The Project is located within the CLGB, which is a steeply east dipping homocline sequence of metavolcanic and metasedimentary rocks of the Yellowknife Supergroup. The CLGB is bounded to the west by a sodic granite pluton, referred to as the Courageous Lake Batholith, and to the east by conformably overlying turbidite sequences. Dynamothermal regional metamorphism within the CLGB has created mineral assemblages indicative of mid-greenschist facies metamorphic grade. Lower amphibolite facies grade metamorphism has been identified north and south of the CLGB.
The volcanic material within the CLGB represents a tholeiitic to calc-alkaline suite of volcanic rocks common to many Archean greenstone belts. Uranium-lead dating and rubidium-strontium dating age determinations reveal an age of 2.66 Ga.
Felsic volcanic rocks and their intrusive equivalents in the CLGB were derived from peraluminous, sub-alkaline magmas of calc-alkaline affinity. These felsic volcanic lithologies are the predominant host of the FAT deposit.
Within the felsic volcanic rocks are abundant lense-shaped epiclastic intercalations that are thought to be derived from a tuffaceous source. The lithologies are tuffaceous greywacke, thinly laminated siltstone, and fine-grained arkosic sandstone.
The mineral domains or zones of the FAT deposit are defined by a discrete suite of hydrothermal alteration assemblages. The lateral continuity and stratigraphic thickness of the hydrothermal system indicates that the FAT deposit is robust in volume and durations. The predominant hydrothermal alteration minerals in the FAT deposit are illite group sheet silicates, referred to as “sericite”. Silicic alteration of varying intensity is ubiquitous throughout the defined mineralized zones and is represented by silica flooding of groundmass material in volcanic rock. Generally the most intense zones of silica alteration are not indicative of higher gold concentrations. Carbonate alteration is also quite ubiquitous and occurs as calcite, ankerite, and siderite.
Sulfide mineralogy in the FAT deposit is relatively simple and consists of pyrite, pyrrhotite, arsenopyrite, sphalerite, and chalcopyrite in decreasing order of abundance. While all of these minerals can be found in the mineralized zones, only arsenopyrite has a consistent correlative relationship to gold concentrations. Arsenopyrite occurs in three distinct habits: acicular disseminated crystals, anhedral disseminated clots, and euhedral crystals in fractures. The acicular variety tends to have the clearest association with higher-grade gold mineralization.
The Issuer follows an ongoing and rigorous sample preparation, security, quality control/quality assurance protocol at its Courageous Lake project, including blank and certified reference standards inserted by the Company at a rate of not less than one of each type in every 30 samples. Repeats and re-splits of the sample rejects are being analyzed at a rate of not less than one sample in every 25 for each type. Cross-check analyses are being conducted at a second external laboratory on at least 10% of the samples. The details of these procedures are outlined in the 2012 CL PFS Report.
Several major testing programs have been performed on the mineral samples from the property since 2003 as follows:
These testing programs also determined mineral sample resistance to various comminution processes. The test work determined the Bond ball mill work index and hardness parameters related to SAG and HPGR crushing.
The grindability test results indicated that the sample is moderately hard for grinding by ball mills but
is very hard for milling by SAG mills. The HPGR locked cycle tests showed that the gross specific energy requirement for particle size reduction by HPGR was 2.20 kWh/t with a specific throughput of
257 ts/hm3.
Estimated average metallurgical performance according to the test results and the proposed mining plan are for gold recovery of 89.4%.
In late 2011 and early 2012, RMI constructed a new resource model incorporating 2011 drilling results and an updated geologic interpretation that was completed by Seabridge's geologic staff. Block gold grades were estimated using a series of nested inverse distance cubed interpolation runs within mineral zone wireframe boundaries. Additional constraints were implemented for the updated model using indicator probabilities and a more selective search strategy referred to as "dynamic anisotropy". The estimated block grades were classified into measured, indicated, and inferred categories using a combination of distance to drilling data, the number of drill holes used to estimate block grades, and a wireframe shape reflecting mineralized continuity. The following table summarizes the undiluted measured, indicated, and inferred mineral resources of the Courageous Lake deposit at a 0.83 g/t gold cut-off grade.
Note: This table does not include the results of the 2012 exploration program at the Courageous Lake Project. 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 Mineral Resources have a high degree 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 an Inferred Resource will ever be upgraded to a higher category.
MMTS has produced a series of LG pit shell optimizations for the Courageous Lake deposit using the resource model provided by RMI. The pit optimizations use mining, processing, tailing management, general and administrative (G&A) costs, and process metal recoveries. The processing cost includes a gold plant to produce doré on site. Only measured and indicated resource classes are used in the pit optimization.
Cut-off Grade is determined using an estimated Net Smelter Return (NSR) in Cdn$/t, which is calculated using Net Smelter Prices (NSP). The NSR (net of offsite refining charges and onsite mill recovery) is used as a cut-off item for break-even economic material selection. The NSP includes metal prices, US$ exchange rate, off-site transportation, and refining charges. The metal price used is US$1,244 per ounce and resultant NSP is Cdn$41.98 per gram.
The ultimate economic pit limit for the 2012 CL PFS Report is selected using the Base Case price described above. Typically a time discounted value analysis would be used on a project with a 15- to 20-year mine life to maximize the NPV and IRR. However, when this is done, deeper ore grade material is discounted more heavily and often the pit size is decreased. Even though a discounted value analysis could possibly improve the financial results of this prefeasibility-level study by limiting the mining to shallower ore, the discounted method was not chosen. Instead the larger, less economic, pit limit has been selected as a basis for this study to maximize the mineable resource in anticipation that future exploration will upgrade the inferred material internal in the pit, to a measured or indicated resource. Future studies will consider a time discounted economic pit analysis after the inferred material has been drilled.
The in-situ LG pit delineated resource summarized in the table below uses a NSR cut-off grade of Cdn$20.10 per tonne but does not include any mining dilution or mining loss.
The total in-situ metal contained in the chosen LG ultimate pit is estimated to be 6.5 Moz of gold.
The mine rock management facility for the Project is to be situated east of the pit area, and constructed using a combination of bottom-up and top-down methods. The proposed schedule of mine rock placement enables flotation tailing to be contained within the footprint of this facility. Allowances are made to address reclamation and post-closure requirements by configuring the constructed slopes at the overall reclamation slope angle. Leach residue tailing would be stored between the ultimate pit and immediately west of the mine rock management facility.
Overburden inside the ultimate pit limit is stripped and placed in the overburden stockpile to the west of the pit. This stockpile is used for reclamation material.
Mining operations, methods, and equipment would be typical of open-pit mining in northern Canada. The Project would be a large-capacity operation that utilizes large-scale equipment for the major operating areas in order to generate high productivities, and reduce unit and overall mining costs. The maximum size of the large mining equipment would be constrained by the maximum loads, which can be delivered along the winter road.
Detailed pit phases are developed from the results of the LG sensitivity analysis, which integrates the detailed pit slope criteria and high wall roads. The ultimate pit is divided into smaller mining phases, or pushbacks, to enable a low strip ratio starter pit and to allow for more even waste stripping during the optimized scheduling stage of the project design.
Dilution and mining loss estimates consider the selective mining method required to efficiently extract the narrow near vertical lenses that characterize the Courageous Lake mineralized zones. Proven and Probable Reserves are estimated using diluted whole block grades with additional mining dilution and loss varying by the number of block model resource contact edges with waste blocks. Cut-off grade, mining dilution, loss, and dilution grades were estimated as follows:
The grade of dilution material is derived from blocks in the model that are just below the specified cut-off grade. Internal dilution contained in the block model accounts for the rest of the expected mining dilution. Estimated proven and probable reserves are stated in the table below.
The production schedule has been developed using Mintec Inc.’s MineSight® schedule software.
The mine plan and production schedule will undergo further refinement during higher levels of study for the Project. Additional geotechnical information on high wall capabilities should confirm the pit slopes and determine if the ultimate pit can be designed to a deeper depth. Further details on rock storage management, water management, and final land use will be developed for the Environmental Assessment application, the result of which will impact the mine plan. These elements, along with other optimization details, will need to be integrated into feasibility-stage mine planning.
The proposed process plant would process 17,500 tonnes per day of mineralization. The plant would be operated 365 days per year at an availability of 92%.
The flowsheet proposed for the Project includes HPGR/grinding comminution, conventional flotation, flotation concentrate POX, cyanidation, and gold recovery/refining circuits. The comminution consists of primary crushing by gyratory crusher, secondary crushing by cone crusher, and tertiary crushing by HPGR followed by ball mill grinding. The conventional flotation includes rougher flotation, scavenger flotation, and cleaner flotation on scavenger flotation concentrate. The rougher flotation concentrate together with the scavenger cleaner concentrate would be oxidized under pressure after being reground and acid preleached. A portion of the slurry and acid-bearing solution from the POX circuit would be recycled back to the POX pre-leaching. The slurry and the acid-bearing solution of the POX discharge would be separately neutralized. The POX residue or oxidized concentrate would be leached in a carbon-in-leach (CIL) circuit; the cleaner flotation tailing would be reground and cyanide leached together with the POX residue. Gold recovery is to be completed by stripping the loaded carbon from the CIL circuit, followed by electrowinning to produce gold doré as a final product. The flotation tailing and the cyanide residue is to be thickened and disposed of separately. The residual cyanide in the leach residue would be destroyed by a sulphur dioxide (SO2)/air oxidation procedure prior to disposal to the lined leach residue storage facility.
The HPGR circuit is recommended, instead of a SAG mill grinding arrangement, to reduce energy consumption.
Mine rock and run-of-mine (ROM) waste products from the mining operations will comprise approximately:
The tailing, residue, and mine rock is to be stored in a tailing/mine rock management facility on a flat open area, east of the open pit and south of Courageous Lake. In addition, the dry salt product (associated with the pit depressurization) is to be temporarily stored in encapsulated cells within a landfill located immediately west of pit.
The neutralized leach residue tailing is expected to be somewhat finer than the flotation tailing stream and is to be deposited into a containment structure east of the open pit. The tailing would be pumped as slurry to the storage facility. The neutralized leach residue containment structure would primarily be constructed from mine rock and would be lined.
The flotation tailing would be stored within the mine rock storage facility. The mine rock would form the primary containment structure and would be internally lined with crushed bedding and transition materials. Approximately 53.1 Mm³ of flotation tailing would be disposed of in the tailing storage facility during the life of the mining operations.
Mine rock represents the largest waste stream from the mining operations with an estimated volume of 519 Mm3. The mine rock management facility is to be located to the east of the pit and would occupy an area of 660 ha. The mine rock would be directly hauled from the pit and end-dumped in 30 m lifts and the mine rock management facility would attain a final elevation of 570 m, which is equivalent to a height between 130-150 m. Seepage and runoff from this facility is to be collected and managed within the water storage pond.
Multiple options were investigated for potential saline water handling processes. It is currently proposed to treat the water using reverse osmosis and thereafter evaporate the concentrated brine to produce a dry salt product. It is proposed to temporally store this dry product in encapsulated cells within a landfill located immediately west of the pit. At the end of mining operations, this saline product is to be moved to the base of the pit prior to pit flooding.
Currently, Matthews Creek flows through the proposed open pit area so it will be necessary to divert the creek away from the open pit mining operations. In terms of the proposed mine infrastructure layout, a diversion channel options assessment determined that the most suitable routing for the diversion channel is approximately 1.5 km west of the existing Matthews Creek.
Due to the remote location, the Courageous Lake Project requires its own power generation, a permanent camp, access by air and by winter road and warehousing and storage at site.
Site logistics include freight delivery over winter roads and air services for personnel and smaller freight components. To meet the Project’s requirements, the existing airstrip will be upgraded to accommodate more frequent flights with larger aircraft in three phases. Currently, there is the Tibbitt to Contwoyto winter ice road connecting Yellowknife, NWT, with the Diavik and EKATI diamond mines. For the purposes of the 2012 CL PFS Report, it is assumed that the Project will use the existing winter road. Transport services along the ice roads are available on average for a period of nine weeks per year, generally starting from the last week in January until the first week in April.
The selected power supply option for the Project includes a combination of thermal power, based on a diesel power plant, and wind power generation. To meet the estimated process plant and ancillary average annual load of 24.4 MW, a normal running load of 26.0 MW, and a peak load of 29.4 MW, a total of 9 generator sets are required, each with a nominal continuous rating of around 4.4 MW and a “prime” (short time overload) rating of 4.8 MW. With 7 sets operating, the total continuous capacity is 30.8 MW and the short time “prime” capacity is 33.6 MW. This arrangement provides two redundant generator sets (one permitted to be down for service or maintenance, and one on hot standby to allow for a forced outage).
Based on the analysis of the Courageous Lake wind speed data, a mean wind power density at 50 m is indicated as being 385 W/m2, which, although rated as only “Fair” by industry guidelines, nonetheless represents an attractive supplemental source of energy for the Project. This is due to the fact that the alternative is more expensive diesel generated power. A wind farm of 31.5 MW installed capacity has been selected. Further studies are recommended in order to arrive at the optimal wind farm size.
The projected total annual energy consumption for the process plant is 213,829 MWh. Based on the proposed wind farm, there would be 91,900 MWh produced by wind and 121,931 MWh by diesel generation. Thus, with a 31.5 MW wind farm consisting of 21 turbines, approximately 43% of the required energy would be provided by wind in an average year.
Figure 5 shows the Courageous Lake Project and its proposed infrastructure near the end of mining at the project.
Project Capital Costs
The initial capital cost estimate for the project is estimated at US$1.52 billion, broken down as follows:
| Description | US$000 | US$000 |
| Direct Costs |
| Overall Site | 59,745 | |
| Open Pit Mining | 96,701 | |
| Crushing and Stockpiles | 83,238 | |
| Grinding and Flotation | 135,039 | |
| Pressure Oxidation | 88,660 | |
| Thickening, Neutralization and Cyanide Leaching | 38,9400 | |
| Gold ADR Circuit, Cyanide Handling and Electrowinning | 14,833 | |
| Reagents and Consumables | 23,536 | |
| Tailing Management Facility | 53,422 | |
| Water Treatment Plant | 8,774 | |
| Site Services and Utilities | 34,352 | |
| Ancillary Buildings | 66,839 | |
| Airstrip and Loading/Unloading Facilities | 10,676 | |
| Plant Mobile Equipment | 190,739 | |
| Temporary Services | 10,791 | |
| Electrical Power Supply | 217,319 | |
| Yellowknife and Edmonton Facilities | 17,227 | |
| Sub-total Direct Costs | | 965,490 |
| Indirect Costs | | |
| Indirects | 315,187 | |
| Owner’s Costs | 55,059 | |
| Contingency | 186,703 | |
| Indirects Subtotal | | 556,949 |
| Total Capital Cost | | 1,522,439 |
All currencies in this section are expressed in US dollars. Costs in this estimate have been converted using a fixed currency exchange rate based on the Bank of Canada three-year average of Cdn$1.00 to US$0.98 (base case). The expected accuracy range of the capital cost estimate is +25%/-15%. This capital cost estimate includes only initial capital, which is defined as all capital expenditures that are required up until the start of gold doré production.
This estimate is prepared with a base date of Q2 2012 and 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 2012, and are budgetary and non-binding. For non-major equipment (i.e. equipment less than $100,000), costing is based on in-house data or quotes from recent similar projects. All equipment and material costs include Free Carrier (FCA) manufacturer plant Inco terms 2010. Other costs such as spares and freight are covered separately in the Indirects section of the estimate.
Project Operating Costs
The operating costs for the Project, as shown in the table below, were estimated at US$47.35/tonne of ore processed. The estimate was based on an average annual process rate of 6,387,500 tonnes ore milled at a gold grade of 2.20 g/t, including dilution.
| | Annual Costs (US$000) | US$/tonne Milled |
| Mine | 167,620 | 26.24 |
| Mill | 100,420 | 15.72 |
| G & A | 22,300 | 3.49 |
| Surface Services | 12,100 | 1.90 |
| Tailing Handling | Included in sustaining cost |
| | | |
| Total | 302,440 | 47.35 |
The operating costs are defined as the direct operating costs including mining, processing, surface service, and G&A. The power is estimated to be US$0.18/kWh. The cost estimates in this section are based on budget prices in Q1/Q2 2012 or based on information from the databases 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$0.98. All costs are reflected in 2012 US dollars. The expected accuracy range of the operating cost estimate is +25%/-15%.
Economic Evaluation
The economic evaluation of the Project, incorporating all the relevant capital, operating, working, sustaining costs, and royalties (2% NSR), was based on a pre-tax financial model. The revenues projected in the cash flow model were based on the average metal production values indicated in following Table.
| | Years 1 to 5 | Life of Mine |
| Total Tonnes to Mill (000s) | 29,433 | 91,126 |
| Annual Tonnes to Mill (000s) | 5,887 | 6,075 |
| Average Grades |
| Gold (g/t) | 2.170 | 2.205 |
| Total Production |
| Gold (000s oz) | 1,836 | 5,777 |
| Average Annual Production |
| Gold (000s oz) | 367 | 385 |
The gold price used for the base case is US$1,384.00/oz using the three-year trailing average (as of July 3, 2012). Two additional metal price scenarios were also developed using the spot metal price on July 3, 2012 (including the closing exchange rate of that day), and using an alternate gold price of US$1,925/oz. For the 15-year mine life and 91 million tonne inventory, the following pre-tax financial parameters were calculated using the base case gold price, the spot price case and the alternate case.
Summary of the Economic Evaluation
| | Unit | Base Case | Spot Price Case | Alternate Case |
| Metal Price |
| Gold | US$/oz | 1,384.00 | 1,617.50 | 1,925.00 |
| Exchange Rate | US:Cdn | 0.9803 | 0.9877 | 0.9877 |
| Economic Results |
| NPV (at 0%)* | US$ M | 1,507 | 2,785 | 4,519 |
| NPV (at 5%) | US$ M | 303 | 1,054 | 2,080 |
| IRR | % | 7.3 | 12.5 | 18.7 |
| Payback | Years | 11.2 | 7.4 | 4.0 |
| Cash Cost/oz Au | US$/oz | 780 | 789 | 796 |
| Total Cost/oz Au | US$/oz | 1,123 | 1,134 | 1,141 |
* undiscounted cash flow
Sensitivity Analysis
Sensitivity analyses were carried out on the gold price, exchange rate, initial capital expenditure and on-site operating costs.
The analyses are presented graphically in the 2012 CL PFS Report as financial outcomes in terms of NPV and IRR. Both the Project NPV and IRR are most sensitive to gold price and exchange rate followed by operating costs, with initial capital having the least impact.
Environmental Permitting
The formal environmental assessment of the Project would commence with preliminary screening of an application to the Mackenzie Valley Land and Water Board (MVLWB) for a Class A Water License, issued under the Mackenzie Valley Resource Management Act (MVRMA). After preliminary screening, the Project would be referred to the Mackenzie Valley Environmental Impact Review Board (MVEIRB), an independent body set up under the MVRMA to conduct environmental assessments of projects in the NWT, either by the MVLWB, or any other regulatory agency involved. The environmental assessment is conducted in a number of phases and documentation is submitted to the Minister of Aboriginal Affairs and Northern Development (AAND) for decision making.
Environmental baseline work was initiated at the site by EBA in 2004; Rescan restarted the environmental baseline in the spring of 2010, and a second year of baseline was completed in 2011. In 2012, baseline work continued and is designed to address information required to further advance the Project. Results of this baseline work were integrated into mine planning for the 2012 CL PFS Report.
Seabridge is engaging with local communities and their respective leaders, regulatory agencies, regional, municipal and aboriginal governments, Treaty Nations, and First Nations as part of their efforts to advance the proposed project through the review process.
Project Development Plan
It is estimated that the Project would take approximately six and half years to complete permit applications and construction activities, starting with the completion of the 2012 CL PFS Report. A high-level project schedule is provided in the 2012 CL PFS Report.
Project Opportunities and Recommendations
Based on the results of the 2012 CL PFS Report, the authors recommend that it should be followed by either an updated prefeasibility study or feasibility study in order to further assess the economic viability of the Project.
The 2012 CL PFS Report makes recommendations as to areas to investigate for potential improvements or refinements to the Project, including an examination of short range gold variability by drilling, further optimization of the mine plan, additional metallurgical test work to confirm optimum operating conditions and reagent consumption and further refinement of the plans for tailing and mine rock management facilities, water management and the diversion channel and the desalination solids
storage facility.
In addition, the 2012 CL PFS Report recommended the investigation of the following opportunities for the Courageous Lake Project in relation to hydro power, road access and optimizing economic pit limits.
| | · | There are hydropower options for the Project's power supply that could significantly reduce the requirement for diesel fuel at the site. A prefeasibility level assessment is anticipated to be completed in early 2013, at which time the applicability of this option will be better understood and feasibility level studies will be considered. |
| | · | Access to the Project by winter ice road is limited to less than three months per year. It is during this period that almost all of the project’s supplies are transported to site. The Tibbitt to Contwoyto Winter Road Joint Venture investigated extending the winter road seasonal use by at least another month with a 150 km extension from the permanent road access at Tibbitt Lake to Lockhart camp. While this would result in some reduction in both operating and capital costs for Courageous Lake, an all-season access road from the Bathhurst Inlet would provide considerably more benefit to Courageous Lake economics. Site access improvements would significantly reduce on-site storage requirements, especially fuel oil and reagents such as lime. |
| | · | The size and geometry of the Courageous Lake orebody, as well as the high capital impact of throughput and mine life, make the impact of the discounted cash flow economics important in determining an optimized economic pit limit. The current study, capital costs, and 15-year mine life are a good basis to evaluate the discounted cash flow cases. It would be difficult to use a Gemcom Whittle™ type of analysis, since the orebody does not produce even expansion increments as it deepens, and the fixed component of capital and operating costs is high due to the high Arctic location. Instead, different cases will need to be designed and full cash flows calculated, to determine meaningful economic comparisons. This analysis can also include combined open pit and underground options. |
Courageous Lake 2012 Exploration
Exploration activities at Courageous Lake are being conducted by Seabridge personnel under the supervision of William E. Threlkeld, Senior Vice President of Seabridge. The following information regarding 2012 exploration at the Courageous Lake Project was prepared by or under the supervision of William Threlkeld, a qualified person for the purposes of NI 43-101.
In 2012, an $8.5 million exploration program at Courageous Lake was in part dedicated to the discovery of a second gold deposit along Seabridge’s 52-kilometer-long Matthews Lake Greenstone Belt. A number of targets had been identified over the previous seasons and these were evaluated with an airborne geophysical survey and by core drilling. Positive results were obtained on the Walsh Lake target, which continues to be evaluated.
The Walsh Lake discovery is about 10 kilometers south of the FAT deposit. The north part of this target area is connected by a road network between the FAT deposit and the historical Tundra Gold Mine that was abandoned in 1999. Walsh Lake consists of a series of structural zones part of which are on strike with deposits exploited in the Tundra Mine.
Airborne magnetic and electromagnetic surveys at Walsh Lake showed that gold occurrences were located around a stratigraphic contact with significant strike potential. Drilling of this contact consistently encounters silica alteration with gold-bearing intervals up to 20 meters above the contact in a siltstone package and up to 60 meters below the contact in mixed volcanic rocks. Gold is concentrated in arsenopyrite-bearing silica-altered rocks. Drill holes contain multiple intervals of the arsenopyrite-bearing silica-altered rocks in zones with true widths from one meter to 12 meters wide.
The Walsh Lake Zone projects to the surface and currently has a strike length of 850 meters but remains open to the north and at depth. Significant intersections on the Walsh Lake discovery include:
| Hole ID | Total Depth (meters) | From (meters) | To (meters) | Thickness (meters) | Gold Grade (grams per tonne) |
| CL-210 | 471 including including | 260.4 312.0 361.8 379.7 390.7 447.8 447.8 462.0 | 264.0 315.6 368.0 384.7 396.3 469.0 448.8 464.2 | 3.6 3.6 6.2 4.9 5.6 21.2 1.0 2.2 | 2.5 0.93 3.58 10.49 5.93 8.16 64.84 31.96 |
| CL-228 | 462 including including | 71.8 78.8 186.0 238.0 258.4 271.2 271.2 300.3 331.9 331.9 | 72.9 82.5 191.2 241.0 259.5 277.5 271.9 301.3 336.6 332.5 | 1.1 3.7 5.2 3.0 1.1 6.3 0.7 1.0 4.7 0.6 | 15.47 4.26 1.05 1.43 10.60 3.97 21.83 11.47 5.09 35.50 |
| CL-230 | 357 including including | 7.5 7.5 91.3 111.0 116.5 123.0 133.9 | 16.7 9.0 92.7 112.3 124.0 124.0 135.2 | 9.2 1.5 1.4 1.3 7.5 1.0 1.3 | 9.50 52.86 13.70 7.83 5.31 20.09 28.58 |
| CL-241 | 300.0 | 117.3 144.7 | 120.5 150.1 | 3.2 5.4 | 2.4 8.8 |
| CL-242 | 330.0 | 66.0 201.0 292.9 | 70.3 204.4 296.3 | 4.3 3.4 3.4 | 4.1 0.7 4.5 |
| CL-245 | 228.0 including including | 131.5 131.5 139.2 | 142.8 132.9 141.0 | 11.3 1.4 1.8 | 26.2 61.3 107.5 |
Glossary of Technical Terms
In this AIF, the following technical terms have the following meanings:
Alteration – Any change in the mineral composition of a rock brought about by physical or chemical means.
Batholith – A very large intrusive mass of igneous rock.
Biotite – A common rock-forming mineral in crystalline rocks, either as an original crystal in igneous rocks or as a metamorphic product in gneisses and schists.
Breccia – A rock in which angular fragments are surrounded by a mass of fine-grained minerals.
Carbonate – Sediment formed by the organic or inorganic precipitation from aqueous solution of carbonates of calcium, magnesium, or iron; e.g., limestone and dolomite.
Chalcopyrite – A sulphite mineral of copper and iron.
Clastic – Fragments of minerals and rocks that have been moved individually from their places of origin.
Core samples – The cylindrical form of rock called “core” that is extracted from a diamond drill hole. Mineralized sections are separated and these samples are sent to a laboratory for analysis.
Cut-off grade – The lowest grade of mineralized material that qualifies as reserve in a deposit, i.e.: contributing material of the lowest assay that is included in a reserve estimate.
Diorite – An intrusive igneous rock.
Dip – The angle that a structural surface, a bedding or fault plan, makes with the horizontal, measured perpendicular to the strike of the structure.
Disseminated – Where minerals occur as scattered particles in the rock.
Facies – The character and composition of sedimentary deposits.
Fault – A fracture or break in rock along which there has been movement.
Feasibility Study – A definitive study of the viability of a mineral project by a qualified professional which defines: (1) mining methods, pit configuration, mine scheduling, mine equipment and all related costing, (2) method of mineral processing and all related plant, equipment and costing, (3) necessary determination of all infrastructure required and relevant costs and (4) all requirements of government and markets for mine operation. A definitive financial analysis of the mineral project, taking into consideration all relevant factors which will establish the presence of a Mineral Reserve and the details of its economic viability.
Felsic – An adjective describing an igneous rock having mostly light colored minerals and rich in silica, potassium and sodium.
Fracture – A break or crack in rock.
Geochemistry – The study of the chemical properties of rocks.
Gneiss – A layered or banded crystalline metamorphic rock, the grains of which are aligned or elongated into a roughly parallel arrangement.
Grade – The metal content of rock with precious metals. Grade can be expressed as troy ounces or grams per tonne of rock.
Granite – Any holocrystalline, quartz-bearing plutonic rock.
Granitic – Pertaining to or composed of granite.
Greenschist – A schistose metamorphic rock whose green color is due to the presence of chlorite, epidote or actinolite.
Greywacke – A dark grey, firmly indurated, course-grained sandstone that consists of poorly sorted, angular to subangular grains of quartz and feldspar, with a variety of dark rock and mineral fragments embedded.
Hydrothermal – The products or the actions of heated waters in a rock mass such as a mineral deposit precipitating from a hot solution.
Hydrothermal alteration – The process by which heated or superheated water/solutions alter the chemistry of the rocks they circulate through.
Igneous – A primary type of rock formed by the cooling of molten material.
Indicated Resource – That part of a resource for which quantity, grade and quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
Inferred resource – That part of a resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
Intrusion; intrusive – Molten rock that is intruded (injected) into spaces that are created by a combination of melting and displacement.
Measured resource – That part of a resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
Mineral – A naturally formed chemical element or compound having a definitive chemical composition and usually a characteristic crystal form.
Mineralization – A natural concentration in rocks or soil of one or more metalliferous minerals.
Monzonite – A granular plutonic rock containing approximately equal amounts of orthoclase and plagioclase, and thus intermediate between syenite and diorite. Quartz is minor or absent.
Net smelter return royalty/NSR – A phrase used to describe a royalty payment made by a producer of metals based on gross metal production from the property, less deduction of certain limited costs including smelting, refining, transportation and insurance costs.
Outcrop – The part of a rock formation that appears at the surface of the ground.
Phenocryst – A term for large crystals or mineral grains floating in the matrix or groundmass of a porphyry.
Placer – A deposit of sand or gravel that contains particles of gold, ilmenite, gemstones, or other heavy minerals of value. The common types are stream gravels and beach sands.
Porphyritic – The texture of an igneous rock in which larger crystals (phenocrysts) are set in a finer-grained groundmass, which may be crystalline or glassy or both.
Porphyry – Any igneous rock in which relatively large crystals are set in a fine-grained matrix of rock.
Prefeasibility study or preliminary feasibility study – A comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established and where an effective method of mineral processing has been determined. This study must include a financial analysis based on reasonable assumptions of technical engineering, operating and economic factors, which are sufficient for a qualified person acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.
Preliminary assessment – A study that includes an economic analysis of the potential viability of mineral resources taken at an early stage of the project, prior to completion of a preliminary feasibility study.
Pyrite – An iron sulphite mineral (FeS2), the most common naturally occurring sulphite mineral.
Quartz – Crystalline silica; often forming veins in fractures and faults within older rocks.
Reclamation – Restoration of mined land to original contour, use or condition.
Reserve – The economically mineable part of a measured or indicated resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowance for losses that may occur when the material is mined.
Resource – A concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a resource are known, estimated or interpreted from specific geological evidence and knowledge. Resources are subdivided, in order of increasing geological confidence, into inferred, indicated and measured categories.
Sedimentary – Formed by the deposition of sediment or pertaining to the process of sedimentation.
Sediments – Solid fragmental material that originates from weathering of rocks and is transported or deposited by air, water or ice, or that accumulates by other natural agents, such as chemical precipitation from solution or secretions by organisms, and that forms in layers of the Earth’s surface at ordinary temperatures in a loose, unconsolidated form; e.g., sand, gravel, silt, mud, alluvium.
Sericite – A fine-grained potassium mica found in various metamorphic rocks.
Vein – A thin sheet-line, crosscutting body of hydrothermal mineralization, principally quartz.
Waste – Barren rock in a mine, or mineralized material that is too low in grade to be mined and milled at a profit.
Investing in the Common shares is speculative and involves a high degree of risk due to the nature of the Issuer’s business and the present stage of exploration and development of its mineral properties. The following risk factors, as well as risks currently unknown to the Issuer, could materially adversely affect the Issuer’s future business, operations and financial condition and could cause them to differ materially from the estimates described in forward-looking statements relating to the Issuer, or its business, property or financial results, each of which could cause investors to lose part or all of their investment. Before deciding to invest in any Common shares, investors should carefully consider the risks included herein.
Risks Related to the Issuer and its Industry
The Issuer has a history of net losses and expects losses to continue for the foreseeable future.
The Issuer has a history of net losses and, although the Issuer achieved a net profit of $10,290,000 for the fiscal year ended December 31, 2008 and a net profit of $3,540,000 in 2010 primarily as a result the sale of assets of the Issuer, the Issuer expects to incur net losses for the foreseeable future. As of December 31, 2012, the Issuer’s historical net losses totaled approximately $53 million. None of the Issuer’s properties has advanced to the commercial production stage and the Issuer has no history of earnings or cash flow from operations.
The issuer expects to continue to incur net losses unless and until such time as one or more of its projects enters into commercial production and generates sufficient revenues to fund continuing operations or until such time as the Issuer is able to offset its expenses against the sale of one or more of its projects, if applicable. The development of the Issuer’s projects to achieve production will require the commitment of substantial financial resources. The amount and timing of expenditures will depend on a number of factors, including the progress of ongoing exploration and development, the results of consultant analysis and recommendations, the rate at which operating losses are incurred and the execution of any sale or joint venture agreements with strategic partners, some of which are beyond the Issuer’s control. There is no assurance that the Issuer will be profitable in the future.
The Issuer’s ability to continue its exploration activities and any future development activities, and to continue as a going concern, will depend in part on its ability to sell property interests, enter into joint ventures or obtain suitable financing.
The Issuer has financial resources to sustain operations for at least the next year. However, the Issuer requires capital to maintain title to and undertake exploration and development of the Issuer’s principal exploration properties and to cover corporate expenses and presently has no ongoing source of revenue. Accordingly, additional financing will be required to continue to undertake additional development of the Issuer’s mineral properties after its cash on hand has been spent. The maintenance of and further exploration and development of the Issuer’s mineral properties is, therefore, dependent upon the Issuer’s ability to obtain financing through the sale of projects, joint venturing of projects or equity or debt financing. Such sources of financing may not be available on terms acceptable to the Issuer, or at all. Recent disruptions in the credit and financial markets has limited access to capital and credit for many companies, which may make it more difficult for the Issuer to obtain, or increase its cost of obtaining, capital and financing for its operations. Failure to obtain such financing may result in delay or indefinite postponement of exploration and development work on the Issuer’s mineral properties, or the possible loss of such properties. Satisfying financing requirements through the sale of projects or establishment of one or more joint ventures would reduce the Issuer’s gold ownership per share and therefore its leverage to the gold price.
The Issuer has reserves at its KSM Project and its Courageous Lake Project but they may not be brought into production.
There is no certainty that the reserves estimated at the KSM Project or the Courageous Lake Project will actually be mined or, if mined, processed profitably. The Issuer does not intend to bring the KSM Project or the Courageous Lake Project into production on its own and intends to either enter into a joint venture with an experienced operator or to sell the KSM Project and the Courageous Lake Project. Given the size of the KSM Project and its estimated capital costs, there is likely a limited number of mining companies with the ability to raise the necessary capital and to put the KSM Project into production, which limits the options available to the Issuer for such a joint venture or sale. The commercial viability of the KSM Project is also dependent on a number of factors, including metal prices, government policy and regulation and environmental protection, which are beyond the control of the Issuer. The Issuer has relied and will continue to rely upon consultants for development and operating expertise.
The figures for the Issuer’s resources and reserves are estimates based on interpretation and assumptions and the properties may yield less mineral production under actual conditions than is currently estimated.
Unless otherwise indicated, resource figures presented in this AIF and in the Issuer’s other filings with securities regulatory authorities, press releases and other public statements that may be made from time to time are based upon estimates made by Issuer personnel and independent geologists. These estimates are imprecise and depend upon geologic interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be inaccurate. There can be no assurance that resource or other mineralization figures will be accurate or this mineralization could be mined or processed profitably.
Because the Issuer has not commenced commercial production at any of its properties, resource estimates for the Issuer’s properties may require adjustments or downward revisions based upon further exploration or development work or actual production experience. In addition, the grade of ore ultimately mined, if any, may differ from that indicated by drilling results. There can be no assurance that recovery of minerals in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale.
The resource estimates contained in this AIF have been determined based on assumed future prices, cut-off grades and operating costs that may prove to be inaccurate. Substantial declines in market prices for gold and other metals or increases in costs may eliminate the potential profitability of the Issuer’s deposits, require increases in cut-off grades and result in reduced reported resources. Any material reductions in estimates of resources, or of the Issuer’s ability to extract these resources, could have a material adverse effect on the Issuer’s prospects and could restrict the Issuer’s ability to successfully implement its strategies for long-term growth.
Actual capital costs, operating costs, production and economic returns may differ significantly from those Seabridge has anticipated. There are no assurances future development activities by Seabridge, if any, will lead to a favourable feasibility study or profitable mining operations.
The Issuer has completed prefeasibility studies at each of its KSM Project and its Courageous Lake Project, but typically a company will not make a production decision until it has completed a feasibility study. Feasibility studies derive estimates of cash operating costs based upon, among other things:
| | · | anticipated tonnage, grades and metallurgical characteristics of the reserves to be mined and processed; |
| | · | anticipated recovery rates of gold and other metals from the reserves; |
| | · | cash operating costs of comparable facilities and equipment; and |
| | · | anticipated climatic conditions and environmental protection measures. |
Completing a feasibility study at each of the Issuer’s Projects requires significant additional work and study in order to reduce the range of uncertainty associated with the study’s estimates and conclusions. Cash operating costs, production and economic returns, and other estimates contained in studies or estimates prepared by or for the Issuer may differ significantly from those anticipated by Seabridge’s current studies and estimates and may even result in delays or cancellation of Project development.
There can be no assurance that, if it starts production at one or more of its Projects, the Issuer’s actual operating costs will not be higher than currently anticipated. None of the Issuer’s mineral properties have an operating history upon which the Issuer can base estimates of future operating costs.
There is no certainty that a feasibility study in respect of the KSM Project or the Courageous Lake Project will be completed or, if completed, that it will result in sufficiently favourable estimates of the economic viability of the Project. The Issuer has relied and will continue to rely upon consultants for development and operating expertise.
Seabridge has no history of commercially producing precious metals from its mineral exploration properties and there can be no assurance that it will successfully establish mining operations or profitably produce precious metals.
Seabridge has no history of commercially producing precious metals from its current portfolio of mineral exploration properties and the Issuer has no ongoing mining operations or revenue from mining operations. Mineral exploration and development involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. None of the Issuer’s properties are currently under construction. The future development of properties estimated to be economically feasible will require obtaining permits and financing and the construction and operation of mines, processing plants and related infrastructure. Although Seabridge has disclosed that it will not undertake production activities by itself, it may be involved in construction and production at one or more of its properties if it enters into a joint venture or other arrangement with a third party regarding production. As a result, Seabridge may be subject to all of the risks associated with establishing new mining operations and business enterprises, including:
| | · | timing and cost, which can be considerable, of the construction of mining and processing facilities; |
| | · | availability and costs of skilled labour and mining equipment; |
| | · | availability and cost of appropriate smelting and/or refining arrangements; |
| | · | need to obtain necessary environmental and other governmental approvals and permits, and the timing of those approvals and permits; |
| | · | availability of funds to finance construction and development activities; |
| | · | potential opposition from non-governmental organizations, environmental groups, Fist Nations groups or local groups which may delay or prevent development activities; and |
| | · | potential increases in construction and operating costs due to changes in the cost of fuel, power, materials and supplies and foreign exchange rates. |
The costs, timing and complexities of mine construction and development are increased by the remote location of the Issuer’s mining properties. It is common in new mining operations to experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in the commencement of mineral production often occur. Accordingly, there are no assurances that, if the Issuer decides to be involved in mining activities, the Issuer will successfully establish mining operations or profitably produce precious metals at any of its properties.
Changes in the market price of gold, copper and other metals, which in the past have fluctuated widely, affect the potential profitability of the Issuer’s projects.
The potential profitability of the Issuer’s projects depends, in large part, upon the market price of gold, copper and other metals and minerals to be produced. The market price of gold, copper and other metals is volatile and is impacted by numerous factors beyond the Issuer’s control, including:
| | · | expectations with respect to the rate of inflation; |
| | · | the relative strength of the U.S. dollar and certain other currencies; |
| | · | global or regional political or economic conditions; |
| | · | supply and demand for jewelry and industrial products containing metals; |
| | · | faith in paper currencies; |
| | · | changes in global or regional investment or consumption patterns; |
| | · | global production levels; |
| | · | speculative activities; and |
| | · | sales by central banks and other holders, speculators and producers of gold, copper and other metals in response to any of the above factors. |
There can be no assurance that the market price of gold, copper and other metals will remain at current levels or that such prices will improve. A decrease in the market price of gold and copper could adversely affect the Issuer’s ability to finance the exploration and development of the Issuer’s properties and to enter into joint ventures with strategic partners relating to the Issuer’s properties, which would have a material adverse effect on the Issuer’s financial condition and results of operations. There is no assurance that if commercial quantities of gold, copper and other metals are discovered on the Issuer’s properties, that a profitable market will exist or continue to exist for a production decision to be made or for the ultimate sale of the metals. As the Issuer has a high ratio of gold resources per Common share, fluctuations in gold prices have tended to have a great impact on the price of the Common shares.
The Issuer may be adversely affected by future fluctuations of foreign exchange rates.
The potential profitability of the Issuer is exposed to the financial risk related to the fluctuation of foreign exchange rates. The minerals that could be produced from the Issuer’s projects are priced in U.S. dollars but, since the Issuer’s principal projects are located in Canada, the majority of its estimated expenditures will be in Canadian dollars. A significant change in the currency exchange rates between the Canadian dollar relative to the U.S. dollar will have an effect on the on the potential profitability of the Issuer’s projects and therefore its ability to continue to finance its operations. To the extent the actual Canadian dollar to U.S. dollar exchange rate is less than or more than the exchange rate used in the preliminary feasibility studies summarized in this AIF, the profitability of the projects will be more than or less than that estimated (if the other assumptions are realized). Accordingly, the Issuer’s prospects may suffer due to adverse currency fluctuations.
The Issuer’s activities and proposed business are inherently dangerous and contain significant uninsured risks that could negatively impact the Issuer.
The Issuer’s exploration and development of its mineral properties involves a number of risks and hazards. In addition, the business of mining is subject to various risks and hazards including:
| | · | metallurgical and other processing problems; |
| | · | unusual or unexpected rock formations; |
| | · | structural cave-ins or slides; |
| | · | earthquakes, avalanches or landslides; |
| | · | periodic interruptions due to inclement or hazardous weather conditions. |
These risks could result in damage to, or destruction of, mineral properties, plant and equipment, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability.
The Issuer currently maintains insurance against risks relating to its exploration activities in an amount which it believes to be reasonable. If the Issuer commences mining activities with a partner, it will be subject to mining risks, including those listed above. The Issuer anticipates that it will obtain the insurance it feels is reasonable for any mining activities it undertakes, however, such insurance contains exclusions and limitations on coverage and insurance for all risks is not likely available. There can be no assurance that the insurance the Issuer desires will continue to be available, will be available at economically acceptable premiums or will be adequate to cover any resulting liability. The issuer might also be subject to liability for environmental damage or other hazards which may be uninsurable or for which it may elect not to insure because of premium costs or commercial impracticability. The payment of such liabilities would reduce funds available for the acquisition of mineral properties or exploration and development and would have a negative effect on the Issuer’s ability to generate revenues, profits and cash flows.
The Issuer is subject to substantial government regulatory requirements, which could cause a restriction or suspension of the Issuer’s operations.
The exploration and development activities if the Issuer and the potential for profitable operations of the Issuer’s mineral properties is affected to varying degrees by government regulations relating to exploration, development and mining activities, the acquisition of land, royalties, taxes, labour standards, pollution control, environmental protection, health and safety and expropriation of property. Changes in these regulations or in their application are beyond the control of the Issuer and may adversely affect its operations, business and the potential of its projects. Failure to comply with the conditions set out in any permit or failure to comply with applicable statutes and regulations may result in order to cease or curtail further exploration or development or reduce or eliminate the potential profitability of a project. The Issuer may be required to compensate those suffering loss or damage by reason of its exploration activities or operations.
At the federal and provincial level, the Issuer must comply with exploration permitting requirements which require sound operating and reclamation plans to be approved by the applicable government body prior to the start of exploration. At the local level, regulations deal primarily with zoning, land use and specific building permits, as well as taxation and the impact of the Issuer’s operations on the existing population and services. There can be no assurance that all required approvals and permits will be able to be obtained.
Recently the Government of Canada and the Government of the Northwest Territories announced they had reached a consensus on the devolution of lands and resource management from the Government of Canada to the Government of the Northwest Territories. It is not known how this will affect the current regulatory regime relating to the Issuer’s Courageous Lake Project but it could result in the Issuer having to meet stricter standards or the regulatory approval process becoming more onerous.
Depending upon the type and extent of the exploration activities, the Issuer may be required to post reclamation bonds and/or assurances that the affected areas will be reclaimed. Currently, the Issuer has estimated C$2.1 million in reclamation liabilities for its properties. As at December 31, 2012, C$1.6 million has been deposited for the benefit of the various government agencies until released or applied to reclamation costs. If the reclamation requires funds in addition to those already estimated or allocated, the Issuer could be forced to pay for the extra work, which could have a material adverse effect on the Issuer’s financial position and operations. In addition, unidentified environmental deficiencies may exist on other properties of the Issuer. The discovery of and any required reclamation of any additional properties would likely have an adverse effect on the Issuer’s operations and financial position.
The Issuer is subject to substantial environmental requirements which could cause a restriction or suspension of the Issuer’s operations. These requirements must be met for the Issuer to receive regulatory approval of its proposed mining operations.
In connection with its operations and properties, the Issuer is subject to extensive and changing environmental legislation, regulations and actions. The Issuer cannot predict what environmental legislation, regulations or policy will be enacted or adopted in the future or how current or future laws and regulations will be administered or interpreted. The recent trend in environmental legislation and regulation generally is toward stricter standards and this trend is likely to continue in the future. The recent trends include, without limitation, laws and regulations relating to air and water quality, mine reclamation, waste handling and disposal, the protection of certain species and the preservation of certain lands. These regulations may require that the Issuer obtain permits or other authorizations for certain activities associated with exploration and numerous permits associated with mining operations and there is a risk the Issuer will not receive the required permits. These laws and regulations may also limit or prohibit activities on certain lands lying within wetland areas, areas providing habitat for certain species or other protected areas.
The aboriginal land claims process in Canada has recently resulted in some First Nations groups taking over administration of lands subject to the land claims settlement, and First Nations groups may look to impose additional requirements over land they administer. Compliance with more stringent laws and regulations, as well as potentially more vigorous enforcement policies or stricter interpretation of existing laws, may necessitate significant capital outlays, which may adversely affect the Issuer’s results of operations and business, or may cause material changes or delays in the Issuer’s intended activities.
At the federal and provincial level, regulations deal with environmental quality and impacts upon air, water, soil, vegetation and wildlife, as well as historical and cultural resources. Approval must be received from the applicable bureau and/or department before exploration and mining can begin, and ongoing monitoring of operations is common. If the Issuer’s operations result in negative effects upon the environment, government agencies will usually require the Issuer to provide remedial actions to correct the negative effects.
Title to the Issuer’s mineral properties cannot be guaranteed and may be subject to prior unregistered agreements, transfers or claims and other defects.
The Issuer cannot guarantee that title to its properties will not be challenged. Title insurance is not available for mineral properties in Canada and the Issuer’s ability to ensure that it has obtained a secure claim to individual mineral properties or mining concessions may be severely constrained. The Issuer’s mineral properties may be subject to prior unregistered agreements, transfers or claims, and title may be affected by, among other things, undetected defects. To date, the Issuer has only done a preliminary legal survey of the boundaries of its properties and has not obtained formal title reports on any of its properties and, therefore, in accordance with the laws of the jurisdictions in which these properties are situated, their existence and area could be in doubt. If title is challenged, the Issuer will have to defend its ownership through the courts. A successful challenge to the precise area and location of these claims could result in the Issuer being unable to operate on its properties or being unable to enforce its right with respect to its properties.
Securing a right of way to permit construction and operation of the proposed tunnels for the KSM Project are subject to governmental and, possibly, third party approvals and consents which are not guaranteed.
The present development plans at the KSM Project include the construction of twin 23 kilometer parallel tunnels through Crown land. The proposed route passes through approximately 13 kilometers of Crown land subject to mineral claims held by a third party. The grant of a right of way for the tunnels is subject to the discretion of the relevant Minister in British Columbia. Seabridge has applied to the British Columbia Ministry of Forest, Lands and Resource Opportunities for a right of way through such lands. It is not clear whether the relevant Minister will be prepared to grant the required right of way without the consent of the third party mineral rights holders and, accordingly, Seabridge is assuming that obtaining the right of way will require the consent of the third party rights holders. At this time Seabridge has not been able to secure rights to drive the tunnels through this land and it may have to pay appropriate compensation to secure a right of way through such mineral claims. There can be no assurance that a right of way can be obtained.
There is uncertainty related to unsettled First Nations’ rights and title and settled Treaty Nation’s rights in British Columbia and the Northwest Territories and this may create delays in project approval or interruptions in project progress.
The nature and extent of First Nation rights and title remains the subject of active debate, claims and litigation in Canada, including in British Columbia and the Northwest Territories.
Parts of the KSM Project lie within the traditional territory of a First Nation and no comprehensive treaty or land claims settlement has been concluded regarding this traditional territory. A part of the KSM Project lies within territory subject to settled treaty rights of the Nisga’a Nation. The Courageous Lake Project lies within the traditional territory of the Yellowknives Dene First Nation and no comprehensive treaty or land claims settlement has been concluded regarding this traditional territory. A part of the Courageous Lake Project lies within territory designated as a shared use area under the settled treaty rights of the Tlicho Nation. There can be no guarantee that the unsettled nature of land claims, or uncertainties associated with settled claims, in British Columbia and the Northwest Territories will not create delays in project approval or unexpected interruptions in project progress, or result in additional costs to advance the Issuer’s projects.
In many cases mine construction and commencement of mining activities is only possible with the consent of the local First Nations groups. Many companies have secured such consent by committing to take measures to limit the adverse impact to, and ensure some of the economic benefits of the construction and mining activity will be enjoyed by, the local First Nations or Treaty Nations groups. However, there can be no assurance that such consent can or will be secured at an acceptable cost or that the KSM Project or the Courageous Lake Project will be approved without such consent.
High metal prices in recent years have encouraged increased mining exploration, development and construction activity, which has increased demand for, and cost of, exploration, development and construction services and equipment.
The relative strength of metal prices over the past decade has encouraged increases in mining exploration, development and construction activities around the world, which has resulted in increased demand for, and cost of, exploration, development and construction services and equipment. While recent market conditions have had a moderating effect on the costs of such services and equipment, increases in such costs may recur with the resumption of an upward trend in metal prices. Increased demand for services and equipment could result in delays if services or equipment cannot be obtained in a timely manner due to inadequate availability, and may cause scheduling difficulties due to the need to coordinate the availability of services or equipment, any of which could materially increase project exploration, development and/or construction costs.
Increased competition could adversely affect the Issuer’s ability to acquire suitable properties for mineral exploration in the future.
The mining industry is intensely competitive. Significant competition exists for the acquisition of properties producing or capable of producing gold or other metals. The Issuer may be at a competitive disadvantage in acquiring additional mining properties because it must compete with other companies, many of which have greater financial resources, operational experience and technical capabilities than the Issuer. Competition for exploration resources at all levels is currently very intense, particularly affecting the availability of manpower, drill rigs and helicopters. Increased competition could adversely affect the Issuer’s ability to acquire suitable properties for mineral exploration in the future.
The Issuer has a dependence upon key management employees, the absence of which would have a negative effect on the Issuer’s operations.
The issuer strongly depends on the business and technical expertise of its management and key personnel, including Rudi Fronk, Chairman and Chief Executive Officer. There is little possibility that this dependence will decrease in the near term. If the Issuer’s operations expand, additional general management resources will be required. The Issuer may not be able to attract and retain additional qualified personnel and this would have a negative effect on the Issuer’s operations. The Issuer does not carry any formal services agreements between itself and its officers or directors. The Issuer does not carry any “key man” life insurance.
Certain of the Issuer’s directors and officers serve in similar positions with other natural resource companies, which put them in conflict of interest positions from time to time.
Certain of the directors and officers of the Issuer are also directors, officers or shareholders of other natural resource or mining-related companies. Such associations may give rise to conflicts of interest from time to time. The directors of the Issuer are required by law to act honestly and in good faith with a view to the best interests of the Issue and to disclose any interest that they may have in any project or opportunity of the Issuer. If a conflict of interest arises in a matter to be discussed at a meeting of the board of directors, any director in a conflict must disclose his interest and abstain from voting on such matter. In determining whether or not the Issuer will participate in any project or opportunity, the directors will primarily consider the degree of risk to which the Issuer may be exposed and its financial position at the time.
Risks Related to the Common Shares
The market for the Common shares has been subject to volume and price volatility which could negatively affect a shareholder’s ability to buy or sell the Common shares.
The market for the Common shares may be highly volatile for reasons both related to the performance of the Issuer or events pertaining to the industry (i.e., mineral price fluctuation, high production costs) as well as factors unrelated to the Issuer or its industry. In particular, the price for gold has recently been at a historically high level and may not sustain such level. In addition, market demand for products incorporating minerals fluctuates from one business cycle to the next, resulting in a change of demand for the mineral and an attendant change in the price for the mineral. The Common shares can be expected to be subject to volatility in both price and volume arising from market expectations, announcements and press releases regarding the Issuer’s business, and changes in estimates and evaluations by securities analysts or other events or factors. In recent years the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly small-capitalization companies such as the Issuer, have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, the Common shares can also be expected to be subject to volatility resulting from market forces over which the Issuer will have no control. Further, despite the existence of markets for trading the Common shares in Canada and the United States, shareholders of the Issuer may be unable to sell significant quantities of Common shares in the public trading markets without a significant reduction in the price of the shares.
The Common shares are publicly traded and are subject to various factors that have historically made the Common share price volatile.
The market price of the Common shares has been, and may continue to be, subject to large fluctuations, which may result in losses to investors. The market price of the Common shares may increase or decrease in response to a number of events and factors, including: the Issuer’s operating performance and the performance of competitors and other similar companies; volatility in metal prices; the public’s reaction to the Issuer’s press releases, material change reports, other public announcements and the Issuer’s filings with the various securities regulatory authorities; changes in earnings estimates or recommendations by research analysts who track the Common shares or the shares of other companies in the resource sector; changes in general economic and/or political conditions; the number of Common shares to be publicly traded after an offering of Common shares; the arrival or departure of key personnel; acquisitions, strategic alliances or joint ventures involving the Issuer or its competitors; and the factors listed under the heading “Description of the Issuer’s Business – Cautionary Statement Regarding Forward-
Looking Information and Statement”.
The market price of the Common shares is affected by many other variables that are not directly related to the Issuer’s success and are, therefore, not within its control, including other developments that affect the market for all resource sector securities, the breadth of the public market for the Common shares and the attractiveness of alternative investments. The effect of these and other factors on the market price of the Common shares on the exchanges on which they trade has historically made the trading price of the Common shares volatile and suggests that the trading price of the Common shares will continue to be volatile in the future.
The Issuer has never declared or paid any dividends on the Common shares.
The Issuer has never declared or paid any dividends on the Common shares. The Issuer intends to retain earnings, if any, to finance the growth and development of the business and does not intend to pay cash dividends on the Common shares in the foreseeable future. Any return on an investment in the Common shares will come from the appreciation, if any, in their value. The payment of future cash dividends, if any, will be reviewed periodically by the Issuer’s Board of Directors and will depend upon, among other things, conditions then existing including earnings, financial condition and capital requirements, restrictions in financing agreements, business opportunities and conditions and other factors. See “Dividend Policy.”
Shareholders’ interest may be diluted in the future.
The Issuer may require additional funds for exploration and development programs or potential acquisitions. If it raises additional funding by issuing additional equity securities or other securities that are convertible into equity securities, such financings may substantially dilute the interests of existing or future shareholders. Sales or issuances of a substantial number of securities, or the perception that such sales could occur, may adversely affect the prevailing market price for the Common shares. With any additional sale or issuance of equity securities, investors will suffer dilution of their voting power and may experience dilution in the Issuer’s earnings per share.
The Issuer could be deemed a passive foreign investment company which could have negative consequences for U.S. investors.
Depending upon the composition of the Issuer’s gross income or its assets, the Issuer could be classified as a passive foreign investment company (”PFIC”) under the United States tax code. If the Issuer is declared a PFIC, then owners of the Common shares who are U.S. taxpayers generally will be required to treat any “excess distribution” received on their Common shares, ro any gain realized upon a disposition of Common shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer makes a qualified electing fund (“QEF”) election or a mark-to-market election with respect to the Common shares. A U.S. taxpayer who makes a QEF election generally must report on a current basis its share of the Issuer’s net capital gain and ordinary earnings for any year in which the Issuer is classified as a PFIC, whether or not the Issuer distributes any amounts to its shareholders. U.S. investors should consult with their tax advisors for advice as to the U.S. tax consequences of an investment in the Common shares.
The Issuer has not paid any dividends since incorporation. Payment of dividends in the future is dependent upon the earnings and financial condition of the Issuer and other factors which the directors may deem appropriate at the time. However, the Issuer is not limited in any way in its ability to pay dividends on its Common shares other than to comply with solvency tests that apply to it under its governing corporate legislation.
ITEM 6: GENERAL DESCRIPTION OF CAPITAL STRUCTURE
The Issuer is authorized to issue an unlimited number of Common shares without par value and an unlimited number of Preferred shares, issuable in series, of which at March 26, 2013, 45,556,376 Common shares were issued and outstanding and no Preferred shares were issued and outstanding.
The holders of the Common shares are entitled to receive notice of and to attend the vote at all meetings of the shareholders of the Issuer and each Common share confers the right to one vote in person or by proxy at all meetings of the shareholders of the Issuer. The holders of the Common shares, subject to the prior rights, if any, of the holders of any other class of shares of the Issuer, are entitled to receive such dividends in any financial year as the Board of Directors of the Issuer may by resolution determine. In the event of the liquidation, dissolution or winding-up of the Issuer, whether voluntary or involuntary, the holder of the Common shares are entitled to receive, subject to the prior rights, if any, of the holders of any other class of shares of the Issuer, the remaining property and assets of the Issuer.
The directors of the Issuer are authorized to create series of Preferred shares in such number and having such rights and restrictions with respect to dividends, rights of redemption, conversion or repurchase and voting rights as may be determined by the directors and shall have priority over the Common shares to the property and assets of the Issuer in the event of liquidation, dissolution or winding-up of the Issuer.
ITEM 7: MARKET FOR SECURITIES
Trading Price and Volume
The Issuer’s Common shares are listed for trading through the facilities of the TSX under the symbol “SEA”, and on the NYSE under the symbol “SA”. During the Issuer’s most recently completed financial year, the high and low trading prices and trading volume (rounded up or down to the nearest 100) of the Issuer’s Common shares on the TSX and on the NYSE was as follows:
| 2012 | TSX | NYSE/AMEX |
| Month | Volume | High | Low | Volume | High | Low |
| January | 446,788 | 20.89 | 16.55 | 5,390,563 | 20.83 | 16.48 |
| February | 446,601 | 25.62 | 19.95 | 8,585,205 | 25.65 | 19.95 |
| March | 421,717 | 24.38 | 19.09 | 7,231,183 | 24.70 | 19.26 |
| April | 245,140 | 20.15 | 16.20 | 5,468,145 | 20.32 | 16.41 |
| May | 563,394 | 17.28 | 12.31 | 12,437,902 | 16.98 | 12.20 |
| June | 647,459 | 18.10 | 14.01 | 8,038.942 | 17.59 | 13.52 |
| July | 391,477 | 15.45 | 13.34 | 4,688,055 | 15.29 | 12.98 |
| August | 453,381 | 16.60 | 13.57 | 6,233,401 | 16.83 | 13.55 |
| September | 664,034 | 19.66 | 16.22 | 7,989.437 | 20.34 | 16.34 |
| October | 298,720 | 19.60 | 16.41 | 4,180,637 | 19.96 | 16.61 |
| November | 352,797 | 17.79 | 14.10 | 5,412,254 | 17.84 | 14.02 |
| December | 1,039,836 | 18.69 | 14.00 | 13,545,481 | 18.99 | 15.04 |
ITEM 8: DIRECTORS AND OFFICERS
The By-Laws of the Issuer provide for the election and retirement of directors. At each annual general meeting, all the directors retire and the Issuer elects a Board of Directors consisting of the number of directors fixed from time to time by the shareholders, subject to the Issuer’s Articles. If the election of directors is not held at the proper time, the incumbent directors shall continue in office until their successors are elected. The Issuer has a 3 member Audit Committee, a 5 member Corporate Governance Committee, a 5 member Nominating Committee, a 3 member Compensation Committee and a 3 member Technical Committee.
The names and municipalities of residence of the directors and officers of the Issuer, the positions held by them with the Issuer, their principal occupations for the past five years and their shareholdings in the Issuer as of March 25, 2013 are as follows:
Name, Municipality of Residence and Position | Principal Occupation or employment and, if not a previously elected director, occupation during the past 5 years | Previous Service as a Director | Number of Common shares beneficially owned, or controlled or directed, directly or indirectly(5) |
James S. Anthony (3) Toronto, Ontario, Canada Director | President, Suma Investments Inc., a private investment company since 1986. | Since October 1999 | 779,791 directly 432,334 indirectly |
A Frederick Banfield(1) (4) (5) Tucson, Arizona, USA Director | Chairman, Mintec Inc., a consulting and software company providing services to the minerals industry, since 1970. | Since October 1999 | 245,000 |
| Name, Municipality of Residence and Position | Principal Occupation or employment and, if not a previously elected director, occupation during the past 5 years | Previous Service as a Director | Number of Common shares beneficially owned, or controlled or directed, directly or indirectly(5) |
Douglass “Scott” Barr(2) (3) (4) (5) Centennial, Colorado, USA Director | Executive, Value Assurance, Newmont Mining Corporation since Dec. 2011, Technical Advisor to, and previously Executive VP and COO of, Golden Star Resources Ltd., since 2008. With Newmont Mining Corporation from 1995 to 2008, finishing as VP – Technical Strategy and Development | Since June 2011 | Nil |
Thomas C. Dawson(1) (3) (4) Toronto, Ontario, Canada Director | Retired as Senior Audit and Accounting Partner, Deloitte & Touche LLP in 1999. | Since January 2006 | 44,225 directly 8,575 indirectly |
Louis J. Fox(1) (2) (3) (4) Fort Lauderdale, Florida, USA Director | Private Businessman. From 1984 to 1999, a Senior Vice President of Gerald Metals, Inc. | Since January 2000 | 300,750 |
Rudi P. Fronk Toronto, Ontario, Canada Chairman and CEO | Chairman and CEO, Seabridge Gold Inc. | Since October 1999 | 1,150,000 directly 30,000 indirectly |
Eliseo Gonzalez-Urien(2) (3) (4) (5) Ashland, Oregon, USA Director | Senior Technical Advisor, Seabridge Gold Inc. Retired as Senior Vice President, Placer Dome Inc. in 2001. | Since January 2006 | 58,000 |
Jay Layman Breckenridge, Colorado, USA President and Chief Operating Officer | Executive Vice President and Chief Operating Officer, Seabridge Gold since March 2011; Independent Consultant (President of Tactical and Strategic Advisory Services LLC), August 2010 to February 2011, Vice President Solutions and Innovation, Newmont Mining Company from May 2007 to August 2010; Vice President Corporate Development, Hecla Mining Company, 2006 to April 2007 | Since June 2012 | 1,800 |
Christopher Reynolds Oakville, Ontario, Canada Vice President, Finance & CFO | Vice President, Finance and Chief Financial Officer, Seabridge Gold since May 2011; Director of Paramount Gold and Silver Corp., since December 2009; October 2007 – April 2011 Vice President Finance and Chief Financial Officer, Norsemont Mining Inc.; January 2001 – October 2007 various positions – resigned as Senior Vice President, Chief Financial Officer and Corporate Secretary, SoutherEra Diamonds Inc. | N/A | 12,500 |
| Name, Municipality of Residence and Position | Principal Occupation or employment and, if not a previously elected director, occupation during the past 5 years | Previous Service as a Director | Number of Common shares beneficially owned, or controlled or directed, directly or indirectly(5) |
William E. Threlkeld Morrison, Colorado, USA Senior Vice President | Senior V.P. Seabridge Gold Inc. since 2001, consultant to Seabridge; 1997-2001 | N/A | 225,000 |
R. Brent Murphy Yellowknife, NT, Canada Vice President, Environmental Affairs | Vice President, Environmental Affairs, Seabridge Gold Inc. since December 2010, Manager, Environmental Affairs to Seabridge; March 2008 - December 2010, Environment and Sustainability Manager, Alaska Gold Company, June 2007 -- March 2008, Chief Environmental Officer, EKATI Diamond Mine, BHP Billiton Diamonds Inc., January 2006 – June 2007 | N/A | 2,000 |
C. Bruce Scott West Vancouver, B.C., Canada Vice President, Corporate Affairs and Corporate Secretary | President of CBCS Law Corporation, counsel to the Issuer, Partner, DuMoulin Black LLP, January 1998 - December 2011 | N/A | 100 directly 8,900 indirectly |
Gloria M. Trujillo Toronto, Ontario, Canada Assistant Secretary | Assistant Corporate Secretary, Seabridge Gold since 2003; Manager of Administration and Webmaster, Seabridge Gold since 2000 | N/A | 23,700 |
| (1) | Member of the Audit Committee. |
| (2) | Member of the Compensation Committee. |
| (3) | Member of the Corporate Governance Committee. |
| (4) | Member of the Nominating Committee. |
| (5) | Member of the Technical Committee. |
| (6) | Shares beneficially owned, directly or indirectly, or over which control or direction is exercise, as at March 26, 2013, based upon information furnished to the Corporation by individual directors. Unless otherwise indicated, such shares are held directly. |
As of March 26, 2013, the directors and executive officers of the Issuer, as a group, hold 3,453,875 Common shares of the Issuer (excluding Common shares which may be acquired upon exercise of stock options held by them), representing 7.6% of the Issuer’s issued and outstanding shares. Each director holds office until the next general meeting of the Issuer at which directors are elected.
Other than as set forth below, none of the Issuer’s directors or executive officers is, as at the date of this AIF, or has been, within ten years before the date of this AIF, a director, chief executive officer or chief financial officer of any company (including the Issuer) that:
| | (a) | was subject to an Order (as defined below) that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or |
| | (b) | was subject to an Order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. |
“Order” means a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation and, in each case, that was in effect for a period of more than 30 consecutive days.
None of the Issuer’s directors or executive officers or any shareholder holding a sufficient number of securities of the Issuer to affect materially the control of the Issuer:
| | (a) | is, as at the date of this AIF or has been, within the ten years before the date of this AIF, a director or executive officer of any company, that while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangements or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or |
| | (b) | has, within the ten years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, officer or shareholder. |
ITEM 9: AUDIT COMMITTEE INFORMATION
The Issuer’s audit committee has a charter (The “Audit Committee Charter”) in the form attached to this AIF as Schedule “A”.
Composition of the Audit Committee
Each of the members of the Issuer’s Audit Committee is independent and financially literate, as those terms are defined in National Instrument 52-110 Audit Committees.
Relevant Education and Experience
A description of the education and experience of each audit committee member that is relevant to the performance of his or her responsibilities as an audit committee member is set out below.
Thomas C. Dawson (Chairman of the Audit Committee)
Accountant since 1961. He is a retired senior audit and accounting partner with 40 years of experience at Deloitte & Touche LLP, Chartered Accountants. He received his B.Comm from Loyola College (now Concordia University), Canada, in 1959. Mr. Dawson is also a director of WaterFurnace Renewable Energy, a Canadian public company, Top 20 Dividend Trust, Top 20 US Dividend Trust and Top 20 Europe Dividend Trust.
Louis Fox
Mr. Fox holds a B.A. from the University of Pittsburgh and a J.D. from the Boston University Law School. Mr. Fox has served on several public company boards and their respective audit committees. He has more than 25 years of experience in precious metals trading, merchandising and merchant banking activities. From 1984 to 1999, Mr. Fox was a Senior Vice President of Gerald Metals, Inc., an internationally recognized commodity trading, refining and merchant banking firm. Prior to Gerald Metals, from 1974 to 1981, Mr. Fox was a Vice President of J. Aron & Co., and Vice President of Goldman Sachs from 1981 through 1984.
A. Frederick Banfield
Mr. Banfield is the Founder and Chairman of Mintec, Inc. Mr. Banfield was one of the original developers of MineSight ™, recognized as the pre-eminent reserves modeling and mine design software system with more than 300 installations worldwide. Mr. Banfield has also been an independent reserves auditor and mine planning advisor to some of the world’s leading gold mining organizations with respect to projects in the United States, Canada, Africa, Australia and Latin America. Mr. Banfield holds an Engineer of Mines degree from the Colorado School of Mines.
External Auditor Services Fees (by Category)
The aggregate fees billed by the Issuer’s external auditors in the following categories for the 12 months ended December 31, 2012 and 2011 are as follows:
| | 2012 | 2011 |
| Audit Fees | $276,500 | $196,500 |
| Audit Related Fees | $5,000 | $75,000 |
| Tax Fees | $53,710 | $5,425 |
| All Other Fees | Nil | $7,500 |
| Total | $335,210 | $284,425 |
Pre-Approval of Audit and Non-Audit Services Provided by Independent Auditors
The Audit Committee nominates, for election by the Issuer’s shareholders at the Issuer’s annual general meeting, the Issuer’s independent auditors to audit the Issuer’s financial statements. The Audit Committee is authorized by the Issuer’s Board of Directors to review the performance of the Issuer’s external auditors, to approve in advance the provision of services by the independent auditors and to consider the independence of the external auditors.
ITEM 10: CONFLICTS OF INTEREST
Certain of the Issuer’s directors and officers serve or may agree to serve as director or officers of other reporting companies or have significant shareholdings in other reporting companies and, to the extent that such other companies may pursue business objectives similar to those which the Issuer may pursue, the directors of the Issuer may have a conflict of interest respecting such pursuits. Under the corporate laws applicable to the Issuer, the directors of the Issuer are required to act honestly, in good faith and in the best interests of the Issuer and to disclose all conflicts to the directors so that appropriate procedures may be established for the circumstances, including abstaining from voting or the establishment of special committees.
ITEM 11: LEGAL PROCEEDINGS AND REGULATORY ACTIONS
The Issuer is not a party to any legal proceedings and does not know of any such proceedings that are contemplated.
There are no: (a) penalties or sanctions imposed against the Issuer by a court relating to securities legislation or by a securities regulatory authority during the Issuer’s most recent completed financial year and up to the date of this AIF; (b) other penalties or sanctions imposed by a court or regulatory body against the Issuer that would likely be considered important to a reasonable court or regulatory body against the Issuer that would likely be considered important to a reasonable investor in making an investment decision; or (c) settlement agreements the Issuer entered into with a court relating to securities legislation or with a securities regulatory authority during the Issuer’s most recently completed financial year and up to the date of this AIF.
ITEM 12: INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
No director, executive officer or person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10% of the Issuer’s outstanding Common shares, or any associate or affiliate of the foregoing, has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year prior to the date of this AIF that has materially affected or is reasonably expected to materially affect the Issuer.
ITEM 13: TRANSFER AGENTS AND REGISTRARS
The registrar and transfer agent for the Common shares is Computershare Investor Services Inc. at its principal office at 100 University Avenue, 9th floor, Toronto, Ontario, Canada M5J 2Y1 and co-transfer points at 510 Burrard Street, Vancouver, British Columbia, Canada V6C 3B9 and Computershare Trust Company, N.A., at 350 Indiana Street, Suite 800, Golden, Colorado, USA 80401.
ITEM 14: MATERIAL CONTRACTS
The Issuer is not a party to a material contract that was not entered into in the ordinary course of its business or that is otherwise required to be filed under section 12.2 of National Instrument 51-102 (“NI 51-102”) at the time this AIF is filed or would be required to be filed under section 12.2 of NI 51-102 at the time this AIF is filed but for the fact that it was previously filed, other than the Option Agreement between Seabridge Gold Inc. and a subsidiary of Royal Gold, Inc. dated June 16, 2011, as amended October 28, 2011 and December 12, 2012, and described under “General Development of the Business – Three Year History”.
ITEM 15: INTERESTS OF EXPERTS
None of Michael Lechner, Dr. John Huang, Sabry Abdel Hafez, Jim Gray, W.N. Brazier, Pierre Pelletier, Harold Bosche, Graham Parkinson, Darby Kreitz, Robert Parolin, Warren Newcomen, Kevin Jones, Ross Hammett, Tony Wachmann, Cameron Clayton, Nigel Goldup and Stephen Day, each being companies or persons who have been named as having prepared or participated in preparing reports relating to the Issuer’s mineral properties referred to in this AIF or otherwise filed under NI 51-102 by the Issuer during, or relating to, the Issuer’s most recently completed financial year or during the period thereafter to the date of this AIF, or any director, officer, employee or partner thereof, as applicable, received or has received a direct or indirect interest in the property of the Issuer or of any associate or affiliate of the Issuer. To the Issuer’s knowledge, as at the dates of their respective reports, the aforementioned persons, and the directors, officers, employees and partners, as applicable, of each of the aforementioned companies and partnership beneficially own, directly or indirectly, in total, less than one percent of the securities of the Issuer and one of them have received securities of the Issuer from the Issuer since such dates.
Neither the aforementioned persons, nor any director, officer, employee or partner, as applicable, of the aforementioned companies or partnerships, are currently expected to be elected, appointed or employed as a director, officer or employee of the Issuer or of any associate or affiliate of the Issuer.
William Threlkeld, the Senior Vice President of the Issuer and a Registered Professional Geologist, is named as having prepared or supervised the preparation of technical information in respect of exploration programs of the Issuer at both of the KSM and Courageous Lake projects. Mr. Threlkeld owns 225,000 Common shares of the Issuer and options to purchase 285,000 Common shares at various prices.
The auditors of the Issuer are KPMG LLP, Chartered Accountants, of Toronto, Ontario, Canada. KPMG LLP, Chartered Accountants, have confirmed that they are independent with respect to the Issuer with the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulation, and that they are independent accountants with respect to the Issuer under all relevant US professional and regulatory standards.
ITEM 16: ADDITIONAL INFORMATION
Additional information relating to the Issuer may be found on SEDAR at www.sedar.com. The information available at www.sedar.com includes copies of the full text of all of the technical reports prepared for the Issuer in respect of the Issuer’s properties described herein.
Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Issuer’s securities, and securities authorized for issuance under equity compensation plans, where applicable, is contained in the Issuer’s Information Circular for its most recent annual general meeting of securityholders that involved the election of directors.
Additional financial information is provided in the Issuer’s consolidated financial statements and management’s discussion and analysis for the Issuer’s most recent completed financial year.
SCHEDULE A
AUDIT COMMITTEE CHARTER
The Audit Committee of Seabridge is a committee of the Board composed entirely of three outside and unrelated directors. Its overall goal is to ensure that the Corporation adopts and follows a policy of full, plain, true and timely disclosure of material financial information to its stakeholders Primary responsibility for the Corporation’s financial reporting, accounting systems and internal controls lies with management and is overseen by the Board. The Committee assists the Board in fulfilling its responsibilities in this regard. The Committee is mandated to satisfy the requirements of the Canada Business Corporations Act and any other applicable regulatory agencies.
Specifically, the Committee:
| (a) | reviews the annual statements of the Corporation and makes recommendations to the Board with respect to these statements, |
| (b) | reviews the quarterly financial statements and makes recommendations to the Board with respect to these statements, |
| (c) | reviews all prospectuses, offering circulars, and similar documents, |
| (d) | oversees the adequacy and accuracy of the Corporation’s financial disclosure policies and obligations, |
| (e) | reviews significant accounting policies and estimates, |
| (f) | satisfies themselves from discussions with and/or reports from management and reports from the external auditors, that the Corporation’s internal controls, financial systems and procedures, and management information systems are appropriate and that internal controls identified are operating effectively, |
| (g) | meets with the Corporation’s auditors to review audit, financial reporting and other pertinent matters and to review their recommendations to management, and |
| (h) | recommends the appointment of auditors and reviews the terms of the audit engagement and the appropriateness of the proposed fee, |
| (i) | reviews through discussion or by way of a formal document the plan for the annual audit with the auditors and management, |
| (j) | evaluates the performance of the auditors, |
| (k) | confirms the independence of auditors, |
| (l) | establishes procedures for the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters, and |
| (m) | establishes procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. |
The Audit Committee meets at a minimum, quarterly and on such other occasions as required. The auditors are invited to attend the meetings.
