Sabina likes Hackett River preliminary economics (March 06, 2007)

Vancouver – Aspiring Nunavut silver-zinc producer Sabina Silver (SBB-V, SBBFF-O) moved another step forward with a positive preliminary economic assessment (PEA) on its Hackett River project located about 70 km southwest of Bathurst Inlet.

The PEA looked at a mine plan with average annual production of 147,300 tonnes (324.7 million lbs.) zinc, 12.4 million oz. silver, 9,400 tonnes (20.7 million lbs.) copper, 16,800 tonnes (37 million lbs.) lead and 17,200 oz. gold over an estimated mine-life of 13.6 years.

The study paints a rosy economic picture for Hackett River showing a $345-million net present value, at an 8% discount rate, and a 20.6% pre-tax internal rate of return. A 3-year payback is projected from the commencement of concentrate production.

Capital costs of $527 million are estimated for the projects initial 3 years. The study also tabulates cash cost estimates of US$4.44 per oz. of silver equivalent or US22 per lb. of zinc equivalent.

Sabinas mining plan foresees open pit operations on the Main zone and East Cleaver deposits and underground development on the Boot Lake deposit feeding a 10,000-tonne-per-day milling circuit.

An open pit indicated resource of 25.6 million tonnes grading 126.4 grams silver per tonne, 4.07% zinc, 0.38% copper, 0.58% lead and 0.33 gram gold per tonne was used in the study. Additional inferred open pit resources of 3.4 million tonnes at 99.7 grams silver, 2.57% zinc, 0.37% copper, 0.37% lead and 0.25 gram gold were also tabled.

Indicated underground resources of 14.5 million tonnes at 185.7 grams silver, 5.87% zinc, 0.26% copper, 0.89% lead and 0.25 gram gold were also factored into the PEA. A further 5.4 million tonnes of inferred underground resource grading 186.3 grams silver, 4.71% zinc, 0.23% copper, 0.67% lead and 0.34 gram gold was also reviewed.

Resource estimates assigned a $19.40 per tonne value (NSR) cut-off grade for open pit material, $59.94 per tonne for Boot Lake underground material and $49.94 per tonne for Main zone and East Cleaver underground material.

Proposed concentrate production would be hauled by truck on an all-season road to a deep-port load-out facility in Bathurst Inlet for shipment to smelters and refineries in Europe or Asia.

Sabina recently landed Silver Wheaton (SLW-T, SLW-X) as a major shareholder (14.2%) after it invested $12.9 million in the company. Silver Wheaton holds right of first refusal on the sale of silver production from any of Sabinas projects.

This years work program at Hackett River will comprise initiation of a formal environmental impact assessment, further definition and exploration drilling plus geotechnical and metallurgical testing. Data from the 2007 program will be incorporated into a prefeasibility study.

Sabina acquired Hackett River in early-2004 from Teck Cominco (TCK.B-T, TCK-N) predecessor Cominco and from Etruscan Resources (EET-T, ETRUF-O) that holds a 10% net profits interest capped at $2 million.

Shares of Sabina traded even on the news to close at $3.10 apiece with the company posting a $170-million market capitalization based on its 55-million shares outstanding. The stock has a 52-week trading range of 84-to-$3.66.