for the 2016 PEA Plan are summarized as follows:

 

Capital Costs (US$ million)

Direct Costs:  
Mine Site 1,272
Process 1,447
Tailing Management Facility 509
Environmental 15
On-site Infrastructure 23
Off-site Infrastructure 120
Permanent Electrical Power Supply and Energy Recovery 167
Total Direct Costs 3,553
Total Indirect Costs 848
Owner’s Cost 161
Contingency 927
TOTAL INITIAL CAPITAL 5,489
TOTAL LIFE OF MINE SUSTAINING CAPITAL 10,018

 

Operating Costs

 

Average mine, process and G&A operating costs over the 2016 PEA Plan project’s life (including waste mining and on-site power credits, excluding off-site shipping and smelting costs) are estimated at US$11.61 per tonne milled (before base metal credits). Estimated unit operating costs decreased 6% from the 2016 PFS Plan primarily due to reduction in process and G&A cost associated with higher throughput. A breakdown of estimated unit operating costs is as follows:

 

LOM Average Unit Operating Costs (US$ Per Tonne Milled)

Mining 4.47
Process 5.19
G&A 0.86
Others 1.09
Total Operating Costs 11.61

 

*excluding pre-production cost of both open pit and underground mining

 

39

 

 

Economic Analysis

 

To compare the economic projections, the 2016 PEA Plan incorporates three of the same case analyses that were presented in the 2016 PFS Plan. A Base Case economic evaluation was undertaken incorporating historical three-year trailing averages for metal prices as of July 31, 2016. This approach adheres to National Instrument 43-101 and is consistent with industry practice. Two alternate cases were constructed: (i) a Recent Spot Case incorporating recent spot prices for gold, copper, silver and the US$/CDN$ exchange rate; and (ii) an Alternate Case that incorporates higher metal prices to demonstrate the project’s sensitivity to rising prices. The pre-tax and post-tax estimated economic results in U.S. dollars for all three cases compared to the results of the 2016 PFS Plan are as follows:

 

Projected Economic Results (US$)

 

  Base Case Recent Spot Alternate
2016 PEA 2016 PFS 2016 PEA 2016 PFS 2016 PEA 2016 PFS
Metal Prices:      
Gold ($/ounce) 1,230 1,350 1,500
Copper ($/pound) 2.75 2.20 3.00
Silver ($/ounce) 17.75 20.00 25.00
US$/CDN$ Exchange Rate: 0.80 0.77 0.80
Cost Summary:            
Operating Costs Per Oz of Gold (life of mine) -$179 $277 $32 $404 -$319 $183
Total Cost Per Ounce of Gold Produced $358 $673 $553 $787 $218 $580
Copper Credits Per Oz Gold Included in Costs -$1,328 -$795 -$1,104 -$636 -$1,449 -$868
Silver Credits per Oz Gold Included in Costs -$83 -$71 -$97 -$80 -$117 -$100
Initial Capital (includes pre-production mining) $5.5 B $5.0 B $5.3 B $4.8 B $5.5 B $5.0 B
Sustaining Capital $10.0 B $5.5 B $9.7 B $5.3 B $10.0 B $5.5 B
Unit Operating Cost On-site (US$/tonne) $11.61 $12.36 $11.17 $12.09 $11.61 $12.36
Pre-Tax Results:            
Net Cash Flow $26.3 B $15.9 B $24.1 B $16.1 B $38.7 B $26.3 B
NPV @ 5% Discount Rate $6.1 B $3.3 B $5.7 B $3.5 B $10.2 B $6.5 B
Internal Rate of Return 12.7% 10.4% 12.9% 11.1% 16.9% 14.6%
Payback Period (years) 5.6 6.0 5.3 5.6 3.9 4.1
Post-Tax Results:            
Net Cash Flow $16.7 B $10.0 B $15.3 B $10.1 B $24.7 B $16.7 B
NPV @ 5% Discount Rate $3.4 B $1.5 B $3.2 B $1.7 B $6.0 B $3.7 B
Internal Rate of Return 10.0% 8.0% 10.1% 8.5% 13.4% 11.4%
Payback Period (years) 6.4 6.8 6.1 6.4 4.7 4.9

 

Note: Operating and total cost per ounce of gold are after copper and silver credits. Total cost per ounce include all start-up capital, sustaining capital and reclamation/closure costs. Dollar values followed by a B are in billions. The post-tax results include the B.C. Mineral Tax and corporate provincial and federal taxes. The 2016 PEA is preliminary in nature, and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA will be realized.

 

The 2016 KSM PFS/PEA Report includes sensitivity analyses illustrating the impact on project economics from positive and negative changes to metal prices, capital costs and operating costs. The Project is most sensitive to changes in metal prices and foreign exchange, less sensitive to changes in capital costs, and least sensitive to operating cost and labour costs changes.

 

PFS and PEA Differences

 

Notable changes in the 2016 PEA Plan by comparison to the 2016 PFS Plan include:

 

In the 2016 PEA Plan, open pits would account for only 22% of total production compared to 70% in the 2016 PFS Plan. In the 2016 PEA Plan, the Kerr Deposit (including Deep Kerr) would be mined exclusively as a large underground block cave. The 2016 PEA Plan mine plans in total would reduce the amount of waste rock by 81% (by approximately 2.4 billion tonnes) compared to the 2016 PFS Plan, substantially shrinking the project’s foot print and its environmental impact and reducing water treatment costs.

 

40

 

 

By expanding Kerr (to include Deep Kerr), annual average maximum throughput of 130,000 tonnes per day envisioned in the 2016 PFS Plan has been increased to 170,000 tonnes per day in the 2016 PEA Plan without significant redesign of facilities. Increased throughput would increase metal production, reducing payback periods and improving estimated projected internal rates of returns and net present values.
In the 2016 PEA Plan, estimated Base Case initial capital costs including pre-production mining costs are about 9.7% higher than the 2016 PFS Plan due primarily to increased throughput. Base Case total cost per ounce of gold produced in the 2016 PEA Plan is estimated at US$358 compared to US$673 per ounce in the 2016 PFS Plan. The change in Base Case total cost is due to higher by-product credits from significantly higher copper production more than offsetting higher sustaining capital for expanded underground development in the 2016 PEA Plan.
As a result of approximately 77% more copper that would be produced over the projected life, Base Case life of mine operating costs in the 2016 PEA Plan are estimated at negative US$179 per ounce of gold produced, compared to the positive US$277 per ounce in the 2016 PFS Plan.

 

2016 PEA Plan Recommendations

 

The exploration drilling program on Deep Kerr should be augmented with geotechnical activities to provide a better understanding of the rock structure characteristics important for the mine design. Further testwork should be performed to confirm process parameters and test domain composites and point samples to address geometallurgical variability that will support more advanced studies on the Deep Kerr deposit.

 

2016, 2017, 2018 and 2019 Exploration

 

Exploration activities at the KSM Project are being conducted by Seabridge personnel under the supervision of William E. Threlkeld, Senior Vice President, Exploration of Seabridge. The following information regarding 2016, 2017, 2018 and 2019 exploration at KSM, but excluding the resource estimates, was prepared by or under the supervision of William Threlkeld, a qualified person for the purposes of NI 43-101. The resource estimates were prepared by RMI under the direction of Michael Lechner, who is independent of Seabridge and a Qualified Person as defined by NI 43-101.

 

Kerr

 

The Issuer’s exploration program at Kerr in 2016 proposed core drilling designed to expand the block cave shapes that confined the Deep Kerr resource estimate. The drill program was carefully designed to optimize the prospective mine plan at Kerr. Five holes were completed in 2016 which expanded the known resource about 500 meters along strike to the south at grades consistent with the deposit’s inferred resource. These results were then added to the existing database and a new inferred resource estimate was announced in February, 2017. Drilling during the 2016 campaign corroborated the major controls identified in past drilling with respect to copper and gold distribution and the predictability of the resource model.

 

41

 

 

Gold, copper, silver and molybdenum grades in the new resource were estimated by RMI using inverse distance weighting methods and gold and copper grade domains that were designed within modeled structural and lithologic controls of mineralization for the Deep Kerr zone. Trend plane search strategies were defined for four distinct structural domains defining strike and dip projections for sample data. Copper and gold domains were comparable to those used in the resource model completed in March of 2016 that was also prepared by RMI. Drilling during the 2016 campaign corroborated the major controls identified in past drilling with respect to copper and gold distribution and the predictability of the resource model.

 

The grade models were validated visually and by comparisons with nearest neighbor models. The drill hole database that was used for the estimate of the Deep Kerr mineral resources consisted primarily of data collected by Seabridge from 77 core drill holes totaling more than 74,000 meters of core drilling completed between 2009 and 2016. RMI reviewed the quality assurance/quality control protocols and results associated with the Seabridge drilling and has concluded that the number and type of gold and copper standard reference materials (standards, blanks, and duplicates) were reasonable. Based on the performance of those standard reference materials, RMI believes that the Seabridge drill samples are reproducible and suitable for estimating mineral resources. Historical drill hole results were used in conjunction with the 77 Seabridge core holes to estimate block grades for the upper portion of the Deep Kerr resource.

 

Block NSR values were calculated using metal recovery projection formulae from metallurgical test work. This NSR value, stated in terms of Canadian dollars, reflects metal prices, a US/Cdn currency exchange rate of 0.83, and offsite transportation, smelting, and refining charges.

 

Deep Kerr was treated as a potential block cave (bulk underground) mining target. The lateral and vertical continuity of the zone provides a geometric configuration that is likely to be amenable to these mining methods. Seabridge has retained Golder Associates, a leading industry expert in underground mining, to undertake bulk underground mining studies for Deep Kerr. Golder used the block model prepared by RMI to establish three separate draw point elevations at an NSR shutoff value of Cdn$16/t, and the conceptual cave footprints of these three elevations were extruded upward 495 meters. Resources within the extruded shapes were tabulated for each of the three hypothetical draw point elevations using an NSR cut-off value of Cdn$16/t, consistent with the resource statement in the 2016 KSM PFS/PEA Report. Evaluation of the economic potential of Deep Kerr was based on metal prices of US$3.00 per pound of copper, US$1300 per ounce of gold, US$20 per ounce of silver, US$9.70 per pound of molybdenum together with estimated metal recoveries from metallurgical test work. These metal prices are generally in line with, or lower than, the metal prices used by major mining companies for their current resource disclosure for similar types of projects.

 

42

 

 

The updated Deep Kerr inferred resource estimate of RMI effective as of December, 2016, and the previous inferred resource estimate (which is included for comparison purposes) are as follows:

 

Deep Kerr Undiluted Block Cave Inferred Mineral Resources at C$16/t NSR Cutoff

 

Date of Estimate Tonnes (millions) Average Grades Contained Metal
Gold (gpt)

Copper

(%)

Silver

(gpt)

Moly

(ppm)

Gold

(000

ounces)

Copper

(million

pounds)

Silver

(000

ounces)

Moly

(M

pounds)

May 31, 2016 1,609 0.31 0.43 1.8 25 16,036 15,249 93,115 89
Feb. 13, 2017 1,921 0.31 0.41 2.1 24 19,050 17,301 130,853 102

 

Note: Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

 

The tonnes, grade and metal content of the portion of the above updated Deep Kerr mineral resource estimate contained within the 2016 PFS Plan and the 2016 PEA Plan is not materially different than the tonnes, grade and metal content in the mineral resource estimate used in the 2016 PFS Plan and the 2016 PEA Plan, respectively, and the updated mineral resource estimate is the only current estimate of mineral resources in the Deep Kerr deposit. In order to facilitate cost-effective underground exploration drilling of the Kerr Deposit at depth compared to surface drilling, in 2016 the Issuer applied for and, in 2016, received permits from the BC Government necessary to develop an exploration adit into the deposit. The proposed 2,100 meter long adit would be collared in the Sulphurets Valley at the base of Kerr Mountain, declining at a 12 percent grade parallel to the footwall of the Kerr deposit, allowing access to mineralized zones that have only been tested to depths approximately 1,800 meters below surface. To date, all drilling at Kerr has been from surface, resulting in very long holes which are slow and expensive to drill. The adit will be needed to upgrade Deep Kerr’s inferred resource to higher categories. The adit will also provide the opportunity to collect additional geotechnical information required to finalize the development of a block cave underground mine plan for the Kerr Deposit.

 

Iron Cap

 

In 2017, the Issuer’s exploration program at KSM focused on targets emerging from the last drill hole in the 2016 drill program, hole IC-16-62, which returned an interval of 555.2 meters grading 0.83 g/t gold, 0.24% copper and 4.4 g/t silver beginning at a depth of 353 meters in the Lower Iron Cap zone, but also included a shallower blind discovery beginning at a depth of 201 m and continuing over an interval of more than 60.7 meters averaging 1.20 g/t gold, 0.95% Cu and 4.1 g/t silver. Off set drilling of the deeper interval tested for continuity of this mineralization down plunge of the existing resource at the time, which holes would also pass through the shallower interval.

 

In the drill program in 2017 the Issuer completed 11 holes and 10,383 m of drilling. All 11 holes returned wide zones of significant grade, but the final 3 holes included long runs of some of the highest metal values found to that date at the KSM Project.

 

In 2018 the Issuer continued drilling at Iron Cap to test the down plunge projection of the high grade core zone of the Iron Cap Deposit to the west of the current resource. The 2018 program also included drilling to evaluate the relative positioning between Iron Cap resources and the currently planned alignment of the Mitchell-Treaty Tunnel and additional geotechnical and model confirmation drilling to help refine engineering parameters for the deposits. The program successfully confirmed the down plunge projection at Iron Cap and the Issuer announced a new resource estimate at Iron Cap prepared by Michael Lechner, P.Geo of RMI on March 12, 2019.

 

43

 

 

Gold, copper, silver and molybdenum grades in the updated resource were estimated by RMI using ordinary kriging methods. Independently designed gold, copper, silver, and molybdenum grade envelopes along with lithologic wireframes provided the key constraints in the grade estimation plan. The grade envelopes were designed using drill hole grades and an updated structural and lithologic model that was developed for the Iron Cap deposit. A multi-pass ordinary kriging estimation plan was developed using steeply oriented search ellipses to select eligible composites for block grade estimation based on updated variography studies.

 

The grade models were validated visually and by comparisons with nearest neighbor grade models. The drill hole database that was used for the estimate of the Iron Cap mineral resources consisted of data collected almost exclusively by Seabridge from 99 drill holes totaling about 67,000 meters of core drilling completed between 2005 and 2018. The entire 2018 electronic drill hole assay database was compared against certified lab assay results by RMI with no errors discovered. RMI also reviewed the quality assurance/quality control protocols and results associated with the Seabridge drilling. Based on the performance of the standard reference materials and secondary laboratory check assay results, RMI believes that the Seabridge drill samples are reproducible and suitable for estimating mineral resources.

 

Block NSR values were calculated by Moose Mountain Technical Services using metal recovery projection formulae developed by Tetra Tech from metallurgical test work. This NSR value, stated in terms of Canadian dollars, reflects metal prices, a US$/C$ currency exchange rate of 0.83, and offsite transportation, smelting, and refining charges. The metal recovery estimates were updated using previous and additional test work completed in 2018.

 

Iron Cap was treated as a potential block cave (bulk underground) mining target. The lateral and vertical continuity of the zone provides a geometric configuration that is likely to be amenable to this mining method. Seabridge has retained Golder Associates, a leading industry expert in underground mining, to undertake bulk underground mining studies for KSM. Golder used the block model prepared by RMI to establish three separate draw point elevations at an NSR shutoff value of C$16/t, and the conceptual cave footprints at these three elevations were extruded upward by 495 meters and then clipped against one another. Resources within the extruded shapes were tabulated for each of the three hypothetical draw point elevations using an NSR cut-off value of C$16/t, consistent with the previous updated resource estimate. Evaluation of the economic potential of Iron Cap for the purposes of resource estimation was based on metal prices of US$3.00 per pound of copper, US$1300 per ounce of gold, US$20 per ounce of silver, US$9.70 per pound of molybdenum and a US$/C$ exchange rate of 0.83 together with estimated metal recoveries from metallurgical test work. These metal prices are generally in line with, or lower than, the metal prices used by major mining companies for their current resource disclosure for similar types of projects.

 

44

 

 

The 2018 drill program at Iron Cap confirmed that the deposit continues down dip and to the northwest. The 2018 drilling results allowed for the expansion of the mineralized system along the hanging wall of the previous interpretation. Within the conceptual cave footprints extruded up 495 meters and clipped against one another, there exist large, higher grade zones. The following table compares the undiluted tonnes and grades of the updated Iron Cap resource at higher NSR cut offs:

 

Iron Cap Mineral Resources effective December, 2018

NSR Cutoff (C$/t) Resource Category Tonnes (millions) Average Grades Contained Metal
Gold (gpt)

Copper

(%)

Silver

(gpt)

Moly

(ppm)

Gold

(000

ounces)

Copper

(million

pounds)

Silver

(000

ounces)

Moly

(million

pounds)

16 Indicated 423 0.41 0.22 4.6 41 5,576 2,051 62,559 38
Inferred 1,899 0.45 0.30 2.6 30 27,474 12,556 158,741 126
20 Indicated 361 0.44 0.24 4.7 41 5,107 1,910 54,550 33
Inferred 1,675 0.48 0.31 2.6 30 25,849 11,444 140,016 111
24 Indicated 274 0.50 0.25 5.1 39 4,405 1,510 44,927 24
Inferred 1,373 0.53 0.34 2.7 30 23,396 10,289 119,186 91
28 Indicated 195 0.56 0.27 5.3 34 3,511 1,160 33,228 15
Inferred 1,070 0.59 0.36 2.7 29 20,297 8,490 92,883 68
32 Indicated 132 0.64 0.28 5.5 29 2,716 815 23,341 8
Inferred 808 0.67 0.39 2.8 28 17,405 6,945 72,738 50
36 Indicated 87 0.72 0.29 5.6 23 2,014 556 15,664 4
Inferred 594 0.75 0.43 2.9 28 14,323 5,629 55,383 37

 

The tonnes, grade and metal content of the portion of the above 2018 Iron Cap mineral resource estimates contained within the 2016 PFS Plan and the 2016 PEA Plan is not materially different than the tonnes, grade and metal content in the mineral resource estimates used in the 2016 PFS Plan and the 2016 PEA Plan, respectively, and the 2018 mineral resource estimates are the only current estimates of mineral resources in the Iron Cap deposit. The rows in bold text in the table above represent the updated undiluted mineral resource tonnes, grade, and contained metal at a C$16/t cut-off. The tonnes, grade, and contained metal for the other NSR cut-offs are shown to provide a relative sense of the distribution of materials within the extruded shapes. It may be possible to develop higher grade lower tonnage caves given the trends shown in the table.

 

The new Iron Cap resource is expected to take a more prominent place in future mine plans. Favourable capital and operating costs should be possible due to its larger size and higher grade and its proximity to the proposed Mitchell-Treaty Twin Tunnel alignment and other key infrastructure, all of which could result in Iron Cap making a strong contribution to improving Project economics.

 

New Deposits and Follow-up Drilling

 

Continuous exploration at KSM since 2005 has recognized the potential for undiscovered porphyry deposits west of the exposed deposits and at depth below the Sulphurets Thrust Fault (“STF”) system. Several potential blind targets have been identified but did not merit attention while the corporate focus was on delineating mineral resources and supporting reserves to the point where the information was sufficient to prepare for final feasibility determination. High definition magnetic surveys and historical drilling have identified porphyry style targets separate from, but in the vicinity of, the Mitchell and Iron Cap deposits. In 2019, the Issuer’s attention turned to these targets.

 

Deep penetrating geophysical techniques were employed in 2019 to improve resolution on targets and generate discrete zones for testing in the future. New Z-Tipper Axis Electromagnetic (ZTEM) surveys and 3D IP surveys were completed. Data was integrated into a digital 3D earth model by Mira Geoscience. These results are now being integrated with historical MT surveys, airborne high-resolution magnetic survey, bore hole geophysical surveys and geological mapping. Geophysical profiles indicate that these targets can be tested from surface but would likely be evaluated as bulk underground opportunities. The Issuer does have plans to drill these targets in the near future, but believes they establish further upside potential at KSM.

 

45

 

 

Also, in the 2019 program, the Issuer completed exploration drilling totaling 6,121 meters in 26 drill holes. Drilling was within the 2016 proposed Sulphurets Pit limits, at the margins of the Sulphurets deposit with 24 of the 26 holes intersecting plus 1.0 g/t gold material. These holes evaluated several intermediate sulfidation epithermal occurrences that are not captured in the existing deposit resource model. Focusing on the 500 meters of strike between holes S-18-81 (2 meters grading 1,580g/t gold and 209g/t silver from 69.0m to 71.0m) and S-18-82 (12.2 meters of 5.83g/t gold and 7.2g/t silver from 21.0m to 33.2m) holes were off-set at about 50 meter intervals. Intersections are being evaluated for inclusion in the resource model. Selected intervals from these holes are provided below:

 

Select Intersections from 2019 Sulphurets Drilling

Drill Hole Total Depth (m) From (m) To (m) Width (m) Gold (g/t) Silver (g/t)
S-19-87 168.0 127.0 128.5 1.5 6.01 5.0
S-19-89 268.4 113.5 115.0 1.5 3.03 102.0
138.0 139.8 1.8 5.17 5.8
S-19-90 186.0 6.0 9.0 3.0 2.78 1.0
70.7 71.9 1.2 2.83 5.3
175.1 175.8 0.7 4.49 36.4
S-19-93 240.0 33.0 34.5 1.5 7.34 10.3
S-19-94 180.0 53.5 55.0 1.5 9.42 7.1
S-19-95 258.3 212.5 216.2 3.7 2.65 0.7
S-19-97 300.0 156.7 158.0 1.3 10.25 12.2
S-19-98 357.0 26.0 27.5 1.5 3.24 10.4
S-19-103 300.0 18.8 21.3 2.5 6.48 2.3
66.8 68.4 1.6 7.27 8.1
241.3 241.8 0.5