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Seabridge Gold Inc.

Seabridge Gold Inc. is designed to provide its shareholders with exceptional leverage to a rising gold price. From 1999 through 2002, Seabridge acquired nine North American projects with substantial gold resources, including Courageous Lake and KSM. Subsequent exploration by Seabridge has significantly expanded its acquired gold resource base. Seabridge’s aim is to create value for its shareholders by growing reserves and resources faster than shares outstanding. Project acquisitions, exploration and engineering programs are carefully designed and monitored to ensure that equity dilution required to fund these activities is more than offset by additional reserves and resources.

 

H2/19 Explorer Preview – Looking for Winners in the Upcoming Drill Season

Introducing our inaugural Exploration Preview, which focuses on names within our coverage universe with drill bit torque. We review the exploration potential and try and quantify the potential impact on the share price should the company be successful in delivering results. We believe that exceptional drill results can create value regardless of where we are in the commodity cycle. Our top ideas are highlighted in Figure 1 below and will be presented in a similar alphabetical order within this document, bifurcated for precious and base metals focus.

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Precious Metals – Looking for Leverage to the Gold Price Rally

Gold is on the move, looking for the companies we expect to be the big winners. Recent events have been very constructive for the gold price and point to it having the potential to move higher in the near-term. Taking this into account we have evaluated the leverage our current coverage universe has to the gold price (Figure 1). The companies with the highest leverage to gold in our coverage universe are: Gran Colombia Gold (TSX:GCM, FV est. C$6.00), De Grey (ASX:DEG, FV est. A$0.35) and Lion One (TSX:LIO, FV est. C$1.35). We note that while Seabridge (TSX:SEA, FV est. C$29.00) does not have the highest financial leverage to the gold price, it could be a go-to name because of its higher market cap and better liquidity. As well, while we do not have a NAVPS estimate on, Minera Alamos (TSXV:MAI) and RNC Minerals (TSX:RNX, FV est. C$1.00) both should also react favourably to a rising gold price.

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Seabridge Gold Inc. (TSX:SEA, NYSE:SA) – One Step Closer to Production at KSM

Impact: Mildly Positive

Seabridge has announced that it has reached an agreement with the Tahltan Nation on the terms of an Impact Benefit Agreement (IBA) in connection with Seabridge’s KSM project in British Columbia’s Golden Triangle. We view this as an important milestone in de-risking the KSM project by securing its social license to operate in the region. We continue to believe that Seabridge’s KSM project is one of the few, large scale Au-Cu projects that majors are chasing and we expect Seabridge to deliver a JV for the project in the near-term.

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Seabridge Gold Inc. (TSX:SEA, NYSE:SA) – Goldstorm Adds to Snowstorm’s Potential

Impact: Neutral

Seabridge has announced a definitive agreement to acquire the Goldstorm project in northern Nevada, adjacent to its Snowstorm project, where the Company has been adding land ahead of summer drilling. This fits Seabridge’s strategy of acquiring assets cheaply with a view to create value by discovering a tier one asset and/or potentially monetize in the future for a gain on behalf of shareholders. We continue to believe that Seabridge’s KSM project is one of the few, large scale Au-Cu projects that majors are chasing and we expect Seabridge to deliver a JV to be completed in the near-term.

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Seabridge Gold Inc. (TSX:SEA; NYSE:SA) – CRA Creates Buying Opportunity

Impact: Neutral

We believe that recent share price underperformance (down 18%, GDXJ down 4%), driven by the disclosure of a Canada Revenue Agency (CRA) proposals recently regarding prior flow through expenditure has created a buying opportunity in Seabridge. The underperformance implies as impact of C$157M, while the maximum liability only appears to be C$14M. This news does not impact our view, that Seabridge is one of the few, large scale Au-Cu projects that majors are chasing and we expect Seabridge to deliver a JV to fund project construction in the nearterm.

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Seabridge Gold Inc. (TSX:SEA, NYSE:SA) – Iron Cap Continues to Grow

Impact: Mildly Positive

Seabridge has announced an upgraded resource at Iron Cap, one of its four large Au-Cu porphyry deposits that make up the KSM project in BC. As a result, the slight increase higher-grade resources have positively impacted our estimates. As Seabridge continues to improve the size and quality of its resources, this news continues to highlight the company’s undervalued potential as it seeks a suitable JV partner.

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Seabridge Gold Inc. (TSX:SEA; NYSE:SA) – JV is Coming

We are publishing our initial estimates on Seabridge Gold (TSX:SEA) and believe the stock is worth C$29.00/sh based on 0.70x our NAVPS estimate of C$41.44/sh. In our view, Seabridge with its world-class KSM project is a significantly undervalued gold-copper developer that is poised for a re-rating, which we expect to be driven by a JV announcement this year in an improving gold market.

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Seabridge Gold Inc. (TSX:SEA, NYSE:SA) – Is Iskut a Fifth Deposit at KSM?

Impact: Mildly Positive

Seabridge’s summer drill program at it’s Iskut Property has identified another porphyry target close to surface. Iskut is only 30 km east of Seabridge’s KSM Project which hosts four porphyry deposits with P&P Reserves of 39Moz of gold + 10Blbs of copper. These latest results support our view that Seabridge is positioning itself as a gold-copper developer to watch in a premier jurisdiction – we believe majors are taking notice.

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