Sabina Gold completes $126.5M bought deal; Goose project now fully financed

Sabina Gold & Silver (TSX: SBB; OTC: SGSVF) has completed a bought-deal offering with a syndicate of underwriters led by BMO Capital Markets for gross proceeds of $126.5 million. The company is owner of the Back River gold district in Nunavut hosting a total of six properties, including the advanced-stage Goose mine project.

This round of financing saw Sabina issue approximately 81.6 million of its common shares, including the underwriters’ over-allotment option, all priced at $1.55 each. Zhaojin International Mining participated in this financing and purchased about 7.8 million shares for a total of $12.1 million.

The bought deal is part of a comprehensive US$520 million financing package for the Goose mine announced by the company in February. Prior to this, Sabina has closed approximately $114.8 million in equity placements with Orion Mine Finance and Wheaton Precious Metals.

Completion of the bought deal also allows the company to unlock the previously arranged Orion credit facilities and the Wheaton stream arrangement, totalling US$300 million and US$125 million respectively.

“Including debt, stream and equity, we have now arranged a total of approximately US$646 (C$807) million in project financing,” Sabina president and CEO Bruce McLeod commented. “This additional equity enables us to advance procurement of critical items and re-align our budgets and programs for 2022, which we look forward to announcing in the coming weeks.”

Proceeds will be used to develop the company’s Goose mine, which according to a 2021 feasibility study is expected to produce an average of 223,000 oz. of gold a year over 15 years, with production averaging 287,000 oz. gold annually for the first five years. With an initial capex of $610 million, the project’s after-tax net present value is estimated at $1.1 billion, based on a 5% discount rate and US$1,600 per oz. gold. The internal rate of return was pegged at 27.7%, and the payback period at 2.3 years.

In a note to clients, Cantor Canada mining analyst Matthew O’Keefe noted that Goose, which has a large and high-grade resource, is now fully financed.

“This $126-million equity issue in conjunction with the previously announced $520-million project financing package should more than cover the remaining capex to bring the Goose Mine into production,” O’Keefe wrote. “The completion of these deals is a key milestone that removes any additional financing risk from the Back River Project. Sabina will be releasing a revised budget and timeline in the coming weeks that should keep Sabina on track for first gold production in early 2025.”

Open pit reserves at Goose total 9.9 million tonnes at 5.27 g/t gold with underground reserves of 8.8 million tonnes at 6.76 g/t gold. Cut-off grades range between 1.6 g/t gold and 4.1 g/t gold.