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Kerr-Sulphurets-Mitchell: ENGINEERING STUDIES

2016 PRELIMINARY ECONOMIC ASSESSMENT (PEA)

2016 UPDATED PRELIMINARY FEASIBILITY STUDY (PFS)

2012 UPDATED PRELIMINARY FEASIBILITY STUDY

2016 PRELIMINARY ECONOMIC ASSESSMENT (PEA)

An updated PEA was prepared by Amec Foster Wheeler and its results were released on October 6, 2016. The PEA is contained in Section 24 of the NI 43-101 report for the updated KSM Preliminary Feasibility Study (PFS) prepared by Tetra Teck and filed at www.sedar.com on November 7, 2016.

Unlike the updated Preliminary Feasibility Study (the “2016 PFS”) announced on September 19, 2016, the PEA took a different approach to developing the KSM Project by incorporating the Inferred Mineral Resources found in the Deep Kerr Zone and the Iron Cap Lower Zone into a conceptual project design. The 2016 PFS incorporated KSM’s Measured and Indicated Mineral Resources into mine plans generating Proven and Probable Mineral Reserves of 2.2 billion tonnes grading 0.55 grams per tonne gold, 0.21% copper and 2.6 grams per tonne silver (38.8 million ounces of gold, 10.2 billion pounds of copper and 183 million ounces of silver). The 2016 PFS could not include the higher grade Inferred Mineral Resources delineated at Deep Kerr and the Iron Cap Lower Zone as they cannot be considered as Mineral Reserves which are required for inclusion in a PFS.

The PEA approach to developing the KSM Project emphasizes low cost block cave mining and reducing the number and size of the open pits, which significantly reduces the surface disturbances in the re-designed project. The PEA assesses the potential impacts of incorporating these inferred resources into project design, capital and operating cost estimates and projected economics. The results of the 2016 PFS remain valid and represent a viable option for developing the KSM project, with the PEA assessing an alternative development option at a conceptual level. The 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 PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

It should be noted that Seabridge has had considerable success at KSM upgrading inferred resources to higher categories and the Company therefore believes that the improvements suggested by the PEA could be realized.

Significant changes in the PEA (compared to the PFS) include:

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

By including Deep Kerr, annual average maximum throughput of 130,000 tonnes per day envisioned in the 2016 PFS has been increased to 170,000 tonnes per day in the PEA without significant redesign of facilities. Increased throughput would increase metal production, reducing payback periods and improving estimated projected internal rates of returns and net present values.

In the PEA, estimated Base Case initial capital costs including pre-production mining costs are about 9.7% higher than the 2016 PFS due primarily to increased throughput. Base Case total cost per ounce of gold produced in the PEA is estimated at US$358 compared to US$673 per ounce in the 2016 PFS. The change in Base Case total cost is due to higher by-product credits from significantly higher copper production more than offsetting higher sustaining capital for expanded underground development in the PEA. (see Projected Economics table at end of release for breakdown of copper and silver credits)

As a result of approximately 77% more copper that would be produced over the projected life, Base Case life of mine operating costs in the PEA are estimated at negative US$179 per ounce of gold produced, compared to the positive US$277 per ounce in the 2016 PFS . (see Projected Economics table at end of release for breakdown of copper and silver credits)

The PEA envisages a combined open-pit/underground block caving mining operation that is planned to operate for 51 years. Over the entire 51-year mine life, mineralized material would be fed to a copper and gold extraction mill. The flotation plant would produce a gold/copper/silver concentrate for transport by truck to a nearby sea port at Stewart, B.C. for shipment to Pacific Rim smelters. Metallurgical testing indicates that KSM can produce a clean concentrate with an average copper grade of 25% with a high gold and silver content, making it readily saleable. Separate gold-silver doré would be produced at the KSM processing facility.

Mineral Resources

The PEA is based on the same Mineral Resources estimates that were used in the 2016 PFS. Measured and Indicated Mineral Resources at KSM are estimated at 2.9 billion tonnes grading 0.54 grams per tonne gold, 0.21% copper and 2.7 grams per tonne silver (49.8 million ounces of gold, 13.6 billion pounds of copper and 253 million ounces of silver). An additional 2.7 billion tonnes are estimated in the Inferred Resource category grading 0.35 grams per tonne gold, 0.32% copper and 2.0 grams per tonne silver (30.8 million ounces of gold, 19.2 billion pounds of copper and 178 million ounces of silver).

Mine Design

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

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

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

Mitchell is estimated to have a production ramp-up period of 5 years, steady state production at 21.9 million tonnes per year for 28 years, and then ramp-down production for another 3 years. Iron Cap is estimated to have a production ramp-up period of 3 years, steady state production at 14.6 million tonnes per year for 11 years, and then ramp-down production for another 4 years. Kerr is estimated to have a production ramp-up period of 6 years, steady state production at 25.5 million tonnes per year for 38 years with some variations during years where the operation transitions from first to second lift and second to third lift. Ramp down lasts 4 years. The underground pre-production period is 5 years for Mitchell and Iron Cap and 3 years for Kerr. The first underground mill feed production from Mitchell, Iron Cap and Kerr comes in years 9, 10 and 4, respectively. The mining NSR shut-off is Cdn$20 per tonne for the Mitchell underground mine, Cdn$23 per tonne for the Iron Cap underground mine and Cdn$22 per tonne for Kerr.

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

Mineral Resources in the PEA Mine Plan

Production

The mine production plan starts in lower-cost open pit areas using conventional large scale equipment before transitioning into block cave underground bulk mining later in the mine life. Starter pits have been selected in higher grade areas and cutoff grade strategy optimizes revenues to minimize the payback duration.

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

At Mitchell, a near-surface higher grade gold zone outcrops allowing for gold production in the first seven years that is substantially above the mine life average grade. The mine plan is specifically designed for mining highest gold grade first to facilitate an early capital investment payback. The project’s post-tax payback period is approximately 6.3 years for the Base Case or less than 12% of mine life. A payback period representing less than 20% of mine life is considered highly favorable. Metal production for the first seven years, compared to life of mine average production, is estimated as follows:

Average Annual Metal Production (metal recovered)

Capital Costs

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

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

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

Capital Costs (US$ million)

Operating Costs

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


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

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


Economic Analysis

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

Projected Economic Results (US$)

Note: Operating and total cost per ounce of gold are after copper and silver credits. Total cost per ounce include all start-up capital, sustaining capital and reclamation/closure costs. The post-tax results include the B.C. Mineral Tax and corporate provincial and federal taxes.

The NI 43-101 Technical Report will include sensitivity analyses illustrating the impact on project economics from positive and negative changes to metal prices, capital costs and operating costs.

National Instrument 43-101 Disclosure The 2016 KSM PEA was prepared by Amec Foster Wheeler, 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 principal consultants who contributed to the 2016 PEA, and their Qualified Persons are listed below along with their areas of responsibility:

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

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

    2016 UPDATED PRELIMINARY FEASIBILITY STUDY (PFS)

    An updated PFS was prepared by Tetra Tech with news release on September 19, 2016 and filing of NI 43-101 Technical Report at www.sedar.com on November 7, 2016. Tetra Tech also authored the 2012 PFS.

    The 2016 PFS results released herein do not include material from recent higher-grade discoveries at Deep Kerr and Iron Cap Lower Zone which are expected to have a positive impact on project economics. An analysis of the integration of these deposits into the proposed project design was included as a Preliminary Economic Assessment (“PEA”) forming part of the NI 43-101 Technical Report. Results of this PEA level analysis can be found above.

    As background, in 2012 Seabridge completed a Preliminary Feasibility Study (the “2012 PFS”) that was used as the basis for submitting its application for an Environmental Assessment (“EA”). The KSM Project received its environmental assessment approvals from the provincial and federal governments in July and December 2014, respectively. The approvals were granted after a rigorous joint harmonized federal-provincial Environmental Assessment (EA) and both decisions concluded that the KSM Project would not result in significant adverse effects. Subsequent to the 2012 PFS, Seabridge continued exploration activities at KSM which led to the discovery of the higher-grade Deep Kerr and Lower Iron Cap deposits.

    The 2016 PFS answered a number of important questions about KSM. Projected capital costs fell despite substantial enhancements to meet environmental improvements committed to in the EA process. Gold and copper reserves are up slightly despite lower metal prices. Base Case estimated total cost, at US$673 per ounce of gold produced, remains well below the industry average for operating mines. The Base Case after tax payback period is approximately 6.8 years, a remarkably low 13% of the 53 year mine life and a key benefit to large producers. Overall, the 2016 PFS confirms that KSM is an economic project with an unusually long life in a low risk jurisdiction.”

    The 2016 PFS was started in 2015, using most of the 2012 PFS consulting team members. Notable changes in the 2016 PFS include:

    • Capital and operating costs and metal prices have been updated to the 2016 economic environment. Estimated Base Case initial capital costs including pre-production mining costs are about 12% lower despite major enhancements while estimated Base Case total cost per ounce of gold produced is US$673, up 13% from the 2012 PFS. The increase in the Base Case total cost is due primarily to lower base metal credits from price declines partially offset by a reduction of approximately 9% in per unit life of mine (LOM) operating costs;
    • Improved mine sequencing decreases the early strip ratio while increasing gold grade 4% and copper grade 1% through the payback period;
    • Increased operational flexibility is achieved by switching ore transport between the mine and the process plant from conveying to automated trains allowing a flexible ore delivery rate to the plant while maintaining ore source scheduling functionality. Additional benefits are more efficient movement of people, fuel and other consumables;
    • Designs and costs have been updated to reflect the commitments made in the 2014 approved EA. This includes higher initial capital for water management consisting of provision of increased water retention capacity and capability for increased treatment rate for improved environmental protection, during mining operations and after closure.

    The 2016 PFS envisages a combined open-pit/underground block caving mining operation that is scheduled to operate for 53 years. During the initial 33 years of mine life, the majority of ore would be derived from open pit mines with the tail end of this period supplemented by the initial development of underground block cave mines. Ore delivery to the mill during year 2 to year 35 is designed to be maintained at an average of 130,000 metric tonnes per day (tpd). After depletion of open pits, the mill processing rate would be reduced to 95,000 tpd for 10 additional years before ramping down to just over 60,000 tpd for the remaining few years of stockpile reclaim at the end of the mine life. Over the entire 53-year mine life, ore would be fed to a flotation and gold extraction mill. The flotation plant would produce a gold/copper/silver concentrate for transport by truck to a nearby sea port at Stewart, B.C. for shipment to Pacific Rim smelters. Extensive metallurgical testing confirms that KSM can produce a clean concentrate with an average copper grade of 25% with a high gold and silver content, making it readily saleable. A separate molybdenum concentrate and gold-silver doré would be produced at the KSM processing facility.

    Mineral Resources

    The 2016 PFS includes updated resource estimates that are based US$1,300 per ounce gold, US$3.00 per pound copper, US$20.00 per ounce silver and US$9.70 per pound molybdenum. In addition, the resources are constrained by conceptual open pit shapes for material that could potentially be mined from surface, and conceptual block cave shapes for material that could potentially be mined from underground. The methodology for establishing block cave resources and the material definition of Net Smelter Return ("NSR") have been described in a news release dated March 8, 2016 (see http://seabridgegold.net/News/Article/580/).

    Measured and Indicated Mineral Resources at KSM are estimated at 2.9 billion tonnes grading 0.54 grams per tonne gold, 0.21% copper and 2.7 grams per tonne silver (49.8 million ounces of gold, 13.6 billion pounds of copper and 253 million ounces of silver). An additional 2.7 billion tonnes are estimated in the inferred resource category grading 0.35 grams per tonne gold, 0.32% copper and 2.0 grams per tonne silver (30.8 million ounces of gold and 19.2 billion pounds of copper and 178 million ounces of silver). A detailed breakdown of KSM’s Mineral Resources can be found here.

    Mineral Reserves

    Updated reserves for the project are based on open pit mining and underground block caving for the Mitchell deposit, open pit mining for the Sulphurets and Kerr deposits and underground block caving for the Iron Cap deposit. Approximately 70% of the stated proven and probable reserves would come from open pit operations and 30% from underground block caving. Waste to ore cut-offs were determined using a NSR for each block in the model. NSR is calculated using prices and process recoveries for each metal accounting for all off-site losses, transportation, smelting and refining charges. Metal prices of US$1,200 per ounce gold, US$2.70 per pound copper, US$17.50 per ounce silver and US$9.70 per pound molybdenum were used in the NSR calculations.

    Lerchs-Grossman (“LG”) pit shell optimizations were used to define open pit mine plans in the 2012 PFS and the same limits were confirmed by LG in the PFS. Ultimate open pits have been modified slightly to implement design changes from the EA review and updated geotechnical study. Reserves have been calculated using the updated pit designs and the 2016 resource models. These include mining loss and dilution that varies by pit ranging from 2.2% to 5.3% for loss and 0.8% to 3.9% for dilution. A dynamic cut-off grade strategy has been applied with a minimum NSR of Cdn$9 per tonne.

    The underground block caving mine designs for both Mitchell and Iron Cap are based on modeling using GEOVIA’s Footprint Finder (FF) and PCBC software. The ramp-up and maximum yearly mine production rates were established based on the rate at which the drawpoints are constructed, and the initial and maximum production rates at which individual drawpoints can be mucked. The values chosen for these inputs were based on industry averages adjusted to suit the anticipated conditions. Mitchell is estimated to have a production ramp-up period of 6 years, steady state production at 20 million tonnes per year for 17 years, and then ramp-down production for another 7 years. Iron Cap is estimated to have a production ramp-up period of 4 years, steady state production at 15 million tonnes for 10 years, and then ramp-down production for another 9 years. The underground pre-production period would be 6 years with first underground ore production from Mitchell and Iron Cap in years 23 and 32, respectively. The mining NSR shut-off is Cdn$15.00 per tonne for the Mitchell underground mine and Cdn$16 per tonne for the Iron Cap underground mine. Mitchell reserves include 59 million tonnes of non-mineralized dilution at zero grade (13%) and 7 million tonnes of mineralized dilution (2%). Iron Cap reserves include 20 million tonnes of dilution at zero grade (9%) and 25 million tonnes of mineralized dilution (11%).

    Mineral Reserves for the KSM project are stated as follows:

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

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

    Estimated Proven and Probable Mineral Reserves of 38.8 million ounces of gold and 10.2 billion pounds of copper (2.2 billion tonnes at an average grade of 0.55 grams of gold per tonne and 0.21% copper per tonne) are slightly above 2012 estimates. Proven and Probable Mineral Reserves are derived from a total undiluted Measured plus Indicated Mineral Resource of 49.8 million ounces of gold and 13.6 billion pounds of copper contained in 2.9 billion tonnes at an average grade of 0.54 grams of gold per tonne and 0.21% copper per tonne. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. Most of the Deep Kerr and Lower Iron Cap Mineral Resources are classified as Inferred Mineral Resources and are excluded from the reserves.

    Production

    The mine production plan starts in lower cost open pit areas using conventional large scale equipment before transitioning into block cave underground bulk mining later in the mine life. Starter pits have been selected in higher grade areas and cutoff grade strategy optimizes revenues to minimize the payback duration. Improvements since the 2012 PFS focus on reducing open pit pre-production requirements within the project description approved by permitting authorities.

    At an average of 130,000 tonnes per day, annual throughput for the mill after ramp up during the initial 35 years of mine life is estimated at 47.5 million tonnes. KSM’s mine life is estimated at approximately 53 years. At Mitchell, open pit production is scheduled from inception through year 24, followed by underground block caving production through year 53. Open pit production from Sulphurets will augment Mitchell open pit production from start-up through year 17. Open pit production from Kerr is designed for years 24 through 34. Iron Cap underground block caving production begins in year 32 through year 53, essentially replacing Sulphurets and Kerr production. Final production years are dominated by stockpile reclaim and underground production.

    At Mitchell, a near-surface higher grade gold zone outcrops allowing for gold production in the first seven years that is substantially above the mine life average. The mine plan is specifically designed for mining highest gold grade first to facilitate a quick capital investment payback. The project’s post-tax payback period is approximately 6.8 years for the Base Case or less than 13% of mine life. A payback period representing less than 20% of mine life is considered highly favorable. Metal production for the first seven years, compared to life of mine average production, is estimated as follows:

    Average Annual Metal Production

    Capital Costs

    Initial capital cost (including contingency of US$671 million and preproduction mining costs) is estimated at US$5.0 billion, approximately 12% lower than the initial capital estimate in the 2012 PFS. This results from the 2016 estimate being 14% higher than the 2012 estimate on a Canadian dollar basis through scope additions that are more than offset by the benefit of a lower foreign exchange rate (0.80 US$ to Cdn$ vs 0.96 previously). Major scope changes comprise: (i) initially building the Water Storage Facility ("WSF") to its final crest elevation; (ii) the addition of the Mitchell Valley Diversion Tunnel for diverting contact water under the Rock Storage Facility ("RSF") to the WSF; and (iii) changing the Mitchell-Treaty tunnel ("MTT") ore conveyance to a train system that has the advantages of scalable ore transfer rate, and ability to effectively transport personnel and consumables. Scope modifications that influence costs both positively and negatively include improved water capture design at the inlet to Mitchell Diversion Tunnel east of the Mitchell open pit (-57% tunnel excavation volume), initially building the Water Treatment Plant rate to 5.4 m3/s (4.3 m3/s in the 2012 PFS), replacement of the Mitchell coarse ore stockpile with underground ore bins above the MTT, improved process plant layout reducing footprint costs and modifications to small tunnels at the WSF and Tailings Management Facility. In addition to scope changes, notable cost changes include a 12% lower fully burdened hourly cost for all construction staff.

    Sustaining capital over the 53 year mine life is estimated at US$5.5 billion and is dominated by capitalizing the underground mine expansions midway through the mine life for the Mitchell and Iron Cap block caves. Notable additions to sustaining capital are a water treatment plant for removing selenium, a collection system in the RSF for capturing a specific portion of the RSF seepage to direct to the selenium treatment plant and our contribution to the Northwest Transmission Line overrun (Tariff Supplement 37). In addition to sustaining capital, a further US$688 million has been charged against the project including US$528 million set aside in a sinking fund during the production period to pay for estimated water treatment obligations which continue after closure and US$160 million for physical reclamation after mining operations have ceased.

    Initial capital and sustaining capital estimates are summarized as follows:

    Capital Costs (US$ million)

    Operating Costs

    Average mine, process and G&A operating costs over the project’s life (including waste mining and on-site power credits, excluding off-site shipping and smelting costs) are estimated at US$12.36 per tonne milled (before base metal credits). Estimated unit operating costs decreased 9% from the 2012 PFS primarily due to foreign exchange differences. A breakdown of estimated unit operating costs is as follows:

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

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

    Economic Analysis

    A Base Case economic evaluation was undertaken incorporating historical three-year trailing averages for metal prices as of July 31, 2016. 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. Two alternate cases were constructed: (i) a Recent Spot Case incorporating recent spot prices for gold, copper, silver and the US$/Cdn$ exchange rate; and (ii) an Alternate Case that incorporates higher metal prices to demonstrate the project’s sensitivity to rising prices. The pre-tax and post-tax estimated economic results in U.S. dollars for all three cases are as follows:

    Projected Economic Results (US$)

    Note: Operating and total cost per ounce of gold are after copper, silver and molybdenum credits. Total cost per ounce includes all start-up capital, sustaining capital and reclamation/closure costs. The post-tax results include the B.C. Mineral Tax and provincial and federal corporate taxes

    The NI 43-101 Technical Report will include sensitivity analyses illustrating the impact on project economics from positive and negative changes to metal prices, capital costs and operating costs.

    National Instrument 43-101 Disclosure

    The updated KSM PFS 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 principal consultants who contributed to the 2016 PFS, and their Qualified Persons are listed below along with their areas of responsibility:

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

    KSM Undiluted Mineral Resources as of May 31, 2016

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

    2012 UPDATED PRELIMINARY FEASIBILITY STUDY

    An updated PFS was prepared by Tetra Tech Wardrop ("Tetra Tech") and released on May 14, 2012. The PFS Executive Summary can be found here.

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