Annual Report

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# Annual Report

Source: https://cdn.prod.website-files.com/5f8f6760f825687e7c1c6508/6080bbceca5ee726775956c1_Searbridge_AR2020%20FINAL.pdf
Published: 2021-04-19T00:00:00+00:00
Fetched: 2026-05-12T15:53:58.229+00:00
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# Annual Report
GOLD
AND GREEN
ANNUAL REPORT 2020
Corporate Overview
Seabridge Gold’s resource base of gold, copper and silver is one of the world’s largest. Our principal
projects are located in Canada. Our objective is to grow resource and reserve ownership per share.
Our risk-reducing strategy: acquire North American deposits; expand them through exploration;
move them to reserves through engineering; and sell or joint venture them to established
producers for mine construction and operation.
Contents
CEO's Report to Shareholders 3
Our 2020 Corporate Report Card and Our 2021 Objectives 6
A New Precious Metal Emerges: Copper - Interview with COO 11
Mineral Reserves and Resources 14
Management’s Discussion and Analysis 16
Management’s Responsibility for Financial Statements 27
Report of Independent Registered Public Accounting Firm 28
Consolidated Statements of Financial Position 31
Consolidated Statements of Operations and Comprehensive Loss 32
Consolidated Statements of Changes in Shareholders’ Equity 33
Consolidated Statements of Cash Flows 34
Notes to the Consolidated Financial Statements 35
Corporate Information 54
Cover Photo: Copper leaching naturally from KSM
Forward-Looking Statements
We are making statements and providing information about our expectations
for the future which are considered to be forward-looking information Stock Exchange Trading Symbols
or forward-looking statements under Canadian and United States securities “SEA” on Toronto Stock Exchange
laws. These include statements regarding future plans and the timing of “SA” on New York Stock Exchange
them, the proposed production scenarios in respect of our principal projects,
anticipated exploration results at our projects and our view of the gold and
copper market and financial markets generally. The purpose of these
statements is to help the reader understand management’s current views Annual General Meeting of Shareholders
of our future prospects and is not intended for other purposes. This Thursday, June 24, 2021
information will not necessarily be updated unless required by securities 4:30 p.m. EDT
laws. This information is based on a number of material assumptions, and
is subject to a number of material risks, which are discussed in our Virtual AGM
annual Management's Discussion and Analysis contained in this https://agm.issuerdirect.com/sea
document under the headings “Forward-Looking Statements” and “Risks
and Uncertainties”. We also refer shareholders to the more comprehensive
discussion of forward-looking information in our Annual Information Form
filed on SEDAR at www.sedar.com and our Annual Report on Form 40-F
filed on EDGAR at www.sec.gov/edgar.shtml.
CEO’s Report to Shareholders
In last year’s annual report, we laid out the reasons we Government transfer payments have accounted for
believed another bull market in gold was beginning. Our as much as 31% of personal income in recent months
views on rising gold prices were centered on global debt thanks to stimulus payments reaching nearly 25% of GDP.
levels and a coming recession that would result in central Enormous deficits, funded largely by the Federal Reserve,
banks implementing aggressive monetization. At the have generated huge increases in money supply and have
time, the full impact of COVID-19 on the global economic begun to provoke signs of higher inflation. Interest rates
and financial system was unknown, however, the policies at the long end of the curve have been rising fast and
we expected were implemented by central banks right neither the Treasury nor the economy can handle higher
on cue. rates. The Federal Reserve argues that rising inflation and
yields will be transitory but we think we are headed back
The price of gold began 2020 at approximately US$1,514 to the 70s and a powerful move higher in gold.
per ounce and by early August was trading above
US$2,000 for the first time in history. At the time, many For the past two decades, Seabridge has focused on
market players were forecasting even higher gold prices building the industry’s best leverage to the gold price
but by year end gold had settled back to US$1,887 per by growing ounces in the ground faster than our shares
ounce and many forecasters had turned bearish. We outstanding. No other gold company comes close to
think the arguments we made last year on why gold will Seabridge in terms of gold reserves or gold resources
go higher remain valid. Furthermore, monetary policy has per common share outstanding. As shown in the chart
entered a new and more dangerous phase. below, from 2003 to 2020, Seabridge’s gold resources have
grown by 915% during a period when shares outstanding
increased by only 167%.
SEABRIDGE GOLD 3 ANNUAL REPORT 2020
Our gold-focused strategy has resulted in Seabridge’s common shares
significantly outperforming gold and other gold equities over the past 20
years. Last year was no different. In 2020, Seabridge’s share price increased by
approximately 53%, outperforming the GDX (+23%), the GDXJ (+28%) and the gold
price (+25%) over the same time period.
The acquisition of the Snowfield Property in December, made 2020 one of our
best years ever for offsetting equity dilution with accretion in gold resources.
Snowfield is located in the same valley that hosts KSM’s Mitchell and Iron Cap
deposits. To pay the US$100 million acquisition price, Seabridge arranged a
bought-deal equity financing consisting of 6.1 million shares. In return, Snowfield
delivered 25.9 million ounces of gold in the measured and indicated category
and a further 9.0 million ounces in the inferred category as well as substantial
copper resources. To put it another way, Seabridge was able to purchase
Snowfield’s in-the-ground gold resources for approximately US$3 per ounce.
IRON CAP
MITCHELL
SNOWFIELD
SULPHURETS
NSR$/ T
> 75
50 - 75
25 - 50
16 - 25
KERR
K SM PRO JE C T
E O Y 2019 N S R
B L O C K M O D E L S IN
P L A N V IE W
Work is already underway to integrate Snowfield into a new KSM mine
plan. We believe a large portion of the Snowfield mineral resource could be
exploited, potentially improving KSM’s internal rate of return and net present
value projections as well as shortening the payback period of initial capital.
This coming season, we plan to collect the additional data that is necessary to
complete a new Preliminary Feasibility Study ("PFS") for KSM which includes
Snowfield. We believe this new PFS will increase project reserves and improve
capital efficiency by extending the life of open pit mining, thereby allowing us
to delay the capital-intensive development of underground block-cave mining
until later in the project life. The expected improvements to KSM as a result of the
acquisition of Snowfield are already generating new interest with potential joint
venture partners.
SEABRIDGE GOLD 4 ANNUAL REPORT 2020
However, Seabridge is not just about gold. In addition deposits. Not only is KSM the world’s largest undeveloped
to our extensive gold reserves and resources, Seabridge gold project, but it also ranks as one of the world’s largest
has also amassed, at KSM, one of the world’s largest undeveloped copper projects. As the charts below
inventories of copper. Since completion of the 2016 show, Seabridge provides far more copper reserves and
PFS, copper resources at KSM have grown by over 33 resources per share than most of the world’s largest
billion pounds with most of this growth coming from operating copper/gold producers.
exploration success at the Deep Kerr and Iron Cap
Source: company data. Data as of March 31, 2021
Note: companies shown include North America's largest copper companies and selected copper project development companies
Last year’s annual report theme was “Enhancing KSM”. We are very enthusiastic about Seabridge’s positioning
At the time we had just completed a new review of KSM right now. We believe that current market conditions
that included an alternative mine plan capturing some of provide the economic incentives for a major mining
the higher grade copper resources added since 2016. The company to meet our terms for a joint venture at KSM. In
results were extremely positive for the project. the meantime, we believe our shareholders will benefit
from our significant exposure to copper in a world that
The theme for this year’s annual report is “Gold and increasingly needs more of it as well as our industry-
Green”. The world’s new “green revolution” is predicated leading leverage to gold.
on reducing the use of fossil fuels and their related
emissions and increasing new green energy use. Copper, On Behalf of the Board of Directors,
also known as the green metal, will play an important
part in this transition. To tell the story on why copper
demand is expected to grow in the coming years, and
how KSM could play a role in the new green initiative, we
have included an interview with our President and Chief
Operating Officer, Jay Layman. I hope you enjoy it.
As in years past, the following section provides a self- Rudi P. Fronk
graded report card on how we did against the corporate Chairman and Chief Executive Officer
objectives set for the past year, as well as the new April 19, 2021
objectives set for the current year.
SEABRIDGE GOLD 5 ANNUAL REPORT 2020
Our 2020 Corporate Report Card
and Our 2021 Objectives
Reporting on Last Year
We begin each year with a set of clear objectives focused While we work towards a joint venture deal that meets
on enhancing shareholder value. At year end, our Board our objectives, we will continue to improve the quality of
of Directors evaluates how we performed against these the project by integrating the Snowfield Property into the
objectives. Last year’s annual report set out seven greater KSM Project in a new PFS which we believe will
objectives, six of which were achieved. Here is a recap: further enhance the project’s already robust economics.
We have stated many times that we only get to do this
OBJECTIVE #1: Complete a joint venture agreement once and, in our view, joint venture terms are far more
on the KSM Project with a suitable partner on terms important than timing. Our goal in a joint venture is to
advantageous to Seabridge. maintain a meaningful interest in KSM while minimizing
our capital contributions. We believe that our patience will
In early 2020, joint venture discussions were taking place be rewarded.
with a number of interested parties, with an expectation
that a joint venture proposal from a “syndicate” would As of now, this objective has not been met.
be delivered early in the second quarter. Unfortunately,
shortly after the onslaught of the COVID-19 pandemic in
March, we were informed by the interested parties that OBJECTIVE #2: Continue to strengthen our social license
their plans needed to be put on hold. by responding effectively to the needs and concerns of
Treaty and First Nations and local communities.
Improving copper and gold prices along with the
acquisition of Snowfield have made KSM an even Despite the limitations imposed by COVID-19, we were
more attractive project. Parties with which we have able to continue advancing our social license. Our focus
had discussions in the past, as well as new parties, are was local engagement to respond to local needs.
reviewing information on the Snowfield/KSM opportunity
and we anticipate joint venture negotiations arising from
these reviews.
SEABRIDGE GOLD 6 ANNUAL REPORT 2020
KSM • We completed a Yk Dene Traditional Use Study for the
• This year’s educational funding supported 68 Courageous Lake Area.
students in NW BC, from Smithers, Terrace,
Telkwa, Witset, Stewart, Dease Lake and Prince • Seabridge completed and released its 2019 Wildlife

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