Updated PEA Study Enhances Seabridge Gold’s KSM Project A Larger Iron Cap Mine Improves Production and Dramatically Boosts Economics Total Cost (Net of By-Product Credits) Estimated at US$4 per Ounce (US$358 in 2016 PEA)
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News Release
Trading Symbols: TSX: SEA F OR IMMEDIATE RELEASE
NYSE: SA April 27, 2020
Updated PEA Study Enhances Seabridge Gold’s KSM Project
A Larger Iron Cap Mine Improves Production and Dramatically Boosts Economics
Total Cost (Net of By-Product Credits) Estimated at US$4 per Ounce (US$358 in 2016 PEA)
After-Tax NPV@5% Increases ~80% (US$3.4B to US$6.0B) vs the 2016 PEA
After-Tax IRR Improves 40% (from 10% to 14%) vs the 2016 PEA
After-Tax projected payback shrinks from 6.4 to 4.0 years, only 9% of projected mine life
Toronto, Canada – Seabridge Gold announced today that an updated Preliminary Economic Assessment (the “2020 PEA”) for
its 100%-owned KSM project has confirmed the potential for a dramatic improvement in project economics by incorporating the
recently expanded, higher grade Iron Cap deposit into mine plans. This alternate scenario does not impact the current Preliminary
Feasibility Study (the “2016 PFS”) which remains in effect and will be included with the 2020 PEA in an updated NI 43-101
Technical Report to be filed on SEDAR within 45 days.
KSM is located in mining friendly British Columbia, Canada near existing and past producers as well as valuable transportation
and energy infrastructure. KSM is the world’s largest undeveloped gold/copper project measured by Mineral Reserves, which do
not include a sizeable Inferred Mineral Resource at the project’s four deposits. The project has both Federal and Provincial
Environmental Assessment (EA) certificates and the Company is maintaining a strong social license, having signed Impact
Benefit Agreements with the Nis g̱ a’a and Tahltan First Nations, an environmental agreement with the Gitanyow Nation and
receiving letters of support from the Gitxsan Nation.
Chairman and CEO Rudi Fronk noted that the 2020 PEA was undertaken to assess an alternate approach to developing KSM by
incorporating a much larger Iron Cap block cave mine into the production schedule accompanied by smaller open pits compared
to prior studies and developing this opportunity much earlier in the project’s mine life. “The benefits of incorporating Iron Cap
into mine plans at an early stage have exceeded the upper end of our expectations, not only for the improvements in projected
economics but also for the reduction in environmental impact. The PEA is based on Iron Cap’s inferred resource estimate but we
are very confident these resources will upgrade to higher categories with further drilling as they have in the past at the project’s
other deposits. We therefore think the new Technical Report gives investors a compelling view of the project’s potential,” Fronk
said.
“I would like to recognize the outstanding effort by our engineering team and our consultants for these results while working
under the constraints imposed by COVID-19 and also the impressive success of our exploration team for their expansion of the
Iron Cap resource,” Fronk continued.
2020 PEA Highlights
After Tax NPV at a 5% discount rate of US$6.0 billion using Base Case three-year average price assumptions of
US$1,340/oz gold, US$2.80/lb copper and foreign exchange rate of US$0.76 per C$1.00:
44 year mine production plan capturing 19.6 million ounces of gold and 5.4 billion pounds of copper from the measured
and indicated categories plus an additional 20.8 million ounces of gold and 13.8 billion pounds of copper from the
inferred category:
Life of mine recovered production of 27.6 million ounces gold and 17.0 billion pounds copper:
170,000 tonne per day processing rate capturing 2.4 billion tonnes (Bt) of mill feed, or only 30% of the total mineral
resource:
4.0-year payback on US$5.2 billion initial capital:
Average annual pre-tax Free Cash Flow of US$1.45 billion from 1.3 million oz gold and 265 million pounds copper
produced per year during the initial 5 years of production:
Life of mine average operating cost of negative US$472 per ounce of gold produced, net of copper and silver by-product
revenues:
Life of mine total cost of US$4 per ounces of gold produced, inclusive of all project capital and net of copper and silver
by-product revenues;
57% reduction in mine waste rock compared to the approved EA;
33% reduction in greenhouse gas emissions from mine operations compared to the approved EA.
“These PEA economic projections, if achieved, would rank KSM among the best large-scale producing mines in the world,”
Fronk concluded.
The 2020 PEA evaluates an alternate development approach to KSM and validates the 2017-2018 investment in Iron Cap
exploration drilling that resulted in a significantly larger Iron Cap Mineral Resource with improved grade ( March 12, 2019 Iron
Cap News Release ). The larger Iron Cap block cave reduces underground mine development per unit capital cost and benefits
from an electrified and partially automated mine which improves Iron Cap profitability compared to the 2016 PEA. The 2020
PEA production plan transitions to block cave mining early in the mine life and maintains the concept of less total disturbance
area relative to the 2016 PFS by reducing the size of open pits and consolidating all mine waste rock into a single location in the
Mitchell Valley.
The 2020 PEA assesses the potential impacts of incorporating Inferred Mineral Resources into project design, capital and
operating cost estimates and projected economics. The 2019 Mineral Resource estimate is the current and only resource estimate
used in this study. The results of the 2016 PFS remain valid and represent a viable option for developing the KSM project while
the 2020 PEA assesses an alternative development option at a scoping level. The 2020 PEA is preliminary in nature and includes
Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them
that would enable them to be categorized as Mineral Reserves, and there is no certainty that the results of the 2020 PEA will be
realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
The 2020 PEA envisages a combined open pit and underground block cave mining operation planned to operate for 44 years.
Over this mine life, mill feed delivered to the process plant is planned principally for gold and copper extraction with silver
produced as a by-product. The mill would produce a flotation copper concentrate containing precious metals for transport by
truck to a nearby seaport at Stewart, B.C. for shipment to Pacific Rim smelters, and a gold/silver doré produced from the carbon-
in-leach (CIL) process on pyritic concentrates. Metallurgical testing indicates that KSM can produce a clean copper concentrate
at an average copper grade of 25% with relatively high gold and silver content, making it readily saleable.
The NI 43-101 Technical Report summarizing the results of the 2020 PEA in Chapter 24, as well as the 2016 PFS, will be filed
at www.sedar.com with a Report Effective Date of April 30, 2020. Key Findings from the 2020 PEA include:
In the 2020 PEA, open pit mining accounts for a third of production while underground mining comprises the balance.
This is the reverse of the 2016 PFS plan where two thirds of production were derived from open pit mining. Smaller
open pits allow the 2020 PEA mine plan to reduce the waste rock storage volume by 57% compared to the 2016 PFS,
with a corresponding reduction to environmental impact.
Initial mill feed is mined exclusively from Mitchell pit, allowing for a streamlined mine to mill material flow through
the payback period. The initial phases of Mitchell pit mining have been redesigned to integrate recent geotechnical data
and improve pit wall designs, improve the variable cutoff strategy, and improve the efficiency of waste pre-stripping
from upper pit benches. These changes have resulted in reduced initial mining costs and an improvement in the payback
period mill feed grades.
An improved mining sequence has been achieved by deferring the Sulphurets pit and initiating earlier development of
Iron Cap and Deep Kerr block caves. Construction rock sourced from the Sulphurets pit in the 2016 PEA is quarried
from within the Mitchell pit in the 2020 PEA allowing for re-sequencing of open pit mining to only the Mitchell pit
until the initial capital payback has been achieved.
Electrification of the Iron Cap block cave mine equipment with partial automation results in significant diesel
consumption reduction replaced by lower cost green power supplied by BC Hydro. The electrified mine design has an
11% higher capital cost versus a conventionally developed and operated mine design but these costs are offset by much
lower operating costs, leveraging savings on diesel consumption, ventilation, equipment maintenance and labor,
yielding an approximately 11% lower total cost per tonne mined.
In the 2020 PEA, large footprints of the Iron Cap and Deep Kerr block cave mines support the high production rates
required to meet the designed mill throughput rate of 170,000 tonnes per day (“tpd”), the same mill throughput as the
2016 PEA. The 2020 PEA design includes dedicated processing lines to treat Mitchell and Sulphurets mill feed separate
from Iron Cap and Kerr mill feed. This design concept reflects recent metallurgical test work that suggests incremental
CIL gold production is marginal or sub-economic from the copper rich Iron Cap and Deep Kerr block caves. The 2020
PEA process plan therefore excludes CIL processing of Iron Cap and Deep Kerr mill feeds.
Mine site water tunnel alignments are revised in the 2020 PEA to incorporate recent field data, avoid mineralized
deposits and reflect the mine development plan, resulting in improved constructability and reliability over the 2016
PEA design. One dual bore tunnel has been changed to a single bore, concrete lining was added to multiple tunnels
and tunnel system expansions were removed as a result of the reduction in the size of the Rock Storage Facility (RSF).
Commensurate with these design changes and life of mine plan requirements, the cumulative length of water diversion
mine site tunnels has been reduced from 51 km to 20 km.
In the 2020 PEA, estimated initial capital costs including pre-production mining are 6% improved over the 2016 PEA
(from US$5.5 billion down to US$5.2 billion), reflecting changes in initial mine design. Sustaining capital shows a
significant 31% reduction (from US$10 billion down to US$6.9 billion) derived mostly from production plan
improvements related to underground mining, focusing on more profitable Iron Cap and Deep Kerr block cave mines,
and limiting cave development to three separate cave horizons through the life of mine instead of the five described in
the 2016 PEA.
As a result of mine plan extraction from the larger Iron Cap block cave mine, the life of mine copper grade in the 2020
PEA increased 16% (from 0.32% to 0.37%), delivering 2.5 B lb more copper to the mill (from 16.7 to 19.2 B lb)
versus the 2016 PEA.
Base Case operating cost and total cost per ounce of gold produced (net of copper and silver by-products) dramatically
improve in the 2020 PEA. The life of mine estimated average operating cost is reduced from negative US$179 to
negative US$472 per ounce of gold produced, while the estimated life of mine total cost, inclusive of all capital, is
reduced from US$358 to US$4 per ounce compared to the 2016 PEA. The change in Base Case operating and total
cost is due to higher by-product credits from significantly higher copper production more than offsetting reduced gold
production because no incremental gold production is taken from the CIL circuit for two deposits plus the application
of an improved price scenario.
For a primary copper producer reporting costs per pound of copper produced (net of gold and silver by-products) the
Base Case total life of mine average operating cost is negative US$0.14 per pound and total life of mine average cost
inclusive of all capital is US$0.63 per pound.
For a diversified mining company reporting costs on a co-product basis, the Base Case total life of mine average
operating costs are US$511 per ounce for gold production and $1.17 per pound for copper production. Total life of
mine average costs, inclusive of all capital, are US$717 per ounce of gold produced and US$1.59 per pound of copper
produced.
Attached to this news release is an addendum providing additional details relating to the 2020 PEA’s mineral resources, mine
design, production plan, capital costs, operating costs and economic projections.
KSM 2016 PFS Remains Current
Seabridge engaged independent consultants to conduct an extensive data verification exercise on the 2016 PFS to determine
whether there had been any material changes to the information used in the 2016 PFS and whether the study could be considered
current. The results of the exercise verified that if the 2016 PFS were to be updated using the 2020 information, there would be
no material change to outcomes of the 2016 PFS, its capital and operating costs, mineral reserves, or financial analysis, and
therefore the 2016 PFS remains current and is suitable to be used unchanged in the 2020 Technical Report.
The data verification checks used updated resource models with updated process recoveries and escalated cost assumptions and
estimated that variances in total mill feed would be limited to +1.3% on mill feed tonnes, no change on gold grade, and +2.4%
on copper grade. These overall differences are not material to the 2016 PFS Mineral Reserves. The financial results using the
2016 PFS mine plan with updates to capital and operating costs, 3-year average metal prices and tax code revisions are also not
materially different from the 2016 PFS financial results.
The 2016 PFS was designed to align with regulatory approvals for project construction and operation included in federal and
provincial Environmental Assessments. The scope of the 2016 PFS mine design included open pits and underground mines to
extract ore from the Mitchell, Sulphurets, Kerr and Iron Cap deposits. Ore is transported through access tunnels to a processing
plant located in the Teigen Creek valley nearby provincial infrastructure where it is processed to produce saleable concentrate
and doré. Process waste is stored in a tailings management facility. The 2020 PEA is an alternative development option to the
2016 PFS, with a significantly higher plant throughput rate, exploitation of deeper Inferred Mineral Resources maximizing
underground mass mining techniques over open-pit mining, and changes to the life of mine plan and infrastructure design. The
2020 PEA is a standalone, alternative development option that does not invalidate the 2016 PFS which remains as a viable option.
National Instrument 43-101 Disclosure
The 2020 PEA and 2016 PFS incorporate the work of a number of industry-leading consulting firms. These firms and their
Qualified Persons (as defined under National Instrument 43-101) are independent of Seabridge and have reviewed and approved
this news release. The principal consultants who contributed to the 2020 PEA and 2016 PFS, and their Qualified Persons, are
listed below along with their areas of responsibility:
Wood under the direction of Kirk Hanson, MBA, P.E. (capital and operating costs; financial model; 2020 PEA only);
Alan Keylock P.Eng. (process design, water treatment and operating costs; 2020 PEA only)
Moose Mountain Technical Services under the direction of James Gray, P.Eng. (mine design; capital and operating costs
for open pit mines and tunnels).
Resource Modeling Inc. under the direction of Michael Lechner P.Geo. (Mineral Resources).
Golder Associates Ltd. under the direction of Ross Hammett P.Eng. (block caving assessments).
Klohn Crippen Berger Ltd. under the direction of Graham Parkinson P.Geo. (design of surface and tunnel diversion
infrastructure, Rock Storage Facility, Tailing Management Facility and Water Storage Dam).
W.N. Brazier Associates Inc. under the direction of Neil Brazier, P. Eng. (power infrastructure).
Tetra Tech under the direction Hassan Ghaffari, P. Eng (process design, capital and operating costs, financial model;
2016 PFS)
____________________________________
Seabridge Gold holds a 100% interest in several North American gold resource projects. The Company’s principal assets are the
KSM and Iskut properties located near Stewart, British Columbia, Canada and the Courageous Lake gold project located in
Canada’s Northwest Territories. For a breakdown of Seabridge’s mineral reserves and resources by project and category please
visit the Company’s website at http://www.seabridgegold.net/resources.php.
Neither the Toronto Stock Exchange, New York Stock Exchange, nor their Regulation Services Providers accepts
responsibility for the adequacy or accuracy of this release.
All reserve and resource estimates reported by the Corporation were calculated in accordance with the Canadian National Instrument 43-101 and the
Canadian Institute of Mining and Metallurgy Classification system. These standards differ significantly from the requirements of the U.S. Securities
and Exchange Commission. Mineral resources which are not mineral reserves do not have demonstrated economic viability.
This document contains "forward-looking information" within the meaning of Canadian securities legislation and “forward-looking statements” within
the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as
“forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and
reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i)
the estimated amount and grade of mineral reserves and mineral resources and the potential to upgrade inferred resources to higher resource
categories; (ii) estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration
of financing payback periods; (iii) the estimated amount of future production, both ore processed and metal recovered; and (iv) estimates of operating
costs, life of mine costs, net cash flow, net present value (NPV) and economic returns from an operating mine. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using
words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives”
or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the
negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
All forward-looking statements are based on Seabridge's or its consultants' current beliefs as well as various assumptions made by them and information
currently available to them. The most significant assumptions are set forth above, but generally these assumptions include: (i) the presence of and
continuity of metals at the Project at estimated grades; (ii) the geotechnical and metallurgical characteristics of rock conforming to sampled results;
including the quantities of water and the quality of the water that must be diverted or treated during mining operations; (iii) the capacities and durability
of various machinery and equipment; (iv) the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery
times; (v) currency exchange rates; (vi) metals sales prices; (vii) appropriate discount rates applied to the cash flows in the economic analysis; (viii) tax
rates and royalty rates applicable to the proposed mining operation; (ix) the availability of acceptable financing under assumed structure and costs;
(ix) anticipated mining losses and dilution; (x) metallurgical performance; (xi) reasonable contingency requirements; (xii) success in realizing proposed
operations; (xiii) receipt of permits and other regulatory approvals on acceptable terms; and (xiv) the successful conclusion of consultation with
impacted Treaty and First Nations groups. Although management considers these assumptions to be reasonable based on information currently
available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking
statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and
assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed
costs will remain stable over the relevant period.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates,
forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution
readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ
materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking
statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but
specifically include, without limitation: risks relating to variations in the mineral content within the material identified as mineral reserves or mineral
resources from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which
infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being
different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments
in world metals markets; risks relating to fluctuations in the Canadian dollar relative to the US dollar; increases in the estimated capital and operating
costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available
financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or
other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals or the conclusion of
successful consultation with impacted First Nations groups; changes in regulations applying to the development, operation, and closure of mining
operations from what currently exists; the effects of competition in the markets in which Seabridge operates; operational and infrastructure risks and
the additional risks described in Seabridge's Annual Information Form filed with SEDAR in Canada (available at www.sedar.com ) for the year ended
December 31, 2019 and in the Corporation’s Annual Report Form 40-F filed with the U.S. Securities and Exchange Commission on EDGAR (available
at www.sec.gov/edgar.shtml). Seabridge cautions that the foregoing list of factors that may affect future results is not exhaustive.
When relying on our forward-looking statements to make decisions with respect to Seabridge, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events. Seabridge does not undertake to update any forward-looking statement, whether written
or oral, that may be made from time to time by Seabridge or on our behalf, except as required by law.
ON BEHALF OF THE BOARD
"Rudi Fronk"
Chairman and CEO
For further information please contact:
Rudi P. Fronk, Chairman and CEO
Tel: (416) 367-9292 Fax: (416) 367-2711
Email: [email protected]