TOTHE SHORT FORM BASE SHELF PROSPECTUS DATED APRIL 29, 2019
|New Issue||October 11, 2019|
Filedpursuant to General Instruction II.L of Form F-10
File No. 333-229373
(ToProspectus dated April 29, 2019)
Up to US$40,000,000
Thisprospectus supplement (the “Prospectus Supplement”) of Seabridge Gold Inc. (“Seabridge” orthe “Company”), together with the accompanying short form base shelf prospectus dated April 29, 2019 (the“Prospectus”), qualifies the distribution (the “Offering”) of common shares (each, an “OfferedShare”) of the Company, having an aggregate offering price of up to US$40,000,000 (or C$53,176,000, based on the exchangerate on October 10, 2019 reported by the Bank of Canada). The Company has entered into a Controlled Equity OfferingSMSales Agreement dated October 11, 2019 (the “Sales Agreement”) with Cantor Fitzgerald & Co (the “LeadAgent”) and B. Riley FBR, Inc. (together with the Lead Agent, the “Agents”) in respect of the Offering,pursuant to which the Company may distribute Offered Shares from time to time through the Agents, as agent for the distributionof the Offered Shares, in accordance with the terms of the Sales Agreement. The Offering is being made in the United States underthe terms of a registration statement on Form F-10 (SEC File No. 333-229373) (the “Registration Statement”)filed and effective with the United States Securities and Exchange Commission (the “SEC”). See “Planof Distribution”.
Theoutstanding common shares of the Company (“Common Shares”) are listed for trading on the Toronto Stock Exchange(the “TSX”) under the symbol “SEA” and on the New York Stock Exchange (the “NYSE”)under the symbol “SA”. On October 10, 2019, the last day before the filing of this Prospectus Supplement, the closingtrading price of the Common Shares on the TSX was C$17.20 per Common Share and the closing trading price of the Common Shareson the NYSE was US$12.95 per Common Share. The Company has applied to the TSX for the listing of the Offered Shares offered hereunderand such listing is subject to the approval of the TSX in accordance with its applicable listing requirements. NYSE approval isnot required for the listing of the Offered Shares offered hereunder.
Salesof Offered Shares, if any, under this Prospectus Supplement and the accompanying Prospectus are anticipated to be made in transactionsthat are deemed to be “at-the-market distributions” as defined in National Instrument 44-102 - Shelf Distributions(“NI 44-102”), including sales made directly on the NYSE or on any other recognized marketplace outside ofCanada upon which the Common Shares are listed, quoted or traded in the United States. No Offered Shares will be offered or soldin Canada on the TSX or other trading markets in Canada. The Offered Shares will be distributed at market prices prevailing atthe time of the sale. As a result, prices may vary as between purchasers and during the period of any distribution. There isno minimum amount of funds that must be raised under the Offering. This means that the Company may terminate the Offering afterraising only a small portion of the offering amount set out above, or none at all. See “Plan of Distribution”.
TheCompany will pay the Agents compensation, or allow a discount, for its services in acting as agents in connection with the saleof Offered Shares pursuant to the terms of the Sales Agreement an amount equal to 2.0% of the gross sales price per Offered Sharesold.
Assales agents, the Agents will not engage in any transactions to stabilize the price of the Common Shares. No underwriter or dealerinvolved in the Offering, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concertwith such an underwriter or dealer has over-allotted, or will over-allot, Common Shares in connection with the Offering or effected,or will effect, any other transactions that are intended to stabilize or maintain the market price of the Common Shares in connectionwith the Offering. See “Plan of Distribution”.
TheAgents are not registered as investment dealers in any Canadian jurisdiction and accordingly, the Agents will only sell the OfferedShares in the United States and will not, directly or indirectly, solicit offers to purchase or sell the Offered Shares in Canada.
Thepurchase and ownership of Offered Shares is subject to certain risks that should be considered carefully by prospective purchasers.Please see “Risk Factors” in this Prospectus Supplement and the accompanying Prospectus and the risk factors in theAIF (as herein defined) and the other documents incorporated herein and therein by reference, for a description of risks involvedin an investment in Offered Shares. This Prospectus Supplement should be read in conjunction with and may not be delivered orutilized without the accompanying short form base shelf Prospectus.
TheOffering is made by a Canadian issuer that is permitted under a multi-jurisdictional disclosure system adopted by the United Statesand Canada to prepare this Prospectus Supplement in accordance with Canadian disclosure requirements. Prospective investors shouldbe aware that such requirements are different from those applicable to issuers in the United States. Financial statements incorporatedherein by reference have been prepared in accordance with International Financial Reporting Standards, as issued by the InternationalAccounting Standards Board, (“IFRS”) and thus may not be comparable to financial statements of United States companies.The Company’s financial statements are subject to Canadian generally accepted auditing standards and auditor independencestandards, in addition to the standards of the Public Company Accounting Oversight Board (United States) and the SEC independencestandards.
Prospectiveinvestors should be aware that the acquisition, holding or disposition of the Offered Shares may have tax consequences. Such consequencesfor investors who are resident in, or citizens of, the United States may not be described fully herein. Prospective investorsshould read the tax discussion contained in this Prospectus Supplement under the heading “Certain United States Federal IncomeTax Considerations” and should consult their own tax advisor with respect to their own particular circumstances.
Theenforcement by investors of civil liabilities under the U.S. federal securities laws may be affected adversely by the fact thatthe Company is incorporated under the laws of Canada, that some or all of its officers, directors and experts named in this ProspectusSupplement and the accompanying Prospectus are residents of a country other than the United States and that a substantial portionof the Company’s assets and the assets of said persons are located outside the United States. Certain of the Company’s directorsreside outside of Canada, being Rudi P. Fronk, A. Frederick Banfield, Richard Kraus, Eliseo Gonzalez-Urien, Melanie Miller andJay Layman. Each of such directors has appointed Seabridge, 400 - 106 Front Street East, Toronto, Ontario, M5A 1E1 as their agentfor service of process. Although they have appointed Seabridge as their agent for service of process in Canada, purchasers areadvised that it might not be possible for investors to enforce judgments obtained in Canada against Messrs. Fronk, Banfield, Kraus,Gonzalez-Urien and Layman and Ms. Miller.
NEITHERTHE SEC NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED HEREBY OR DETERMINED IF THISPROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINALOFFENCE.
TheCompany’s head office is at 106 Front Street East, Suite 400, Toronto, Ontario, Canada, M5A 1E1 and its registered office is at10th Floor, 595 Howe Street, Vancouver, British Columbia, Canada, V6C 2T5.
ThisProspectus Supplement and the accompanying Prospectus dated April 29, 2019 are part of a registration statement that we filedwith the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration process.
ThisProspectus Supplement and the accompanying Prospectus relate to the offer by us of our Offered Shares to certain investors.We provide information to you about this offering of Offered Shares in two separate documents: (1) this Prospectus Supplement,which describes the specific details regarding this offering; and (2) the accompanying Prospectus, which provides general information,some of which may not apply to this Offering. If information in this Prospectus Supplement is inconsistent with the accompanyingProspectus, you should rely on this Prospectus Supplement. However, if any statement in one of these documents is inconsistentwith a statement in another document having a later date—for example, a document incorporated by reference in this ProspectusSupplement or the accompanying Prospectus—the statement in the document having the later date modifies or supersedes theearlier statement as our business, financial condition, results of operations and prospects may have changed since the earlierdates. You should read this Prospectus Supplement, the accompanying Prospectus and the documents and information incorporatedby reference in this Prospectus Supplement and the accompanying Prospectus when making your investment decision. You should alsoread and consider the information in the documents we have referred you to under the headings “Where You Can Find AdditionalInformation” and “Documents Incorporated by Reference.” These documents contain information you should considerwhen making your investment decision.
Youshould rely only on information contained in or incorporated by reference into this Prospectus Supplement and the accompanyingProspectus. We have not, and the Agents have not, authorized anyone to provide you with information that is different. We areoffering to sell and seeking offers to buy our Offered Shares only in jurisdictions where offers and sales are permitted. Theinformation contained in this Prospectus Supplement, the accompanying Prospectus and the documents and information that have beenfiled with the SEC and the securities regulatory authorities in the jurisdictions in Canada in which the Company is a reportingissuer incorporated by reference in this Prospectus Supplement and the accompanying Prospectus are accurate only as of their respectivedates, regardless of the time of delivery of this Prospectus Supplement or of any sale of Offered Shares.
ThisProspectus Supplement does not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offerto buy, any securities offered by this Prospectus Supplement by any person in any jurisdiction in which it is unlawful for suchperson to make such an offer or solicitation.
ThisProspectus Supplement is deemed to be incorporated by reference into the Prospectus solely for the purposes of the Offering. Otherdocuments are also incorporated or deemed to be incorporated by reference into this Prospectus Supplement and into the Prospectus.See “Documents Incorporated by Reference”.
Unlessthe context otherwise requires, references in this Prospectus Supplement and the accompanying Prospectus to “Seabridge”,the “Company”, “we”, “us” and “our” includes Seabridge Gold Inc. and each of its materialsubsidiaries, as the context requires.
Unlessstated otherwise or as the context otherwise requires, all references to dollar amounts in this Prospectus Supplement and theaccompanying Prospectus are references to Canadian dollars. Unless stated otherwise, references to “$” or “C$”are to Canadian dollars and references to “US dollars” or “US$” are to United States dollars. On October 10,2019, the exchange rate as reported by the Bank of Canada for the conversion of one Canadian dollar into United States dollarswas C$1.00 equals US$1.3294.
Thehigh, low, average and closing rates for the United States dollar in terms of Canadian dollars for each of the financial periodsof the Company ended June 30, 2019, December 31, 2018 and December 31, 2017, as quoted by the Bank of Canada, were as follows:
to June 30,
|(expressed in Canadian dollars)|
|Highest rate during period||1.3600||1.3642||1.3743|
|Lowest rate during period||1.3087||1.2288||1.2128|
|Average rate during period||1.3336||1.2957||1.2986|
|Rate at the end of period||1.3087||1.3642||1.2545|
Theaverage exchange rate is calculated using the average of the daily rate on the last business day of each month during the applicablefiscal year or interim period. The Canadian dollar/U.S. dollar exchange rate has varied significantly over the last several yearsand investors are cautioned not to assume that the exchange rates presented here are necessarily indicative of future exchangerates.
Unlessotherwise indicated, all financial information included and incorporated by reference in this Prospectus Supplement and the accompanyingProspectus is determined using IFRS, which differs from United States generally accepted accounting principles and therefore maynot be comparable in all material respects to financial information prepared in accordance with United States generally acceptedaccounting principles.
ThisProspectus Supplement and the accompanying Prospectus, and the documents incorporated by reference herein and therein, containforward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-lookinginformation within the meaning of Canadian securities laws concerning future events or future performance with respect to theCompany’s projects, business approach and plans, including capital, operating and cash flow estimates; business transactions suchas the potential sale or joint venture of the Company’s KSM Project and Courageous Lake Project (each as defined in AIF) and theacquisition of interests in mineral properties; requirements for additional capital; the estimation of mineral resources and reserves;and the timing of completion and success of exploration and development activities, community relations, required regulatory andthird party consents, permitting and related programs in relation to the KSM Project, Courageous Lake Project or Iskut Project.Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectivesor future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”,“believes”, “plans”, “projects”, “estimates”, “intends”, “strategy”,“goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”,“could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative ofany of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements and forward-lookinginformation (collectively referred to in the following information simply as “forward-looking statements”). In addition,statements concerning mineral reserve and mineral resource estimates constitute forward-looking statements to the extent thatthey involve estimates of the mineralization expected to be encountered if a mineral property is developed and the economics ofdeveloping a property and producing minerals.
Forward-lookingstatements are necessarily based on estimates and assumptions made by the Company in light of its experience and perception ofhistorical trends, current conditions and expected future developments. In making the forward-looking statements in this ProspectusSupplement and the accompanying Prospectus, the Company has applied several material assumptions including, but not limited to,the assumption that: (1) market fundamentals will result in sustained demand and prices for gold and copper, and to a much lesserdegree, silver and molybdenum; (2) the potential for production at its mineral projects will continue operationally, legally andeconomically; (3) any additional financing needed will be available on reasonable terms; (4) estimated mineral resources and reservesat the Company’s projects have merit and there is continuity of mineralization as reflected in such estimates; and (5) the Companywill receive all required regulatory approvals required in respect of this Prospectus Supplement.
Forward-lookingstatements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual eventsor results to differ from those expressed or implied by the forward-looking statements, including, without limitation:
|●||the Company’s history of net losses and negative cash flows from operations and expectation of future losses and negative cash flows from operations;|
|●||risks related to the Company’s ability to continue its exploration activities and future development activities, and to continue to maintain corporate office support of these activities, which are dependent on the Company’s ability to enter into joint ventures, to sell property interests or to obtain suitable financing;|
|●||uncertainty of whether the reserves estimated on the Company’s mineral properties will be brought into production;|
|●||uncertainties relating to the assumptions underlying the Company’s reserve and resource estimates;|
|●||uncertainty of estimates of capital costs, operating costs, production and economic returns;|
|●||risks related to commercially producing precious metals from the Company’s mineral properties;|
|●||risks related to fluctuations in the market price of gold, copper and other metals;|
|●||risks related to fluctuations in foreign exchange rates;|
|●||mining, exploration and development risks that could result in damage to mineral properties, plant and equipment, personal injury, environmental damage and delays in exploration or mining, which may be uninsurable or not insurable in adequate amounts;|
|●||risks related to obtaining all necessary permits and governmental approvals for exploration and development activities, including in respect of environmental regulation;|
|●||uncertainty related to title to the Company’s mineral properties and rights of access over or through lands subject to third party rights, interests and mineral tenures;|
|●||risks related to unsettled First Nations rights and title and settled Treaty Nations’ rights;|
|●||risks related to increases in demand for exploration, development and construction services equipment, and related cost increases;|
|●||increased competition in the mining industry;|
|●||the Company’s need to attract and retain qualified management and personnel;|
|●||risks related to possible conflicts of interest due to some of the Company’s directors’ and officers’ involvement with other natural resource companies;|
|●||the Company’s classification as a “passive foreign investment company” under the United States tax code;|
|●||risks associated with the use of information technology systems and cybersecurity; and|
|●||uncertainty surrounding an audit by the Canada Revenue Agency (“CRA”) of Canadian exploration expenses incurred by the Company during the 2014, 2015 and 2016 financial years which the Company has renounced to subscribers of flow-through share offerings and the CRA’s proposal to reduce such renunciations to such subscribers;|
|●||the reassessment by the CRA of the Company’s refund claim for the 2010 and 2011 financial years in respect of the British Columbia Mining Exploration Tax Credit;|
|●||risks related to the dilution of shareholders’ interest;|
|●||the ability for the Company to raise proceeds under the Offering; and|
|●||risks related to the Company’s broad discretion in the use of the net proceeds of the Offering.|
Thislist is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statementsare statements about the future and are inherently uncertain, and actual achievements of the Company or other future events orconditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertaintiesand other factors, including, without limitation, those referred to in this Prospectus Supplement under the heading “RiskFactors”, elsewhere in this Prospectus Supplement and the accompanying Prospectus and in documents incorporated by referenceherein and therein. In addition, although the Company has attempted to identify important factors that could cause actual achievements,events or conditions to differ materially from those identified in the forward-looking statements, there may be other factorsthat cause achievements, events or conditions not to be as anticipated, estimated or intended. Many of the foregoing factors arebeyond the Company’s ability to control or predict. It is also noted that while the Company engages in exploration and developmentof its properties, it will not undertake production activities by itself.
Theseforward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are madeand the Company does not assume any obligation to update forward-looking statements, except as required by applicable securitieslaws, if circumstances or management’s beliefs, expectations or opinions should change. For the reasons set forth above, investorsshould not place undue reliance on forward-looking statements.
Theforward looking statements contained in this Prospectus Supplement and the documents incorporated by reference herein and thereinare qualified by the foregoing cautionary statements.
TheCompany is permitted under a multi-jurisdictional disclosure system adopted by the securities regulatory authorities in Canadaand the United States to prepare this Prospectus Supplement and the accompanying Prospectus, including the documents incorporatedby reference herein and therein, in accordance with the requirements of Canadian securities laws, which differ from the requirementsof U.S. securities laws. National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”)is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makesof scientific and technical information concerning mineral projects. Unless otherwise indicated, all resource estimates containedin or incorporated by reference in this Prospectus Supplement and the accompanying Prospectus have been prepared in accordancewith NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System. These standards differ significantlyfrom the requirements of the SEC, including those set out in SEC Industry Guide 7 under the U.S. Exchange Act (as hereindefined), as interpreted by the staff of the SEC, and resource information contained herein and incorporated by reference hereinmay not be comparable to similar information disclosed by U.S. companies.
Withoutlimiting the foregoing, this Prospectus Supplement and the accompanying Prospectus, including the documents incorporated by referenceherein and therein, uses the terms “measured”, “indicated” and “inferred” resources. U.S. investorsare cautioned that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them.Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made thatthe mineralization could be economically and legally produced or extracted at the time the reserve determination is made. U.S.investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves.
U.S.investors should also understand that “inferred resources” have a great amount of uncertainty as to their existenceand great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of the “inferredresources” exist, are economically or legally mineable or will ever be upgraded to a higher category or resource or reserve.Disclosure of “contained ounces” in a mineral resource is permitted disclosure under Canadian regulations; however,the SEC normally only permits issuers to report “resources” as in place tonnage and grade without reference to unitmeasures. Accordingly, information concerning descriptions of mineralization and resources contained in this Prospectus Supplementor the accompanying Prospectus, or in the documents incorporated by reference, may not be comparable to information made publicby U.S. companies subject to the reporting and disclosure requirements of the SEC.
TheProspectus, and the documents incorporated by reference in the Prospectus, as well as the following documents of the Company,filed with the securities regulatory authorities in the jurisdictions in Canada in which the Company is a reporting issuer andfiled with, or furnished to, the SEC, are specifically incorporated by reference into, and form an integral part of, this ProspectusSupplement:
|a)||the annual information form of the Company dated March 26, 2019 for the year ended December 31, 2018 and filed on SEDAR on March 27, 2019 under National Instrument 51-102;|
|b)||the audited consolidated financial statements of the Company as at and for the years ended December 31, 2018 and 2017, together with the notes thereto and the auditors’ report thereon and related management’s discussion and analysis, filed on SEDAR on March 27, 2019;|
|c)||the unaudited interim condensed consolidated financial statements of the Company as at June 30, 2019 and for the three and six months ended June 30, 2019 and 2018, together with the notes thereto and related management’s discussion and analysis, filed on SEDAR on August 13, 2019;|
|d)||the management information circular dated May 7, 2019 relating to the annual meeting of shareholders of the Company held on June 26, 2019;|
|e)||material change report dated July 23, 2019 in respect of a non-brokered private placement of one million Common Shares at a price of C$17.02 per share for gross proceeds of C$17,020,000 and an option to purchase a further 200,000 Common Shares at the same price; and|
|f)||material change report dated June 10, 2019 in respect of an agreement with the Tahltan Nation in connection with the Company’s KSM Project (as defined in the Prospectus).|
Inaddition, to the extent that any document or information incorporated by reference into this Prospectus Supplement is includedin any report on Form 6-K, Form 40-F, Form 20-F, Form 10-K, Form 10-Q or Form 8-K (or any respective successor form) that is filedwith or furnished to the SEC after the date of this Prospectus Supplement and prior to the date that all Offered Shares offeredhereunder are sold or the Offering is otherwise terminated, such document or information shall be deemed to be incorporated byreference as an exhibit to the registration statement of which this Prospectus Supplement forms a part (in the case of documentsor information deemed furnished on Form 6-K or Form 8-K, only to the extent specifically stated therein).
Areference herein to this Prospectus Supplement also means any and all documents incorporated by reference in this Prospectus Supplement.Any document of the type referred to above, any material change reports (excluding confidential material change reports), anybusiness acquisition reports, the content of any news release disclosing financial information for a period more recent than theperiod for which financial statements are required, and certain other disclosure documents as set forth in Item 11.1 of Form 44-101F1of National Instrument 44-101 - Short Form Prospectus Distributions of the Canadian Securities Administrators filed bythe Company with the securities commissions or similar regulatory authorities in Canada after the date of this Prospectus Supplementand prior to the termination of the distribution shall be deemed to be incorporated by reference in this Prospectus Supplement.
Anystatement contained in this Prospectus Supplement or in the accompanying Prospectus or in a document incorporated or deemed tobe incorporated by reference herein or therein shall be deemed to be modified or superseded by this Prospectus Supplement to theextent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporatedby reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modifiedor superseded a prior statement or include any other information set forth in the document it modifies or supersedes. The makingof a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement,when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact thatis required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it wasmade. Any statement so modified or superseded shall not constitute a part of this Prospectus Supplement or the accompanying Prospectus,except as so modified or superseded.
Copiesof the documents incorporated herein by reference may be obtained on request without charge from the Vice President, General Counseland Corporate Secretary of the Company at 106 Front Street East, Suite 400, Toronto, Ontario, Canada M5A 1E1, Telephone (416)367-9292, and are also available electronically on SEDAR at www.sedar.com and www.sec.gov/edgar.
Thefollowing documents referred to in the accompanying Prospectus or in this Prospectus Supplement have been or will (through post-effectiveamendment or incorporation by reference) be filed with the SEC as part of the U.S. registration statement on Form F-10 (File No.333-229373) of which this Prospectus Supplement and the accompanying Prospectus form a part: (i) the documents referred to underthe heading “Documents Incorporated by Reference” in this Prospectus Supplement and in the accompanying Prospectus;(ii) powers of attorney from certain of the Company’s officers and directors; and (iii) the Sales Agreement.
Investingin the Common Shares is speculative and involves a high degree of risk. The following risk factors, as well as risks currentlyunknown to the Company, could materially adversely affect the Company’s future business, operations and financial conditionand could cause them to differ materially from the estimates described in this Prospectus Supplement, the accompanying Prospectusor the documents incorporated by reference herein or therein, each of which could cause purchasers of Offered Shares to lose partor all of their investment. Before deciding to invest in the Offered Shares, investors should carefully consider the risk factorsset out below, in addition to the other information contained in this Prospectus Supplement, the accompanying Prospectus and thedocuments incorporated by reference herein and therein.
RisksRelating to the Company and its Industry
Inaddition to the other information contained in this Prospectus Supplement, the accompanying Prospectus and the documents incorporatedby reference herein and therein, prospective investors should carefully consider the factors set out under “Risk Factors”in the AIF and the Company’s annual and interim management’s discussion and analysis for the year ended December 31,2018 and the six months ended June 30, 2019 (as well as any future such documents incorporated by reference herein) in evaluatingthe Company and its business before making an investment in the Offered Shares.
Risksrelating to the Offering
Shareholders’interest may be diluted in the future
TheCompany likely requires additional funds for exploration and development programs or potential acquisitions. If it raises additionalfunding by issuing additional equity securities or other securities that are convertible into equity securities, such financingsmay substantially dilute the interests of existing or future shareholders. Sales or issuances of a substantial number of securities,or the perception that such sales could occur, may adversely affect the prevailing market price for the Common Shares. With anyadditional sale or issuance of equity securities, investors will suffer immediate dilution in the net tangible book value of theirshares. Moreover, the issuance of Offered Shares pursuant to this Offering from time to time will dilute the interests of existingor future shareholders.
Thereis No Certainty Regarding the Net Proceeds to the Company
Thereis no certainty that US$40,000,000 will be raised under the Offering. The Agent has agreed to use its commercially reasonableefforts to sell the Offered Shares when and to the extent requested by the Company, but the Company is not required to requestthe sale of the maximum amount offered or any amount and, if the Company requests a sale, the Agent is not obligated to purchaseany Offered Shares that are not sold. As a result of the Offering being made on a commercially reasonable efforts basis with nominimum, and only as requested by the Company, the Company may raise substantially less than the maximum total offering amountor nothing at all.
TheCompany has Broad Discretion in the Use of the Net Proceeds from the Offering and May Use Them in Ways Other than as DescribedHerein
Managementof the Company will have broad discretion with respect to the application of net proceeds received by the Company under the Offering,if any, and may spend such proceeds in ways that do not improve the Company’s results of operations or enhance the value of theCommon Shares or its other securities issued and outstanding from time to time. Any failure by management to apply these fundseffectively could result in financial losses that could have a material adverse effect on the Company’s business or cause theprice of the securities of the Company issued and outstanding from time to time to decline. Because of the number and variabilityof factors that will determine the Company’s use of such proceeds, if any, the Company’s ultimate use might vary substantiallyfrom its planned use. You may not agree with how the Company allocates or spend the proceeds from the Offering, if any.
Risksrelating to the Company
LikelyPFIC status has possible adverse U.S. federal income tax consequences for U.S. investors
TheCompany was likely a “passive foreign investment company” (a “PFIC”) within the meaning of the U.S.Internal Revenue Code in one or more prior tax years, expect to be a PFIC for the current tax year, and may also be a PFIC insubsequent years. A non-U.S. corporation is a PFIC for any tax year in which (i) 75% or more of its gross income is passive income(as defined for U.S. federal income tax purposes) or (ii) on average for such tax year, 50% or more (by value) of its assets eitherproduces or is held for the production of passive income, and thereafter unless certain elections are made.
Ifthe Company is a PFIC for any year during a U.S. taxpayer’s holding period, such taxpayer may be required to treat any gainrecognized upon a sale or disposition of the Common Shares as ordinary income (rather than capital gain), and any resulting U.S.federal income tax may be increased by an interest charge. Rules similar to those applicable to dispositions will generally applyto certain “excess distributions” in respect of the Common Shares. A U.S. taxpayer may generally avoid these unfavorabletax consequences by making a timely and effective “qualified electing fund” (“QEF”) election or “mark-to-market”election with respect to the Common Shares. A U.S. taxpayer who makes a timely and effective QEF election must generally reporton a current basis its share of the Company’s net capital gain and ordinary earnings for any year in which the Company isa PFIC, whether or not the Company makes any distributions to shareholders in such year. A U.S. taxpayer who makes a timely andeffective mark-to-market election must, in general, include as ordinary income, in each year in which the Company is a PFIC, theexcess of the fair market value of the Common Shares over the taxpayer’s adjusted cost basis in such shares. Each U.S. investorshould consult its own tax advisor regarding the PFIC rules and the U.S. federal income tax consequences of the acquisition, ownershipand disposition of the Common Shares.
Thisrisk factor is qualified in its entirety by the discussion provided below under the heading, “Certain United States FederalIncome Tax Considerations.”
Sincethe date of the unaudited condensed interim consolidated financial statements of the Company for the three and six months endedJune 30, 2019 which are incorporated by reference in this Prospectus Supplement, there have been no material changes to the shareand loan capital of the Company on a consolidated basis, except for the issuance of securities set forth under “Prior Sales”.
Assumingthe entire Offering is sold, total equity capitalization will increase by approximately US$39,010,000, being the aggregate proceedsof US$40,000,000, less commissions of US$800,000 and estimated total offering expenses of US$190,000. The number of Offered Sharesissued will depend upon the at-the-market prices at which they are sold.
Thenet proceeds from the Offering are not determinable in light of the nature of the distribution. The net proceeds of any givendistribution of Offered Shares through the Agent in an “at-the-market distribution” will be the gross proceeds afterdeducting the applicable compensation payable to the Agent under the Sales Agreement and the expenses of the distribution.
TheCompany expects to use the net proceeds from the Offering, to advance the exploration and development of the Company’s projectsand for general working capital but may also use net proceeds to fund all or a portion of the price of an acquisition. None ofthe proceeds have been allocated to a specific capital expenditure or future acquisition. The Company reserves the right, forsound business reasons and at the sole discretion of the Company’s management, to reallocate the proceeds of this offeringin response to developments in the Company’s business and other factors.
TheCompany is primarily focused on advancing the KSM Project as it seeks a major mining company as a joint venture partner at, orpurchaser of, the KSM Project. The Company sets forth its business objectives for the ensuing year and reports on its successin achieving its business objectives from the previous year in its annual report to shareholders. For 2019, the Company’sbusiness objectives include:
|●||complete a joint venture agreement on the KSM Project with a suitable partner on terms advantageous to Seabridge|
|●||continue to strengthen our social license by responding effectively to the needs and concerns of Treaty and First Nations and local communities|
|●||execute an initial drill test at the Snowstorm Project targeting a Getchell/Twin Creeks style deposit|
|●||evaluate the potential for blind new porphyry targets at KSM that would enhance the “blue sky” value of the project|
|●||confirm a potential porphyry deposit below the Quartz Rise lithocap at the Iskut Project and define drill targets|
|●||continue the reclamation and closure of the Johnny Mountain mine in cooperation with the Tahltan Nation and B.C. regulators|
|●||evaluate the potential of incorporating the Iron Cap deposit earlier in the KSM mine plan to further improve project economics|
|●||determine if there is a more robust project at Courageous Lake than the one envisaged in the 2012 PFS|
|●||increase gold ownership per common share by way of accretive resource additions from acquisitions and/or continued exploration at the Company’s projects.|
TheCompany has entered into the Sales Agreement with the Agents under which it may issue and sell from time to time Offered Sharesthrough the Agents having an aggregate sales amount of up to US$40,000,000 (or C$53,176,000, based on the exchange rate on October10, 2019 reported by the Bank of Canada). Sales of Offered Shares, if any, will be made in transactions that are deemed to be“at-the-market distributions” as defined in NI 44-102, including sales made directly on the NYSE or other existingtrading markets for the Common Shares in the United States. No Offered Shares will be offered or sold in Canada through the TSXor any other trading market in Canada.
TheAgents will offer the Offered Shares subject to the terms and conditions of the Sales Agreement on a daily basis or as otherwiseagreed upon by the Company and the Agents. The Company will designate the maximum amount of Offered Shares to be sold pursuantto any single placement instruction to the Agents.
Subjectto the terms and conditions of the Sales Agreement, the Agents will use its commercially reasonable efforts to sell on the Company’sbehalf, all of the Offered Shares requested to be sold by the Company. The Company may instruct the Agents not to sell the OfferedShares if the sales cannot be effected at or above the price designated by the Company in any such instruction.
Eitherthe Company or the Agents may suspend the Offering of the Offered Shares being made through the Agents under the Sales Agreementupon proper notice to the other party. The Company and the Agents each have the right, by giving written notice as specified inthe Sales Agreement, to terminate the Sales Agreement in each party’s sole discretion at any time.
TheCompany will pay the Agents compensation, or allow a discount, for its services in acting as agents or in the sale of the OfferedShares pursuant to the terms of the Sales Agreement an amount equal to 2.0% of the gross sales price per Offered Share sold. TheCompany has also agreed to reimburse the Agents for certain specified expenses, including the fees and disbursements of its legalcounsel, in an amount not to exceed US$50,000. The remaining sales proceeds, after deducting any expenses payable by the Companyand any transaction, listing or filing fees imposed by any governmental, regulatory or self-regulatory organization in connectionwith the sales, will equal the net proceeds to the Company for the sale of such Offered Shares.
TheAgents will provide written confirmation to the Company following the close of trading on the NYSE on each day in which OfferedShares are sold through them as agent under the Sales Agreement. Each confirmation will include the number of Offered Shares soldon that day, the volume-weighted average price of the Offered Shares sold on the NYSE, and net proceeds to the Company.
Settlementfor the sales of the Offered Shares will occur, unless the parties agree otherwise, on the second trading day following the dateon which any sales were made in return for payment of the net proceeds to the Company. There is no agreement for funds to be receivedin an escrow, trust or similar arrangement. Sales of Offered Shares as contemplated in this Prospectus Supplement will be settledthrough the facilities of The Depository Trust Company in the United States, or by such other means as the Company and the Agentsmay agree upon.
CantorFitzgerald & Co and B. Riley FBR, Inc. are not registered as investment dealers in any Canadian jurisdiction and, accordingly,will only sell the Offered Shares in the United States, and will not, directly or indirectly, solicit offers to purchase or sellthe Offered Shares in Canada. Subject to applicable laws, the Agents may offer the Offered Shares outside of Canada and the UnitedStates.
Inconnection with the sales of the Offered Shares on the Company’s behalf, each of the Agents will be deemed to be an “underwriter”within the meaning of the U.S. Securities Act, and the compensation paid to the Agents will be deemed to be underwriting commissionsor discounts. The Company has agreed in the Sales Agreement to provide indemnification and contribution to the Agent against certainliabilities, including liabilities under the U.S. Securities Act. In addition, the Company has agreed, under certain circumstances,to reimburse the reasonable fees and disbursements of the Agent’s’ legal counsel and the Agent’s other advisorsin connection with this Offering. The expenses of the Offering, excluding commissions payable to the Agents under the Sales Agreement,are estimated to be approximately US$190,000.
TheAgents will not engage in any transactions that stabilize the price of the Common Shares. No underwriter or dealer involved inthe distribution, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with suchan underwriter or dealer has over-allotted, or will over allot, securities in connection with the distribution or has effected,or will effect, any other transactions that are intended to stabilize or maintain the market price of the Common Shares.
TheOffering pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. TheCompany and the Agents may each terminate the Sales Agreement at any time upon ten days’ prior notice or by either Agentat any time in certain circumstances, including the occurrence of a material and adverse change in the Company’s businessor financial condition that makes it impractical or inadvisable to market the Company’s common shares or to enforce contractsfor the sale of the Company’s common shares.
ThisProspectus Supplement and the Prospectus may be made available in electronic format on the websites maintained by the Agents ortheir U.S. affiliates participating in the Offering. Other than the Prospectus Supplement and Prospectus in electronic format,the information on these websites is not part of this Prospectus Supplement or the Registration Statement of which this ProspectusSupplement forms a part, has not been approved or endorsed by the Company or the Agents in their capacity as agents, and shouldnot be relied upon by investors.
Certainof the Agents and its affiliates have provided in the past to the Company and its affiliates, and may provide from time to timein the future, various investment banking, commercial banking, financial advisory and other financial services for the Companyand its affiliates, for which services they have received, and may continue to receive in the future, customary fees and commissions.To the extent required by Regulation M, the Agents will not engage in any market making activities involving the Common Shares,while the Offering is ongoing under this Prospectus Supplement. However, from time to time, the Agents and its U.S. affiliatesmay have effected transactions for their own account or the account of customers, and hold on behalf of themselves or their customers,long or short positions in the Company’s equity securities, and may do so in the future.
TheCompany has applied to the TSX to conditionally approve the listing of the Offered Shares offered by this Prospectus Supplement.Listing is subject to us fulfilling all of the requirements of the TSX, which cannot be assured. NYSE approval is not requiredfor the listing of the Offered Shares offered hereunder.
TheCompany is authorized to issue an unlimited number of Common Shares without par value and an unlimited number of preferred shares,issuable in series, of which at October 10, 2019, 63,279,403 Common Shares were issued and outstanding and no preferred shareswere issued and outstanding.
Theholders of the Common Shares are entitled to receive notice of and to attend all meetings of the shareholders of the Company andeach Common Share confers the right to one vote in person or by proxy at all meetings of the shareholders of the Company. Theholders of the Common Shares, subject to the prior rights, if any, of the holders of any other class of shares of the Company,are entitled to receive such dividends in any financial year as the board of directors of the Company may by resolution determine.In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of theCommon Shares are entitled to receive, subject to the prior rights, if any, of the holders of any other class of shares of theCompany, the remaining property and assets of the Company.
Thedirectors of the Company are authorized to create series of preferred shares in such number and having such rights and restrictionswith respect to dividends, rights of redemption, conversion or repurchase and voting rights as may be determined by the directorsand shall have priority over the Common Shares to the property and assets of the Company in the event of liquidation, dissolutionor winding-up of the Company.
Duringthe 12-month period before the date of this Prospectus Supplement, the Company issued the following Common Shares:
|DATE OF ISSUANCE||SECURITY||PRICE PER|
|October 11, 2018||Common Shares(3)||6.30||1,066|
|October 11, 2018||Common Shares(3)||10.45||1,667|
|October 11, 2018||Common Shares(3)||12.91||40,000|
|October 12, 2018||Common Shares(3)||6.30||1,349|
|October 12, 2018||Common Shares(3)||12.91||59,800|
|October 15, 2018||Common Shares(3)||11.13||25,000|
|October 16, 2018||Common Shares(3)||10.45||1,667|
|October 17, 2018||Common Shares(3)||6.30||1,190|
|November 15, 2018||Common Shares(3)||10.45||3,334|
|November 26, 2018||Common Shares(2)||14.00||1,000,000|
|December 3, 2018||Common Shares(4)||10.45||62,750|
|December 11, 2018||Common Shares(3)||8.00||50,000|
|December 14, 2018||Common Shares(2)||14.00||250,000|
|December 20, 2018||Common Shares(3)||10.36||50,000|
|December 28, 2018||Common Shares(2)||20.50||250,000|
|January 04, 2019||Common Shares(3)||10.36||250,000|
|January 15, 2019||Common Shares(1)||17.30||100,000|
|January 25, 2019||Common Shares(3)||6.30||317|
|January 30, 2019||Common Shares(3)||6.30||2,856|
|February 1, 2019||Common Shares(3)||10.45||6,667|
|February 19, 2019||Common Shares(3)||10.45||1,667|
|February 19, 2019||Common Shares(3)||11.13||143|
|February 20, 2019||Common Shares(3)||10.45||1,667|
|February 22, 2019||Common Shares(3)||6.30||714|
|February 22, 2019||Common Shares(3)||11.13||34,857|
|February 25, 2019||Common Shares(3)||11.13||20,000|
|March 20, 2019||Common Shares(3)||6.30||1,587|
|April 02, 2019||Common Shares(4)||15.46||68,000|
|April 05, 2019||Common Shares(3)||10.36||50,000|
|April 10, 2019||Common Shares(3)||10.36||50,000|
|May 22, 2019||Common Shares(3)||9.72||25,000|
|June 13, 2019||Common Shares(3)||9.72||25,000|
|June 18, 2019||Common Shares(3)||11.13||10,000|
|June 27, 2019||Common Shares(3)||6.30||500|
|July 19, 2019||Common Shares(5)||18.63||50,000|
|August 02, 2019||Common Shares(2)||17.02||1,000,000|
|August 23, 2019||Common Shares(3)||6.30||2,857|
|August 23, 2019||Common Shares(3)||13.14||3,333|
|August 28, 2019||Common Shares(2)||17.02||200,000|
|August 29, 2019||Common Shares(1)||21.11||25,000|
|August 30, 2019||Common Shares(3)||13.14||1,666|
|September 03, 2019||Common Shares(3)||11.13||15,000|
|September 06, 2019||Common Shares(2)||24.64||100,000|
|(1)||Common Shares issued pursuant to an acquisition involving the Company.|
|(2)||Common Shares issued under a private placement completed by the Company.|
|(3)||Common Shares issued pursuant to the Company’s Stock Option Plan|
|(4)||Common Shares issued pursuant to the Company’s Restricted Share Unit Plan|
|(5)||Common Shares issued pursuant to Impact Benefit Agreement|
Duringthe 12-month period before the date of this Prospectus Supplement, the Company issued the following stock options, which are convertibleinto Common Shares but are not listed or quoted on a marketplace:
|DATE OF ISSUANCE||SECURITY||EXERCISE PRICE PER|
|October 11, 2018||Stock Options||C$||16.94||50,000|
|December 12, 2018||Stock Options||C$||15.46||568,000|
|June 26, 2019||Stock Options||C$||17.72||50,000|
Asof the date hereof, there are options outstanding to purchase 3,003,150 common shares of the Company at exercise prices rangingfrom C$6.30 to C$17.72 with expiry dates ranging from June 23, 2020 to June 26, 2024.
RestrictedShare Units (“RSUs”)
Duringthe 12-month period before the date of this Prospectus Supplement, the Company issued the following RSUs, which are convertibleinto Common Shares but are not listed or quoted on a marketplace:
|DATE OF ISSUANCE||SECURITY||EXERCISE PRICE PER|
|December 12, 2018||RSUs||C$||15.46||68,000||(1)|
|(1)||RSUs vested on April 2, 2019.|
Asof the date hereof, there are no RSUs outstanding.
TheCommon Shares are listed on the TSX under the symbol “SEA” and the NYSE under the symbol “SA”. The followingtable sets forth, for the 12 month period prior to the date of this Prospectus Supplement, details of the trading prices and volumeon a monthly basis of the Common Shares on the TSX and NYSE, respectively:
|Toronto Stock Exchange||NYSE|
|Period||Volume||High (C$)||Low (C$)||Volume||High (US$)||Low (US$)|
OnOctober 10, 2019 the last trading day of the Common Shares prior to the date of this Prospectus Supplement, the closing priceof the Common Shares on the TSX was C$17.20 and on the NYSE was US$12.95.
Thefollowing is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as definedbelow) arising from the acquisition of Common Shares pursuant to the Offering and the ownership and disposition of the CommonShares. This summary applies only to U.S. Holders who hold Common Shares as capital assets (generally, property held for investment)and who acquire Common Shares at their original issuance pursuant to the Offering and does not apply to any subsequent U.S. Holderof a Common Share.
Thissummary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S.federal income tax considerations that may apply to a U.S. Holder as a result of the ownership and disposition of Common Shares.In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder thatmay affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holderunder an applicable tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S.federal income tax advice with respect to any particular U.S. Holder. In addition, this summary does not address the U.S.federal alternative minimum, U.S. federal estate and gift, U.S. Medicare contribution, U.S. state and local, or non-U.S. tax consequencesof the acquisition, ownership, or disposition of Common Shares. Except as specifically set forth below, this summary does notdiscuss applicable tax reporting requirements. Each U.S. Holder should consult its own tax advisor regarding all U.S. federal,U.S. state and local and non-U.S. tax consequences of the acquisition, ownership, or disposition of Common Shares.
Noopinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested,or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership, or disposition of CommonShares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, andcontrary to, any position taken in this summary. In addition, because the authorities upon which this summary is based are subjectto various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.
Scopeof This Disclosure
Thissummary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whetherfinal, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, the Convention BetweenCanada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended(the “Canada- U.S. Tax Convention”), and U.S. court decisions that are applicable and, in each case, as in effectand available, as of the date hereof. Any of the authorities on which this summary is based could be changed in a material andadverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect theU.S. federal income tax considerations described in this summary. This summary does not discuss the potential effects, whetheradverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.
Forpurposes of this summary, the term “U.S. Holder” means a beneficial owner of Common Shares that is for U.S. federalincome tax purposes:
|●||An individual who is a citizen or resident of the U.S.;|
|●||A corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof or the District of Columbia;|
|●||An estate the income of which is subject to U.S. federal income taxation regardless of its source; or|
|●||A trust that (a) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (b) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.|
Forpurposes of this summary, a “non-U.S. Holder” is a beneficial owner of Common Shares that is not a partnership(or other “pass-through” entity) for U.S. federal income tax purposes and is not a U.S. Holder. This summarydoes not address the U.S. federal income tax considerations applicable to non-U.S. Holders arising from the acquisition, ownership,or disposition of Common Shares.
Accordingly,a non-U.S. Holder should consult its own tax advisor regarding all U.S. federal, U.S. state and local, and non-U.S. tax consequences(including the potential application of and operation of any income tax treaties) relating to the purchase of the Common Sharespursuant to the Offering and the acquisition, ownership, or disposition of Common Shares.
Thissummary does not address the tax consequences of transactions effected prior or subsequent to, or concurrently with, any purchaseof the Offered Shares (whether or not any such transactions are undertaken in connection with the purchase of the Offered Shares),other than the U.S. federal income tax considerations to U.S. Holders of the acquisition of Offered Shares and the ownership anddisposition of such Offered Shares.
U.S.Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
Thissummary does not address the U.S. federal income tax considerations of the acquisition, ownership, or disposition of Common Sharesby U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following: (a) tax-exemptorganizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) financial institutions,underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) broker-dealers, dealers,or traders in securities or currencies that elect to apply a “mark-to-market” accounting method; (d) U.S. Holdersthat have a “functional currency” other than the U.S. dollar; (e) U.S. Holders that own Common Shares as part of astraddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position;(f) U.S. Holders that acquire Common Shares in connection with the exercise of employee stock options or otherwise as compensationfor services; (g) U.S. Holders that hold Common Shares other than as a capital asset within the meaning of Section 1221 of theCode (generally, property held for investment purposes); and (h) U.S. Holders that own directly, indirectly, or by attribution,10% or more, by voting power or value, of the outstanding stock of the Company; and (i) U.S. Holders subject to Section 451(b)of the Code. This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are:(a) U.S. expatriates or former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemedto be a resident in Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”); (c) personsthat use or hold, will use or hold, or that are or will be deemed to use or hold Common Shares in connection with carrying ona business in Canada; (d) persons whose Common Shares constitute “taxable Canadian property” under the Tax Act; or(e) persons that have a permanent establishment in Canada for purposes of the Canada-U.S. Tax Convention. U.S. Holders that aresubject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own taxadvisors regarding all U.S. federal, U.S. state and local, and non-U.S. tax consequences (including the potential applicationand operation of any income tax treaties) relating to the acquisition, ownership, or disposition of Common Shares.
Ifan entity or arrangement that is classified as a partnership (or other “pass-through” entity) for U.S. federal incometax purposes holds Common Shares, the U.S. federal income tax consequences to such partnership and the partners (or other owners)of such partnership of the acquisition, ownership, or disposition of the Common Shares generally will depend on the activitiesof the partnership and the status of such partners (or other owners). This summary does not address the U.S. federal income taxconsequences for any such partner or partnership (or other “pass-through” entity or its owners). Owners of entitiesand arrangements that are classified as partnerships (or other “pass-through” entities) for U.S. federal income taxpurposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership,or disposition of Common Shares.
Ownershipand Disposition of Common Shares
Distributionson Common Shares
Asstated above, the Company has never paid a dividend and has no intention of paying a dividend. Subject to the PFIC rules discussedbelow, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to Common Shares will berequired to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income taxwithheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the Company,as computed for U.S. federal income tax purposes. To the extent that a distribution exceeds the current and accumulated “earningsand profits” of the Company, such distribution will be treated first as a tax-free return of capital to the extent of aU.S. Holder’s tax basis in the Common Shares and thereafter as gain from the sale or exchange of such Common Shares (see“Sale or Other Taxable Disposition of Common Shares” below). However, the Company may not maintain calculations ofearnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume thatany distribution by the Company with respect to the Common Shares will be reported to them as a dividend. Dividends received onthe Common Shares generally will not be eligible for the “dividends received deduction” available to U.S. corporateshareholders receiving dividends from U.S. corporations. If the Company is eligible for the benefits of the Canada-U.S. Tax Conventionor another qualifying income tax treaty with the United States that includes an exchange of information program that the U.S.Treasury Department has determined is satisfactory for these purposes, or its shares are readily tradable on an established securitiesmarket in the U.S., dividends paid by the Company to non-corporate U.S. Holders generally will be eligible for the preferentialtax rates applicable to long-term capital gains, provided certain holding period and other conditions are satisfied, includingthat the Company not be classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend rulesare complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.
Saleor Other Taxable Disposition of Common Shares
Subjectto the PFIC rules discussed below, upon the sale or other taxable disposition of Common Shares, a U.S. Holder generally will recognizea capital gain or loss in an amount equal to the difference between the amount of cash plus the fair market value of any propertyreceived and such U.S. Holder’s tax basis in the Common Shares sold or otherwise disposed of. Such capital gain or losswill generally be a long-term capital gain or loss if, at the time of the sale or other taxable disposition, the U.S. Holder’sholding period for the Common Shares is more than one year. Preferential tax rates apply to long-term capital gains of non-corporateU.S. Holders. Deductions for capital losses are subject to significant limitations under the Code. A U.S. Holder’s tax basisin Common Shares generally will be such U.S. Holder’s U.S. dollar cost for such Common Shares.
PFICStatus of the Company
Becausethe Company is not producing revenue from its mining operations, the Company believes that it may have been classified as a PFICfor its taxable year ended December 31, 2018. If the Company is or becomes a PFIC, the U.S. federal income tax consequences toU.S. Holders of the acquisition, ownership and disposition of Common Shares will be different from the foregoing description.The U.S. federal income tax consequences of acquiring, owning and disposing of Common Shares if the Company is or becomes a PFICare described below under the heading “Tax Consequences if the Company is a PFIC.”
Anon-U.S. company is a PFIC for each tax year in which (i) 75% or more of its gross income is passive income (as defined for U.S.federal income tax purposes) (the “income test”) or (ii) 50% or more (by value) of its assets (based on anaverage of the quarterly values of the assets during such tax year) either produce or are held for the production of passive income(the “asset test”). For purposes of the PFIC provisions, “gross income” generally includes salesrevenues less cost of goods sold, plus income from investments and from incidental or other operations or sources, and “passiveincome” generally includes dividends, interest, certain rents and royalties, and certain gains from commodities or securitiestransactions and the excess gains over losses from the disposition of certain assets that produce passive income. If a non-U.S.company owns at least 25% (by value) of the stock of another company, the non-U.S. company is treated, for the purposes of theincome test and asset test, as owning its proportionate share of the assets of the other company and as receiving directly itsproportionate share of the other company’s income.
Undercertain attribution and indirect ownership rules, if the Company is a PFIC, U.S. Holders will generally be deemed to own theirproportionate share of the Company’s direct or indirect equity interest in any company that is also a PFIC (a “SubsidiaryPFIC”), and will be subject to U.S. federal income tax on their proportionate share of (a) any “excess distributions,”as described below, on the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of the stock of a SubsidiaryPFIC by the Company or another Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC.In addition, U.S. Holders may be subject to U.S. federal income tax on any indirect gain realized on the stock of a SubsidiaryPFIC on the sale or disposition of Common Shares. Accordingly, U.S. Holders should be aware that they could be subject to taxeven if no distributions are received and no redemptions or other dispositions of the Company’s Common Shares are made.
Asstated above, the Company believes that it may have been classified as a PFIC for its taxable year ended December 31, 2018. Thedetermination of PFIC status is inherently factual, is subject to a number of uncertainties, and can be determined only annuallyat the close of the tax year in question. Additionally, the analysis depends, in part, on the application of complex U.S. federalincome tax rules, which are subject to differing interpretations. There can be no assurance that the Company will or will notbe determined to be a PFIC for the current tax year or any prior or future tax year, and no opinion of legal counsel or rulingfrom the IRS concerning the status of the Company as a PFIC has been obtained or will be requested. U.S. Holders should consulttheir own U.S. tax advisors regarding the PFIC status of the Company.
TaxConsequences if the Company is a PFIC
Ifthe Company is a PFIC for any tax year during which a U.S. Holder holds Common Shares, special rules may increase such U.S. Holder’sU.S. federal income tax liability with respect to the ownership and disposition of such Common Shares. If the Company is a PFICfor any tax year during which a U.S. Holder owns Common Shares, the Company will be treated as a PFIC with respect to such U.S.Holder for that tax year and for all subsequent tax years, regardless of whether the Company meets the income test or the assettest for such subsequent tax years, unless the U.S. Holder makes a “deemed sale” election with respect to the CommonShares. If the election is made, the U.S. Holder will be deemed to sell the Common Shares it holds at their fair market valueon the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale wouldbe taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s Common Shares willnot be treated as shares of a PFIC unless the Company subsequently becomes a PFIC. U.S. Holders should consult their own U.S.tax advisors regarding the availability and desirability of a deemed sale election.
Underthe default PFIC rules:
|●||Any gain realized on the sale or other disposition (including dispositions and certain other events that would not otherwise be treated as taxable events) of Common Shares (including an indirect disposition of the stock of any Subsidiary PFIC) and any “excess distribution” (defined as a distribution to the extent it (together with all other distributions received in the relevant tax year) exceeds 125% of the average annual distribution received during the shorter of the preceding three years, or the U.S. Holder’s holding period for the Common Shares) received on Common Shares or with respect to the stock of a Subsidiary PFIC will be allocated ratably to each day of such U.S. Holder’s holding period for the Common Shares;|
|●||The amount allocated to the current tax year and any year prior to the first year in which the Company was a PFIC will be taxed as ordinary income in the current year;|
|●||The amount allocated to each of the other tax years (the “Prior PFIC Years”) will be subject to tax at the highest ordinary income tax rate in effect for the applicable class of taxpayer for that year; and|
|●||An interest charge will be imposed with respect to the resulting tax attributable to each Prior PFIC Year.|
AU.S. Holder that makes a timely and effective “mark-to-market” election under Section 1296 of the Code (a “Mark-to-MarketElection”) or a timely and effective election to treat the Company and each Subsidiary PFIC as a QEF under Section 1295of the Code (a “QEF Election”) may generally mitigate or avoid the default PFIC rules described above withrespect to Common Shares.
Atimely and effective QEF Election requires a U.S. Holder to include currently in gross income each year its pro rata share ofthe Company’s ordinary earnings and net capital gains, regardless of whether such earnings and gains are actually distributed.Thus, a U.S. Holder could have a tax liability with respect to such ordinary earnings or gains without a corresponding receiptof cash from the Company. If the Company is a QEF with respect to a U.S. Holder, the U.S. Holder’s basis in the Common Shareswill be increased to reflect the amount of the taxed but undistributed income. Distributions of income that had previously beentaxed will result in a corresponding reduction of basis in the Common Shares and will not be taxed again as a distribution toa U.S. Holder. Taxable gains on the disposition of Common Shares by a U.S. Holder that has made a timely and effective QEF Electionare generally capital gains. A U.S. Holder must make a QEF Election for the Company and each Subsidiary PFIC if it wishes to havethis treatment. To make a QEF Election, a U.S. Holder will need to have an annual information statement from the Company settingforth the ordinary earnings and net capital gains for the year. The Company generally provides this statement annually on itswebsite. In general, a U.S. Holder must make a QEF Election on or before the due date for filing its income tax return for thefirst year to which the QEF Election will apply. Under applicable Treasury Regulations, a U.S. Holder will be permitted to makeretroactive elections in particular, but limited, circumstances, including if it had a reasonable belief that the Company wasnot a PFIC and did not file a protective election. If a U.S. Holder owns PFIC stock indirectly through another PFIC, separateQEF Elections must be made for the PFIC in which the U.S. Holder is a direct shareholder and the Subsidiary PFIC for the QEF rulesto apply to both PFICs.
EachU.S. Holder should consult its own tax advisor regarding the availability and desirability of, and procedure for, making a timelyand effective QEF Election (including a “pedigreed” QEF election where necessary) for the Company and any SubsidiaryPFIC.
Alternatively,a Mark-to-Market Election may be made with respect to “marketable stock” in a PFIC, which is stock that is “regularlytraded” on a “qualified exchange or other market” (within the meaning of the Code and the applicable U.S. TreasuryRegulations). A class of stock that is traded on one or more qualified exchanges or other markets is considered to be “regularlytraded” for any calendar year during which such class of stock is traded in other than de minimis quantities on atleast 15 days during each calendar quarter. If the Common Shares are considered to be “regularly traded” within thismeaning, then a U.S. Holder generally will be eligible to make a Mark-to-Market Election with respect to its Common Shares. However,there is no assurance that the Common Shares will be or remain “regularly traded” for this purpose. A Mark-to-MarketElection may not be made with respect to the stock of any Subsidiary PFIC. Hence, a Mark-to-Market Election will not be effectiveto eliminate the application of the default PFIC rules, described above, with respect to deemed dispositions of Subsidiary PFICstock, or excess distributions with respect to a Subsidiary PFIC.
AU.S. Holder that makes a timely and effective Mark-to-Market Election with respect to Common Shares generally will be requiredto recognize as ordinary income in each tax year in which the Company is a PFIC an amount equal to the excess, if any, of thefair market value of such shares as of the close of such taxable year over the U.S. Holder’s adjusted tax basis in suchshares as of the close of such taxable year. A U.S. Holder’s adjusted tax basis in the Common Shares generally will be increasedby the amount of ordinary income recognized with respect to such shares. If the U.S. Holder’s adjusted tax basis in theCommon Shares as of the close of a tax year exceeds the fair market value of such shares as of the close of such taxable year,the U.S. Holder generally will recognize an ordinary loss, but only to the extent of net mark-to-market income recognized withrespect to such shares for all prior taxable years. A U.S. Holder’s adjusted tax basis in its Common Shares generally willbe decreased by the amount of ordinary loss recognized with respect to such shares. Any gain recognized upon a disposition ofthe Common Shares generally will be treated as ordinary income, and any loss recognized upon a disposition generally will be treatedas an ordinary loss to the extent of net mark-to-market income recognized for all prior taxable years. Any loss recognized inexcess thereof will be taxed as a capital loss. Capital losses are subject to significant limitations under the Code.
EachU.S. Holder should consult its own tax advisor regarding the availability and desirability of, and procedure for, making a timelyand effective Mark-to-Market Election with respect to the Common Shares.
AU.S. Holder that pays (whether directly or through withholding) Canadian income tax in connection with the ownership or dispositionof Common Shares may (under certain circumstances) be entitled to receive either a deduction or a credit for such Canadian incometax paid, generally at the election of such U.S. Holder. Generally, a credit will reduce a U.S. Holder’s U.S. federal incometax liability on a dollar for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federalincome tax. This election is made on a year-by-year basis and applies to all creditable foreign taxes paid (whether directly orthrough withholding) by a U.S. Holder during a year.
Complexlimitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionateshare of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s foreign source” taxable incomebears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items ofincome and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source”.Generally, dividends paid by a non-U.S. Company should be treated as foreign source for this purpose, and gains recognized onthe sale of securities of a non-U.S. Company by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwiseprovided in an applicable income tax treaty, and if an election is properly made under the Code. However, the amount of a distributionwith respect to the Common Shares that is treated as a “dividend” may be lower for U.S. federal income tax purposesthan it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. Inaddition, this limitation is calculated separately with respect to specific categories of income. The foreign tax credit rulesare complex, and each U.S. Holder should consult its own U.S. tax advisor regarding the foreign tax credit rules.
Specialrules apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution, including a constructive distribution,from a PFIC. Subject to such special rules, non-U.S. taxes paid with respect to any distribution in respect of stock in a PFICare generally eligible for the foreign tax credit. The rules relating to distributions by a PFIC and their eligibility for theforeign tax credit are complicated, and a U.S. Holder should consult its own tax advisor regarding their application to the U.S.Holder.
Receiptof Foreign Currency
Theamount of any distribution or proceeds paid in Canadian dollars to a cash-basis U.S. Holder in connection with the ownership ofCommon Shares, or on the sale or other taxable disposition of Common Shares will be included in the gross income of a U.S. Holderas translated into U.S. dollars calculated by reference to the exchange rate prevailing on the date of actual or constructivereceipt of the payment, regardless of whether the Canadian dollars are converted into U.S. dollars at that time. If the Canadiandollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the Canadian dollarsequal to their U.S. dollar value on the date of receipt. Any U.S. Holder who receives payment in Canadian dollars and engagesin a subsequent conversion or other disposition of the Canadian dollars may have a foreign currency exchange gain or loss thatwould generally be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax creditpurposes. Different rules apply to U.S. Holders who use the accrual method with respect to foreign currency.
EachU.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, anddisposing of Canadian dollars.
InformationReporting; Backup Withholding
UnderU.S. federal income tax law, certain categories of U.S. Holders must file information returns with respect to their investmentin, or involvement in, a non-U.S. Company. For example, U.S. return disclosure obligations (and related penalties) are imposedon individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts.The definition of “specified foreign financial assets” includes not only financial accounts maintained in non-U.S.financial institutions, but also, if held for investment and not in an account maintained by certain financial institutions, anystock or security issued by a non-U.S. person, any financial instrument or contract that has an issuer or counterparty other thana U.S. person and any interest in a non-U.S. entity. A U.S. Holder may be subject to these reporting requirements unless suchU.S. Holder’s Common Shares are held in an account at certain financial institutions. Penalties for failure to file certainof these information returns are substantial. U.S. Holders should consult with their own tax advisors regarding the requirementsof filing information returns on IRS Form 8938, and, if applicable, filing obligations relating to the PFIC rules, including possiblereporting on an IRS Form 8621.
Paymentsmade within the U.S. or by a U.S. payor or U.S. middleman of (a) distributions on the Common Shares, and (b) proceeds arisingfrom the sale or other taxable disposition of Common Shares generally will be subject to information reporting. In addition, backupwithholding, currently at a rate of 24%, may apply to such payments if a U.S. Holder (a) fails to furnish such U.S. Holder’scorrect U.S. taxpayer identification number (generally on IRS Form W-9), (b) furnishes an incorrect U.S. taxpayer identificationnumber, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding,or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identificationnumber and that the IRS has not notified such U.S. Holder that it is subject to backup withholding. Certain exempt persons generallyare excluded from these information reporting and backup withholding rules. Backup withholding is not an additional tax. Any amountswithheld under the U.S. backup withholding rules will be allowed as a credit against a U.S. Holder’s U.S. federal incometax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.The information reporting and backup withholding rules may apply even if, under the Canada-U.S. Tax Convention, payments are eligiblefor a reduced withholding rate.
Thediscussion of reporting requirements set forth above is not intended to constitute an exhaustive description of all reportingrequirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension ofthe time period during which the IRS can assess a tax, and, under certain circumstances, such an extension may apply to assessmentsof amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisor regarding theinformation reporting and backup withholding rules.
THEABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITHRESPECT TO THE OWNERSHIP, EXERCISE OR DISPOSITION OF COMMON SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THETAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
Thefollowing is, as of the date of this Prospectus Supplement, a summary of the principal Canadian federal income tax considerationsunder the Income Tax Act (Canada) (“Tax Act”) and the regulations thereunder generally applicable toan investor who acquires as beneficial owner Common Shares pursuant to the Offering and who, for the purposes of the Tax Act andat all relevant times deals at arm’s length with the Company and the Agents, is not affiliated with the Company or the Agents,is not exempt from tax under Part I of the Tax Act, and who acquires and holds the Common Shares, as capital property (a “Holder”).Generally, the Common Shares will be considered to be capital property to a Holder thereof provided that the Holder does not usethe Common Shares in the course of carrying on a business of trading or dealing in securities and such Holder has not acquiredthem or been deemed to have acquired them in one or more transactions considered to be an adventure or concern in the nature oftrade.
Thissummary is generally applicable to a Holder who, at all relevant times, for purposes of the Tax Act: (i) is not, and is not deemedto be, resident in Canada for the purposes of the Tax Act or any applicable income tax treaty or convention; and (ii) does notand will not use or hold, and is not and will not be deemed to hold, the Common Shares in connection with carrying on a businessin Canada (“Non-Resident Holders”). This summary does not apply to a Holder that has or will enter into a “syntheticdisposition arrangement” or “derivative forward agreement” (as such terms are defined in the Tax Act). SuchHolders should consult their own tax advisors with respect to an investment in Common Shares.
Thissummary is based upon the current provisions of the Tax Act and the Regulations in force as of the date hereof and the administrativepolicies and assessing practices of the Canada Revenue Agency (the “CRA”) published in writing by the CRA priorto the date hereof. No legal opinion from Canadian legal counsel or ruling from the CRA has been requested, or will be obtained,regarding the Canadian federal income tax consequences of the acquisition, ownership, and disposition of Common Shares. This summarytakes into account all specific proposals to amend the Tax Act and the Regulations publicly announced by or on behalf of the Ministerof Finance (Canada) prior to the date hereof (the “Tax Proposals”) and assumes that the Tax Proposals willbe enacted in the form proposed, although no assurance can be given that the Tax Proposals will be enacted in their current formor at all.
Otherthan the Tax Proposals, this summary does not otherwise take into account or anticipate any changes in law, whether by legislative,governmental, administrative or judicial decision or action, nor does it take into account or consider any provincial, territorialor foreign income tax considerations, which considerations may differ significantly from the Canadian federal income tax considerationsdiscussed in this summary. This summary also does not take into account any change in the administrative policies or assessingpractices of the CRA.
Thissummary is of a general nature only, is not exhaustive of all possible Canadian federal income tax considerations and is not intendedto be, nor should it be construed to be, legal or tax advice to any particular Holder. Holders should consult their own tax advisorswith respect to their particular circumstances.
Forpurposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of the Common Shares (including dividends,adjusted cost base and proceeds of disposition) must be expressed in Canadian dollars based on the daily noon rate as quoted bythe Bank of Canada for the applicable day or such other rate of exchange that is acceptable to the CRA.
Dividendspaid or credited or deemed to be paid or credited to a Non-Resident Holder by the Company are subject to Canadian withholdingtax at the rate of 25% on the gross amount of the dividend unless such rate is reduced by the terms of an applicable tax treaty.For example, under the Canada-United States Tax Convention (1980), as amended (the “Treaty”), the rate of withholdingtax on dividends paid or credited to a beneficially entitled Non-Resident Holder who is resident in the U.S. for purposes of theTreaty and who is fully entitled to the benefits of the Treaty (a “U.S. Holder”) is generally limited to 15%of the gross amount of the dividend (or 5% in the case of a U.S. Holder that is a corporation beneficially owning at least 10%of the Company’s voting shares). Non-Resident Holders are urged to consult their own tax advisors to determine their entitlementto relief under an applicable income tax treaty.
Dispositionsof Common Shares
Upona disposition (or a deemed disposition) of a Common Share (other than to the Company unless purchased by the Company in the openmarket in the manner in which shares are normally purchased by any member of the public in the open market), a Non-Resident Holdergenerally will realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of such security,as applicable, net of any reasonable costs of disposition, are greater (or are less) than the adjusted cost base of such securityto the Non-Resident Holder.
ANon-Resident Holder generally will not be subject to tax under the Tax Act in respect of a capital gain realized on the dispositionor deemed disposition of a Common Share, unless the Common Share constitutes “taxable Canadian property” to the Non-ResidentHolder thereof for purposes of the Tax Act, and the Non-Resident Holder is not entitled to relief under the terms of an applicabletax treaty. In addition, capital losses arising on the disposition or deemed disposition of a Common Share will not be recognizedunder the Tax Act, unless the Common Share constitutes “taxable Canadian property” to the Non-Resident Holder thereoffor purposes of the Tax Act, and the Non-Resident Holder is not entitled to relief under the terms of an applicable tax treaty.
Providedthe Common Shares are listed on a “designated stock exchange”, as defined in the Tax Act (which currentlyincludes the NYSE and TSX), at the time of disposition, the Common Shares generally will not constitute taxable Canadianproperty of a Non-Resident Holder at that time, unless at any time during the 60 month period immediately preceding thedisposition the following two conditions are met concurrently: (i) one or any combination of (a) the Non-Resident Holder, (b)persons with whom the Non-Resident Holder did not deal at arm’s length, or (c) partnerships in which the Non-ResidentHolder or a person with whom the Non-Resident Holder did not deal at arm’s length held a membership interest directlyor indirectly through one or more partnerships owned 25% or more of the issued shares of any class or series of shares of theCompany; and (ii) more than 50% of the fair market value of the shares of the Company was derived directly or indirectly fromone or any combination of (a) real or immovable property situated in Canada, (b) “Canadian resource properties”(as defined in the Tax Act), (c) “timber resource properties” (as defined in the Tax Act) or (d) an option, aninterest or right in any of the foregoing property, whether or not such property exists. Notwithstanding the foregoing, aCommon Share may otherwise be deemed taxable Canadian property to a Non-Resident Holder for purposes of the TaxAct.
Non-ResidentHolders whose Common Shares are taxable Canadian property should consult their own tax advisors.
TheCompany is being represented in connection with this Offering by DuMoulin Black LLP, as to Canadian legal matters and Carter Ledyard& Milburn LLP, as to U.S. legal matters. The Agents are being represented in connection with this Offering by Bennett JonesLLP, as to Canadian legal matters and Cooley LLP, New York, New York as to U.S. legal matters.
Asof this date of this Prospectus Supplement, the respective partners and associates of each of DuMoulin Black LLP, Carter Ledyard& Milburn LLP, Bennett Jones LLP and Cooley LLP own beneficially, directly or indirectly, less than 1% of our outstandingsecurities of any class and less than 1% of the outstanding securities of our associates or affiliates.
Theauditor of the Company is KPMG LLP, Chartered Professional Accountants, of Suite 4600, 333 Bay Street, Toronto, Ontario, Canada.KPMG LLP has reported that it is independent within the meaning of the relevant rules and related interpretations prescribed bythe relevant professional bodies in Canada and any applicable legislation or regulation and are independent accountants underall relevant US professional and regulatory standards.
Theregistrar and transfer agent for the Common Shares is Computershare Investor Services Inc. at its principal office at 100 UniversityAve., 9th Floor, Toronto, Ontario, Canada M5J 2Y1 and co-transfer points at 510 Burrard Street, Vancouver, BritishColumbia, Canada V6C 3B9 and Computershare Trust Company, N.A., at 350 Indiana Street, Suite 800, Golden, Colorado, USA 80401
Informationregarding certain experts is contained in the Prospectus under “Interests of Experts” and remains current to the datehereof.
TheCompany is governed by the laws of Canada and its principal place of business is outside the United States. Certain of the directorsand officers of the Company and the experts named under “Interests of Experts” in the Prospectus are resident outsideof the United States and a substantial portion of the Company’s assets and the assets of such persons are located outside of theUnited States. Consequently, it may be difficult for United States investors to effect service of process within the United Stateson the Company, its directors or officers or such experts, or to realize in the United States on judgments of courts of the UnitedStates predicated on civil liabilities under the U.S. Securities Act. Investors should not assume that Canadian courts would enforcejudgments of United States courts obtained in actions against the Company or such persons predicated on the civil liability provisionsof the United States federal securities laws or the securities or “blue sky” laws of any state within the United Statesor would enforce, in original actions, liabilities against the Company or such persons predicated on the United States federalsecurities or any such state securities or “blue sky” laws. A final judgment for a liquidated sum in favour of aprivate litigant granted by a United States court and predicated solely upon civil liability under United States federal securitieslaws would, subject to certain exceptions identified in the law of individual provinces of Canada, likely be enforceable in Canadaif the United States court in which the judgment was obtained had a basis for jurisdiction in the matter that would be recognizedby the domestic Canadian court for the same purposes. There is a significant risk that a given Canadian court may not have jurisdictionor may decline jurisdiction over a claim based solely upon United States federal securities law on application of the conflictof laws principles of the province in Canada in which the claim is brought.
Weare a “foreign private issuer” as defined in Rule 3b-4 under the Securities Exchange Act of 1934 (the “ExchangeAct”). As a result, our proxy solicitations are not subject to the disclosure and procedural requirements of Regulation14A under the Exchange Act and transactions in our equity securities by our officers and directors are exempt from Section 16of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statementsas frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. We publish annually anannual report filed on Form 20-F or Form 40-F containing financial statements that have been examined and reported on, with anopinion expressed by, a qualified independent auditor or certified public accountant.. Company’s filings are availableelectronically on SEDAR, which can be accessed electronically at www.sedar.com, and on EDGAR, which can be accessed electronicallyat www.sec.gov. You may also obtain information about us by visiting our website at https://seabridgegold.net. Informationcontained in our website is not part of this Prospectus Supplement or the accompanying Prospectus.
SEABRIDGE GOLD INC.
Up to US$40,000,000
October 11, 2019