Sabina boosts Back River resource

VANCOUVER — With an 83,000-metre drill program completed last year, Sabina Gold & Silver (TSX: SBB) has grown and upgraded the resource at its Back River gold project in Nunavut a few months before a feasibility study gets underway.

Back River is now home to 28.4 million measured and indicated tonnes grading 5.8 grams gold per tonne, for 5.3 million oz. Inferred resources add 1.9 million oz. gold in 8.2 million tonnes averaging 7.3 grams gold. 

The tonnes are divided into open-pit and underground resources. Back River’s open-pit resource sits at 21.1 million measured and indicated tonnes grading 5 grams gold, plus 1.4 million inferred tonnes at 4.9 grams gold. The underground portion totals 7.3 million measured and indicated tonnes at 8 grams gold, plus 6.8 million inferred tonnes at 7.8 grams gold. 

Compared to the 2012 Back River estimate, the overall tonnage has increased 20% while contained gold has risen 11%. Resources in the measured category have climbed fivefold — an increase in confidence that should help Sabina boost the project’s reserve count.

Sabina based its Back River prefeasibility study (PFS) on reserve-quality material of 1.9 million “proven” tonnes at 4.56 grams gold and 13.1 million “probable” tonnes at 5.85 grams gold. This represents less than half of the project’s resources, owing to a need for more drilling and a focus on open-pittable tonnes. The focus on open-pittable tonnes remains as Sabina moves towards a feasibility study, but drilling is no longer as important.

“We believe we have a premier project in a premier geopolitical jurisdiction, with a well-funded treasury,” Sabina president and CEO Rob Pease said in a statement. “Sabina ended 2013 with approximately $58 million in the treasury, which will enable us to advance through permitting and engineering studies with a surplus of cash-on-hand.”

Back River is in Nunavut’s West Kitikmeot region, 75 km from the Bathurst Inlet. 

Sabina has defined five deposits at the project, known as Goose, Echo, Umwelt, Llama and George. Four lie along a 5 km segment of the northwest-trending Goose antiform structure. The fifth, George, is 50 km north. Gold at Back River is found within banded iron formations.

When Sabina bought Back River in 2009, only the Goose and George deposits had been defined, offering a 2 million oz. resource. 

The Back River prefeasibility study that Sabina released in late 2013 outlined an open-pit mine supplemented by limited underground operations feeding a 5,000-tonne-per-day, whole-ore leach process plant. It would churn out 287,000 oz. gold annually over an 8.5-year mine life.

It would take 3.3 of those years to repay the operation’s capital costs, estimated at $605 million. The plan gave Back River an after-tax net present value of US$290 million and a 16.5% internal rate of return, using a 5% discount rate and a US$1,350 per oz. gold price.

Sabina hopes to improve some of those numbers in a feasibility study later this year. In the meantime the company will focus on feasibility optimization studies, including metallurgical testing and mining-method and schedule assessments. The company will also advance the Back River environmental assessment and permitting processes, which are already underway.

Sabina’s share price was unchanged at 89¢ on news of the updated resource. The company has a 52-week trading range of 55¢ to $2.09, and 194 million shares outstanding.