Sabina keeps finding high-grade gold at Back River

Sabina Gold & Silver (TSX: SBB) is pulling strong grades from its Back River gold-silver project in Nunavut. The latest results come from the Umwelt and Llama deposits, two of the project’s four main deposits.

Back River contains four major deposits: Umwelt, Llama and Goose on the Goose claim block, and the George deposit on the George block, some 60 km north of the Goose property.

At Umwelt and Llama, the junior has been focusing its recent drilling efforts on upgrading indicated resources to the measured category. It has drilled 52 holes at Umwelt this year and has received assays for 29 of those holes, highlighting the continuity of the high-grade mineralization at the deposit.

Some recent results from Umwelt include 18.6 metres grading 19.27 grams gold per tonne and 21.9 metres of 24.13 grams gold. The intercepts’ true widths are not known.

The Umwelt deposit contains the largest open-pittable resource at Back River, at 882,000 oz. grading 5.54 grams gold, largely in indicated. It also hosts the largest underground resource, with mineralization running 1 km deep and holding strong grades and widths, says Rob Pease, the company’s president and CEO.

At the Llama deposit, Sabina has received the last four assay results of its 33-hole infill program, with the best two returning 15.2 metres of 11.93 grams gold and 7.8 metres of 4.97 grams gold.

In early July the junior completed 16 holes at George’s Locale 2 deposit, including 13 on the Gap zone and three at the Hinge zone, with standout intercepts returning 8.96 grams gold per tonne over 18.5 metres from Gap and 18.34 grams gold over 8.8 metres from Hinge.

Pease says the company should wrap up drilling for the season at George by early August, but will test surface targets at the Goose property and the Boot and Boulder claim blocks until September.

Around this time, Sabina plans to publish a prefeasibility study that builds on the results of a preliminary economic assessment released last May. The study outlined Back River as a combined open-pit and underground operation, producing 300,000 oz. gold per year over 12.3 years. Production could start in late 2016 or early 2017.

The Vancouver-based firm also announced that it would need more geotechnical work for the Bathurst Inlet Port and Road (BIPR) project before it could submit an environmental impact statement (EIS). BIPR is a project proposed by both Sabina and Glencore Xstrata (LSE: GLEN) that involves building a deep-sea port in the Bathurst Inlet and an all-weather road that would link the port with existing ice roads. Bathurst Inlet is 75 km from Back River and Glencore’s Hackett River silver-zinc project.

Sabina says that initial results from the geotechnical drilling program testing the proposed port suggest the area would not be suitable, and adds that an alternative location nearby would be assessed.

“Although we view the strong infill drilling results positively, we view the delay in the BIPR negatively, given the additional geotechnical work that is now required to file an EIS,” Desjardins Capital Markets analyst Adam Melnyk writes. “Our view of the significant exploration potential at Back River is unchanged,” he adds.

Sabina says it’s on schedule to finish the prefeasibility this third quarter, and a draft EIS for the project by year-end.

Melnyk has a “speculative buy” rating on the stock and a $3 target.