Seabridge Gold

Courageous Lake: ENGINEERING STUDIES

2012 Preliminary Feasibility Study

2011 Preliminary Economic Assessment

2008 Preliminary Economic Assessment

2005 Preliminary Economic Assessment

2012 PRELIMINARY FEASIBILITY STUDY

The PFS was released in July, 2012 and demonstrates that Courageous Lake is an economic project at the current gold price while also offering substantial leverage to higher gold prices. The PFS was prepared by Tetra Tech Wardrop (Tetra Tech). The PFS Executive Summary can be found here.

The Courageous Lake PFS is based on a single open-pit mining operation with on-site processing. A base case scenario was developed for the project incorporating an estimated 91.1 million tonnes of proven and probable reserves at an estimated average grade of 2.20 grams of gold per tonne feeding a 17,500 tonnes per day operation (6.1 million tonnes per year annual average throughput). This yields a projected 15 year operation with average estimated annual production of 385,000 ounces of gold at a projected life of mine average cash operating cost of US$780 per ounce recovered (US$674 in years one to five). Start-up capital costs for the project are estimated at US$1.52 billion, including a contingency of US$187 million.

At a gold price of US$1,384 per ounce (the 3 year trailing average gold price at July 3, 2012), the base case has an estimated US$1.5 billion pre-tax net cash flow, a US$303 million net present value at a 5% discount rate and an internal rate of return of 7.3%. This base case is consistent with the requirements of securities regulators. At a gold price of US$1,618 (the spot price on July 3, 2012), the estimated total pre-tax net cash flow nearly doubles that of the base case to US$2.8 billion, the net present value at a 5% discount rate more than triples to US$1.1 billion and the internal rate of return increases to 12.5%. To demonstrate the leverage to gold price, an alternative case was run using last year's gold price high of $1,925 per ounce which yielded a pre-tax net cash flow of $4.5 billion, a net present value at a 5% discount rate of $2.1 billion and an internal rate of return of 18.7%.

The PFS also identifies several opportunities that could significantly improve the overall project economics. First, the current design incorporates a combination of diesel and wind generated power resulting in a projected power generation cost of Cdn$0.184 per kilowatt hour which is nearly 40% lower than power generation by diesel fuel alone. Seabridge is evaluating nearby potential hydro-electric sources which would also provide reliable, sustainable and lower-cost clean energy source and significantly reduce the requirement for diesel fuel at the site. Secondly, access to the project under the current design is by winter road which 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 proposes 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. Seabridge will continue to investigate these options as the project moves forward.

Mine Planning

Lerchs-Grossman (LG) pit shell optimizations were used to define the mine plans in the PFS. The pit optimizations incorporated estimated costs for mining, processing, tailings management, general and administrative and gold recovery rates. Waste to ore cut-offs were determined using a gold price of US$1,244 per ounce. Estimated in-pit diluted proven and probable reserves, including mining dilution within the ultimate pit limit based on a Cdn$20.10 per tonne cut-off, are as follows:

Unit Operating Costs

Proven and probable reserves are derived from estimated total undiluted measured and indicated resources of 8.0 million ounces of gold (107 million tonnes at an average grade of 2.31 grams of gold per tonne).

Mineral Processing

Seabridge has conducted five major metallurgical testing programs since 2003. The comminution proposed for Courageous Lake uses an energy efficient process including: (i) primary crushing by gyratory crusher; (ii) secondary crushing by cone crusher; (iii) tertiary crushing by high pressure grinding rolls; and (iv) final grinding by ball mills. The recovery process includes conventional flotation, flotation concentrate pressure oxidation, cyanidation and gold refining circuits. Overall gold recovery is projected at 89.4%.

Capital Costs

Start-up capital costs (including contingencies of US$187 million) are estimated at US$1.52 billion and are summarized as follows:

Start-up Capital Costs

Operating Costs

Average mine, process and G&A operating costs over the project's life (including waste mining) are estimated at US$47.35 per tonne milled. A breakdown of estimated unit operating costs is as follows:

Unit Operating Costs

Economic Analysis

A base case economic evaluation was undertaken incorporating historical three-year trailing averages for gold prices and currency exchange rates as of July 3, 2012. This approach is consistent with the guidance of the United States Securities and Exchange Commission, adheres to National Instrument 43-101 and is consistent with industry practice. A spot price case was prepared using the July 3, 2012 spot gold price and currency exchange rates. To demonstrate the leverage to gold price, a third case was prepared using last year's gold price high of $1,925 per ounce. Pre-tax economic results for all three cases are as follows:

Projected Economic Results (IS$)

 

National Instrument 43-101 Disclosure

The PFS for Courageous Lake was prepared by Tetra Tech, and incorporates 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 consultants and their QPs are listed below with their responsibilities:

  • Tetra Tech, under the direction of Dr. John Huang (overall report preparation, metallurgical testing review, mineral processing, infrastructures (excluding power supply and airstrip), operating costs (excluding mining operating costs), capital cost estimate and project development plan) and Dr. Sabry Abdel Hafez (financial evaluation)
  • Moose Mountain Technical Services under the direction of Jim Gray (mining, mine capital and mine operating costs)
  • W.N. Brazier Associates Inc. under the direction of W.N. Brazier (power generation)
  • Rescan Environmental Services Ltd. under the direction of Pierre Pelletier (environmental matters)
  • Golder Associates Ltd. under the direction of Cameron Clayton (open pit slope stability)
  • EBA, a Tetra Tech Company, under the direction of Nigel Goldup (tailings, surface water management and waste rock storage facilities, and surficial geology) and Kevin Jones (airstrip upgrade)
  • SRK Consulting (Canada) Inc., under the direction of Stephen Day (metal leaching and acid rock drainage)
  • Resource Modeling Inc. under the direction of Michael Lechner (mineral resources)

2011 PRELIMINARY ECONOMIC ASSESSMENT

The 2011 PEA confirms that the FAT deposit at Courageous Lake represents an excellent economic opportunity in the current environment. Capital and operating costs increased significantly from the 2008 PEA, as expected, but these increases were more than offset by a larger and higher grade resource, extended mine life and higher gold price assumptions, resulting in a substantial improvement in projected economic value for the deposit. Infill drilling, engineering studies and environmental work will continue to raise the PEA to the level of a Preliminary Feasibility Study ("PFS") in early 2012, resulting in the conversion of resources to proven and probable mineral reserves

The independent consultants continued with earlier conclusions that an open-pit mining operation, with on-site processing, is the most suitable development scenario. A base case scenario was developed for the project incorporating a 17,500 tonnes per day operation (6.4 million tonnes per year throughput), resulting in a projected 16 year operation with average annual production of 383,000 ounces of gold at a life of mine average cash operating cost of US$599 per ounce recovered (US$536 in years 1 to 5) . Start-up capital costs for the project are estimated at US$1.26 billion, including a contingency of US$192 million. The total cost of gold production (including cash operating costs and total capital costs over the life of the mine) is estimated at US$850 per ounce.

At a gold price of US$1089 per ounce (the 3 year trailing average gold price at May 24, 2011), the base case has a US$1.4 billion pre-tax net cash flow, a US$427 million net present value at a 5% discount rate and an internal rate of return of 9.3%, all of which are substantially higher than the base case results from the 2008 PEA. At US$1527 gold (the spot price on May 24, 2011) and at the current US$/Cdn$ exchange rate of 1.025, the total pre-tax net cash flow more than triples that of the base case to US$3.5 billion, the net present value at a 5% discount rate almost quadruples to US$1.6 billion and the internal rate of return nearly doubles to 18.1%.

The 2011 PEA also identifies two opportunities that could significantly improve the overall project economics. First, the current design incorporates a combination of diesel and wind generated power resulting in a projected power generation cost of Cdn$0.179 per kilowatt hour which is nearly 30% lower than power generation by diesel fuel alone. Seabridge is evaluating nearby potential hydro-electric sources which would also provide reliable, sustainable and lower-cost clean energy source and significantly reduce the requirement for diesel fuel at the site. Secondly, access to the project under the current design is by winter road which 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 proposes 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. Seabridge will be investigating these options in the PFS.

Mine Planning
Lerchs-Grossman ("LG") pit shell optimizations were used to define the mine plans in the 2011 PEA. Because of the difficulty in predicting relevant metal prices over such a long project life, the ultimate LG pit limits were set at the point where an incremental increase in pit size did not significantly increase the pit resource (an incremental increase in the pit resource resulted in only marginal economic return). Waste to mineralized material cut-offs were determined using a gold price of US$990 per ounce gold. Estimated in-pit diluted resources including mining dilution within the ultimate pit limit based on a Cdn$20.97 per tonne cut-off are as follows:

Seabridge notes that the 2011 PEA incorporates inferred mineral resources which are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Therefore, Seabridge advises that there can be no certainty that the estimates contained in the PEA will be realized.

Productiong
At 17,500 tonnes per day, 365 operating days per year and a 92% plant availability, annual throughput for the mill is estimated at 6.4 million tonnes. With 101.1 million tonnes of in-pit mineralized material above cut-off, Courageous Lake's mine life is estimated at approximately 16 years. Overall gold recovery is estimated at 89.9% resulting in 6.05 million ounces of gold production over the project's life averaging 383,000 ounces per year.

Capital Costs
Start-up capital costs (including contingencies of US$192 million) are estimated at US$1.26 billion and are summarized as follows:

Operating Costs
Average mine, process and G&A operating costs over the project's life (including waste mining) are estimated at US$34.22 per tonne milled. A breakdown of estimated unit operating costs is as follows:

Economic Analysis
A base case economic evaluation was undertaken incorporating historical three-year trailing averages for gold prices and currency exchange rates as of May 24, 2011. This approach is consistent with the guidance of the United States Securities and Exchange Commission, is accepted by the Ontario Securities Commission and is industry standard. A spot price case was prepared using May 24, 2011 spot metal prices and currency exchange rates. The pre-tax economic results in for both cases are as follows:

National Instrument 43-101 Disclosure
The 2011 PEA for Courageous Lake was prepared by Wardrop, and incorporates 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 disclosure. The consultants and their QPs are listed below with their responsibilities:

  • Wardrop, under the direction of Dr. John Huang (overall report preparation, metallurgical testing review, mineral processing, infrastructures (excluding power supply and airstrip), operating costs (excluding mining operating costs), capital cost estimate and project development plan) and Tysen Hantelmann (financial evaluation)
  • Moose Mountain Technical Services under the direction of Jim Gray (mining, mine capital and mine operating costs)
  • W.N. Brazier Associates Inc. under the direction of W.N. Brazier (power generation)
  • Rescan Environmental Services Ltd. under the direction of Pierre Pelletier (environmental matters)
  • Golder Associates Ltd. under the direction of Cameron Clayton (open pit stability)
  • EBA, a Tetra Tech Company, under the direction of Nigel Goldup (tailings, surface water management and waste rock storage facilities, and surficial geology), Kevin Jones (airstrip upgrade), and Dr. Adrian Chantler (Matthews Creek hydrological survey)
  • Resource Modeling Inc. under the direction of Michael Lechner (mineral resources)

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2008 PRELIMINARY ECONOMIC ASSESSMENT

The 2008 Preliminary Economic Assessment (PEA) was prepared by leading consultants, all of whom were independent of Seabridge and Qualified Persons under National Instrument 43-101. The infrastructure evaluation and the PEA were coordinated by T.J. Smolik of TJS Mining Met Services, Inc. Other consultants with their responsibilities included the following:

  • Wardrop Mining and Minerals under the direction of Ken Deter (who worked for Wardrop when the Process was defined) and Frank Grills (Process Capital Costs)
  • Snowden Mining Industry Consultants under the direction of Dick Matthews (Mining Plans, Mine Capital, Mine Operating Costs, and Financial Analysis)
  • W.N. Brazier Associates Inc. under the direction of W.N. Brazier (Electrical Power Supply including Capital Costs and Minesite Unit Energy Cost)
  • EBA Engineering Consultants Ltd under the direction of Eric Fier (Environment, Geotechnical and Tailings)
  • Resource Modeling Inc under the direction of Michael Lechner (Mineral Resources)

The independent consultants have continued with earlier conclusions that an open-pit mining operation, with on-site processing, is the most suitable development scenario. A base case scenario was developed for the project incorporating a 25,000 tonne per day operation (9.125 million tonne per year throughput) resulting in a projected 11.6 year operation with average annual production of 500,500 ounces of gold at a life of mine average cash operating cost of US$435 per ounce recovered. The base case scenario utilized measured, indicated and inferred resources in the mine plan. Initial capital costs for the project are estimated at US$848 million, including a contingency of US$111 million. The total cost of gold production (including cash operating costs and total capital costs over the life of the mine) is estimated at US$590 per ounce.

At a gold price of US$690 per ounce, the base case cumulative pre-tax net cash flow over the life of the project is estimated at US$ 500 million. At a gold price of US$800 per ounce, the cumulative pre-tax net cash flow over the life of the project is estimated at US$ 1.13 billion.

Seabridge notes that the PEA incorporates inferred mineral resources which are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Therefore, Seabridge advises that there can be no certainty that the estimates contained in the PEA will be realized.

Background
In February 2007, an updated National Instrument 43-101 Technical Report (NI 43-101) prepared by Resource Modeling Inc. ("RMI") of Tucson, Arizona was filed on SEDAR. At a 0.83 gram per tonne cut-off, gold resources for the project were stated as follows:

Background
In February 2007, an updated National Instrument 43-101 Technical Report (NI 43-101) prepared by Resource Modeling Inc. ("RMI") of Tucson, Arizona was filed on SEDAR. At a 0.83 gram per tonne cut-off, gold resources for the project were stated as follows:

Snowden used the resource model prepared by RMI as part of its development of the mining plan for the project, the model was not validated and grades and were accepted as is. RMI has noted that further work would be required, including in-fill drilling, to advance the project to acceptable levels of Measured and Indicated Resources for a pre-feasibility or bankable feasibility study.

Mine Planning
A preliminary pit was selected based on the following cost estimates and operating assumptions.

Snowden used Whittle (Lerchs Grossman) software to determine the optimum pit shell. Incorporated in the pit optimization analysis were the pit slope criteria developed by EBA. Snowden also determined that a mining dilution factor of 5% grade dilution (equivalent to metal loss) was appropriate for the base case estimate. Based on their analysis, using the December 2006 EBA geotechnical projections of pit slopes, Snowden estimated the in-pit diluted resources within the ultimate pit limit as follows:

Sensitivities were run and determined that pit size is most sensitive to gold price and least sensitive to operating costs.

To ensure high grades in the early years, a phased mining strategy with stockpiling is proposed. In this approach, the highest economic value material is the focus of the initial development phase of the open pit, with progressively larger pit shells developed sequentially outward until the final phase establishes the ultimate pit limit described above. The maximum mining rate was set at 100 million tonnes per year with the mill feed rate set at 9.125 million tonnes per year. The average strip ratio over the life of the mine is 7.4:1, and peaks at around 20:1 in years 5 and 6 when large quantities of waste must be removed and the plant feed would come from stockpiles developed in earlier years.

To maximize productivity and minimize unit mining costs, large-scale state-of-the-art mining equipment has been selected for the mine operation. Haulage trucks with a 240 tonne payload capability combined with large capacity hydraulic shovels have been specified. Manpower requirements were estimated based on a 12 hour shift schedule, working four days on and four days off with four full crews of operating and maintenance personnel providing a 24 hour per day, 7 day per week operation. Over the life of mine, Snowden has estimated average mining costs of US$1.14 per tonne of material mined.

Metallurgical Process and Plant
The project's gold to sulphur ratio compares favourably with other operating refractory gold mines. Mineral samples from the Courageous Lake deposit can produce a high-grade flotation concentrate at a relatively coarse primary grind size. Total process operating costs are estimated at US$13.14 per tonne of milled.

The proposed process plant is designed to treat an average of 9.125 million tonnes of mineralization per year. To reduce the project’s comminution energy requirements, a High Pressure Grinding Roll (HPGR) circuit is proposed for the comminution process. The mill feed is processed through a primary gyratory crusher and stored in a coarse mill feed stockpile. The primary crushed material is reclaimed by conveyor and sent to screening and secondary crushing. It is then treated through the high efficiency grinding rolls. The HPGR product is further ground in a grinding circuit consisting of two ball mills and hydrocyclones.

The hydrocyclone overflow is sent to flotation for upgrading. The rougher flotation circuit consisting of 130 cubic meter flotation cells, connected in series, is estimated to recover over 90% of the gold in the rougher concentrate. The concentrate is then reground in a tower mill and upgraded by one stage of cleaner flotation. The cleaner concentrate is further reground in a tower mill and thickened prior to the subsequent oxidation processes. The cleaner tailings containing a low gold content is thickened and pumped to the gold leach circuit for treatment with the oxidized concentrate products.

The upgraded cleaner concentrate is then sent to a two-stage oxidation (hybrid) circuit consisting of biological leaching to partially oxidize gold bearing sulfides in the concentrate and conventional pressure oxidation to oxidize the remaining sulphides. After the oxidized slurry is cooled, it is sent through a washing circuit to reduce the acidity and is then conditioned with lime prior to cyanide gold leaching.

The pH-adjusted slurry is pumped to a gold leach circuit utilizing activated carbon (CIP Circuit) to adsorb dissolved gold. The cleaner flotation tailings are also leached in this circuit. The activated carbon is then treated in a pressure stripping circuit to remove adsorbed gold from the carbon for ultimate deposition and removal in an electrowinning circuit. The overall gold recovery is expected to be 89% with these process stages.

The diluted acid solution from the washing stage is recycled to the flotation circuit and the excessive acid solution is treated by a lime neutralization circuit.

Infrastructure
Due to the remote location, the Courageous Lake project requires its own power generation, a permanent camp, access by air and warehousing and storage at site. Site logistics include freight delivery over winter roads and air services for personnel and smaller freight components. The project's electrical running load of 45 MW can be supplied entirely by diesel generation which can be supplemented with 20 MW peak capacity of wind power generation (estimated to average 6.6 MW of power demand over a yearly time period). The economic comparison of power costs from on-site combustion turbines compares favourably with multiple units of diesel generators. Control systems are available for handling the variable output of the wind generation units. An airport with a 6,500 foot runway, apron and hangar have been incorporated into the study together with local minesite access roads.

Environmental and Project Scheduling
It is estimated that the project would take approximately six years to commence production with the environmental and permitting process for the project estimated at two years. To be proactive in project permitting, Seabridge initiated environmental baseline data collection and community consultation in 2004 and continued the work during 2005, 2006 and 2007. During the two-year environmental process, the in-fill drilling, bulk sampling and final feasibility study could be completed. Final detailed engineering and procurement would subsequently require approximately two years. The construction and commissioning period is estimated at an additional two to three years.

Tailings Management
The preferred location for a tailings impoundment is east of the Courageous Lake deposit and plant site. A "wet tailings" scenario will require a footprint of almost two square kilometers with major engineering and construction of an impoundment to hold approximately 106 million tonnes of processed material. A waste material dump is located west of the proposed mill site.

Project Operating Costs
Average operating costs over the 11.6 year mine life are estimated as follows:

Project Capital Costs
The initial capital costs for the project are estimated as follows:

Total sustaining capital and closure costs over the life of the mine are estimated at US$51 million.

Base Case and Sensitivity Financial Analysis
Using the input parameters described above and a gold price of US$690 per ounce, net cash flows were developed for the base case. The following sensitivity analysis was also performed:

  • Gold Price ranging from US$600 to US$1,000 per ounce. The estimated breakeven gold price for the project is at US$600 per ounce using the base case assumptions. At $700/oz gold the NPV using a 5% discount rate increases by approximately 220% or $380 million.

  • Capital and Operating Costs costs were varied by ±10% from the base case with the results summarized the in the table below. Capital costs have a smaller impact on the project than operating costs.

Project Opportunities
Work on the Courageous Lake project will be continued to evaluate modifications which could improve project economics. Some of the opportunities identified are as follows:

  • All-weather road: An all-weather road in close proximity to the site would have a large positive impact on the project's capital and operating costs. Various levels of government, and Native Groups, continue to study the all-weather road possibilities. There would be a significant reduction in on-site storage requirements, especially fuel oil and reagents such as lime.

  • Power generation sharing: A coal-fired power plant developed in the Bathhurst Inlet, and the installation of a power transmission line to the three diamond mines and Courageous Lake, would significantly reduce operating costs for these mines. A shared power-generating facility seems a reasonable approach. This approach is presently being investigated in Nevada by Newmont, Phelps Dodge and Barrick Gold.

  • Mine life extensions: As demonstrated in the sensitivity analysis, the potential extension of mine life could have a positive material impact on the project's pre-tax net cash flow. Additional drilling would improve the confidence levels of the Courageous Lake resource estimates and may also provide more information that would improve ore scheduling from the open pit.

  • Alternate power schemes: The option of hydro power from the Tolstan Station is another possibility; long power transmission lines would have to be built to benefit from this power source. Wind generation at site is capital intensive, but produces energy at very low operating costs. Further site work is needed to document the wind and weather conditions which would apply to wind power generation.

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2005 PRELIMINARY ECONOMIC ASSESSMENT

In September 2005, a Preliminary Economic Assessment for the Courageous Lake project was completed by TJS Mining-Met Services Inc. (TJS), Roscoe Postle Associates Inc. (RPA) and EBA Engineering Consultants Limited (EBA) (TJS, RPA and EBA collectively, the "Project Consultants"). The Preliminary Economic Assessment is dated September 7, 2005 and is entitled "Seabridge Gold Inc., Courageous Lake Project, Preliminary Technical Assessment". The Preliminary Economic Assessment incorporated the December 2004 resource estimate prepared by Resource Modeling Inc. (RMI). The mining and geological aspects of the estimates contained in this Preliminary Assessment Study were prepared by RPA under the direction of James Hendry and Richard Routledge, both of whom are independent of Seabridge and are Qualified Persons as defined by NI 43-101. The environmental, geotechnical and tailings management sections of the report were prepared by EBA under the direction of Eric Fier, who is also independent of Seabridge and a Qualified Person as defined by NI 43-101. TJS, under the direction of T.J. Smolik who is independent of Seabridge and a Qualified Person as defined by NI 43-101, prepared all remaining parts of this report.

The Preliminary Economic Assessment contains the expression of the professional opinion of TJS, RPA and EBA, based on: (i) information available at the time of preparation, (ii) data supplied by outside sources, (iii) conclusions of other technical specialists named in this report, and (iv) the assumptions, conditions and qualifications in this report. The quality of the information, conclusions and estimates contained in the report are based on industry standards for engineering and evaluation of a mineral project and is consistent with the intended level of accuracy. The study is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that this Preliminary Assessment will be realized. The remainder of this section summarizes the findings of the study.

The independent consultants concluded that given the resource size, location and grade, a year round, open-pit bulk mineable operation with on-site processing is the most suitable development scenario. A base case scenario was developed for the project incorporating a 25,000 tonne per day operation (9.0 million tonne per year throughput) resulting in a projected 8.5 year operation with average annual production of 545,000 ounces of gold at a life of mine average cash operating cost of US$279 per ounce recovered. The base case scenario utilized measured, indicated and inferred resources in the mine plan. Initial capital costs for the project are estimated at US$630 million, including a contingency of US$96.4 million (18.1%). The total cost per ounce of production (including cash operating costs and total capital costs over the life of the mine) is estimated at US$423. The intended level of accuracy of the capital and operating cost estimates is +30%/-20%.

At a gold price of US$450 per ounce, the base case cumulative pre-tax net cash flow over the life of the project is estimated at US$94 million. At a gold price of US$550 per ounce, the cumulative pre-tax net cash flow over the life of the project is estimated at US$553 million.

Mine Planning
RPA reviewed the resource model prepared by RMI as part of its development of the mining plan for the project. RPA concluded that the December 2004 resource model was suitable for the purposes of the study, but noted that further work would be required, including in-fill drilling, to advance the project to a pre-feasibility or bankable feasibility level.

Based on estimated processing and administrative costs, a 90% recovery rate and a gold price of US$400 per ounce, RPA determined that a cutoff grade of 0.83 grams of gold per tonne was appropriate. At a 0.83 gram per tonne cutoff, gold resources stated by RMI for the project are as follows:

Courageous Lake gold resources at 0.83 grams per tonne cut-off (December 2004 resource estimate)

RPA used Whittle (Lerchs Grossman) software to determine the optimum pit shell. Incorporated in the pit optimization analysis were the pit slope criteria developed by EBA. RPA also determined that a mining dilution factor of 12% was appropriate for the base case estimate. Based on their analysis, RPA estimated the in-pit diluted resources within the ultimate pit limit as follows:

In order to assess the impact of higher mining dilution, RPA developed a sensitivity case incorporating an 18% dilution factor. Based on the results of sensitivity analysis, RPA concluded that the size and shape of the open pit and its associated economics are not very sensitive to the estimate of the mining dilution factor.

In order to maximize the early release of the highest grade, and lowest stripping ratio, RPA developed a phased mining strategy. In this approach, the highest economic value material is the focus of the initial development phase of the open pit, with progressively larger pit shells developed sequentially outward until the final phase establishes the ultimate pit limit described above. The maximum mining rate was set at 90 million tonnes per year with the mill feed rate set at 9.0 million tonnes per year.

In order to maximize productivity and minimize unit mining costs, large-scale, state of the art mining equipment has been selected for the mine operation. Haulage trucks with a 240 tonne payload capability combined with large capacity cable shovels of three pass loading per truck have been specified. Manpower requirements were estimated based on a 12 hour shift schedule working four days on and four days off with four full crews of operating and maintenance personnel providing 24 hour per day, 7 day per week operation. Over the life of the mine, RPA has estimated average mining costs of US$0.84 per tonne of material mined.

Metallurgical Process and Plant
Earlier studies completed by Hatch Inc. in 2002 and 2003 on metallurgical issues relating to the project concluded that (1) the project’s gold to sulphur ratio compares favourably with other operating refractory gold mines and (2) material from the FAT deposit can produce a high-grade flotation concentrate that captures 93-94% of mill feed gold content at a relatively coarse grind. Subsequent testwork supervised by Hatch has resulted in a 90.8% overall recovery estimate for the project. Total processing costs are estimated at US$8.61 per tonne.

The annual design throughput of the processing plant designed by Hatch is 9.78 million tonnes per year with a nominal annual throughput of 9.0 million tonnes. The run-of-mine ore is processed through a primary gyratory crusher and stored in a coarse ore stockpile. From there, the ore is reclaimed by conveyor and sent to a semi autogenous grinding (SAG) mill for primary grinding. After sizing by hydrocyclones, the oversize material is sent to secondary grinding in a ball mill. The properly sized material is sent to flotation for further processing. The flotation circuit consisting of 130 cubic meter flotation cells, connected in series, is estimated to recover 93.0% of the gold in concentrate. The concentrate is then sent through a regrind and thickening plant consisting of hydrocyclones and regrind ball mills. The material is then sent to a conventional pressure oxidation plant consisting of an autoclave preheater, vertical autoclave vessels with flash vessels in parallel, slurry coolers and a cooling tower. After the slurry is cooled, it is sent for washing to reduce the acidity. The washed slurry containing the gold is then sent to a CIP neutralization circuit and the diluted acid to a CCD neutralization circuit. The gold is then recovered from solution in an electrowinning circuit.

Infrastructure
The remote location of the Courageous Lake project requires that it generates its own power, maintains a permanent camp, provides access by air and maximizes warehousing and storage due to site access only being available by winter road and air. The required load of approximately 58,000 kW is supplied by two 25 MVA @ 13.8 kV gas turbines, supplemented by a 8 MVA @ 13.8 kV steam turbine. Gas turbines were chosen to maximize fuel efficiency due to the fuel storage requirements. An airport with a 6,500 foot runway, apron and hangar have been incorporated into the study. A ring road of approximately 5,000 meters in length with a width of 8 meters has also been included.

Environmental and Project Scheduling
From this point forward, it is estimated that the project would take approximately six years to commence production. To be proactive in project permitting, Seabridge initiated environmental baseline data collection and community consultation in 2004 and continued the work during 2005. As a result, the time to complete the environmental and permitting process for the project is now estimated at two years. During the two year environmental process, the in-fill drilling, bulk sampling and final feasibility could be completed. Final detailed engineering and procurement would subsequently require approximately two years. The construction and commissioning period is estimated at an additional 21 months to two years.

Tailings Management
The preferred location for a tailings impoundment is east of the FAT deposit. This area is proximal to the proposed mill site and pit. A "wet tailings" scenario will require a footprint of almost two square kilometers with major engineering and construction of an impoundment to hold approximately 77.4 million tonnes of processed material. As well, a waste ore dump is located west of the proposed mill site.

Project Operating Costs
Average operating costs over the 8.5 year mine life are estimated as follows:

The intended level of accuracy of the operating costs estimates stated above is +30/-20%.

Project Capital Costs
The initial capital costs for the project are estimated as follows:

Total sustaining capital and closure costs over the life of the mine are estimated at US$48,243,000.
The intended level of accuracy of the capital costs estimates stated above is +30%/-20%.

Base Case and Sensitivity Financial Analysis
Using the input parameters described above and a gold price of US$450 per ounce, net cash flows were developed for the base case. The following sensitivity analysis was also performed:

Gold Price: US$500, 550 and 600. The estimated breakeven gold price for the project at US$423 per ounce; therefore, any gold price below this level would generate a negative net cash flow in the base case.

Gold Grade (g/T): 2.25, 2.50, 2.75, 3.00. From reported 2005 exploration results, Seabridge suggests that a new structural interpretation of gold distribution within the FAT deposit could result in a material increase in average grade of the deposit.

Capital Cost: +/- 10%

Operating Cost: +/- 10%

Mining Dilution: 18%

Mine life extension: 4 years at average grade and strip ratio of base case. Based on reported 2005 exploration results by Seabridge Gold, there is the opportunity to extend the production life of the project through strike extensions to the north and south. This would result in a substantially lower total cost per ounce of production.

Pre-tax net cash flows for the base case and sensitivity analysis are as follows:

Project Opportunities
Work on the Courageous Lake project is ongoing to evaluate modifications which could improve project economics. The opportunities identified are as follows:

Tailings options: further testwork may prove out paste tailings as an option which may reduce the tailings footprint, tailings capital and operating costs.

All-weather road: providing an all-weather road to the site would have a large positive impact on the project. Such a road is being considered by the various levels of government. There would be a significant reduction in on-site storage requirements, especially fuel oil and lime.

Power generation sharing: providing a network to share power between the mines in the area. There are three mines in the area that potentially could share power generating facilities and costs. This approach is presently being investigated in Nevada by Newmont, Phelps Dodge and Barrick Gold.

Mine life extensions: as demonstrated in the sensitivity analysis, the potential extension of mine life could have a positive material impact on the project's pre-tax net cash flow. The independent consultants have recommended additional exploration to follow-up on 2005's exploration results.