(REUTERS) -- Seabridge Gold Inc said drilling at its Courageous Lake project in Canada's Northwest Territories showed significant expansion of a gold zone that could more than quadruple the zone's contribution to measured and indicated resources.

The company, whose other key asset is the KSM property near Stewart in British Columbia, said new data from Zone 8 has proved to be much more continuous than earlier expected.

In June, the preliminary economic assessment of the Courageous Lake project showed a 16-year mine life with an average annual production potential of 383,000 ounces of gold.

The project was expected to have an initial capital cost of $1.26 billion.

Most of the expansion is within the existing pit design and will, therefore, convert waste to resources, which may qualify for reserves in the preliminary feasibility study, Chief Executive Rudi Fronk said in a statement.

Metallurgical tests on Courageous Lake has resulted in an expected gold recovery of about 90 percent.

The Courageous Lake, or the FAT (Felsic Ash Tuff) deposit, is an advanced gold exploration project. The deposit name is an acronym for its dominant rock type, Felsic Ash Tuff.

Gold was initially discovered in the region in the early 1940s.

Shares of Seabridge, which has full-controlling interest in several North American gold projects, closed at C$22.25 on Monday on the Toronto Stock Exchange.