It uses a lot of memory, but is still below its 2 GB limit of adress space. Still, I don't recommend using it with files greater than 1 GB as it would be to slow & impractical. You have some better alternatives if you wish to perform some serious backups.
Edit : Also, I forgot to mention SMAC was not designed to compress/decompress files longer than 4 GB, as it uses a 32 bit variable to store the length of the file.
Code:
LOCAL FileLength:DWORD
call GetFileSize,@@SourceHandle,0
mov FileLength,eax ;store original size