Silver Wheaton Takes 14% of Sabina

Vancouver — Aspiring Nunavut silver-zinc producer Sabina Silver (SBB-V, SBBFF-O) has secured a major new shareholder with Silver Wheaton (SLW-T, SLW-X) stepping up to invest $12.9 million in the company.

Silver Wheaton will buy 7.8 million Sabina units at $1.65 apiece in the non-brokered private placement. Units consist of a share and a half-warrant, with each full warrant exercisable at $2.75 over four years.

When the financing closes, Silver Wheaton will own 14.2% of Sabina and can boost its interest to 19.9% if all its warrants are exercised. Additionally, Silver Wheaton acquires right of first refusal on the sale of silver production from any of Sabina’s projects. It will also hold the right to maintain its percentage interest in Sabina by participating in any future financings.

Sabina is advancing its flagship Hackett River silver-zinc project in western Nunavut, where a preliminary economic assessment is under way. The company recently tabled a new indicated resource of 23.7 million tonnes grading 181.4 grams silver per tonne, 6.48% zinc, 0.29% copper and 0.95% lead using a 343 gram silver equivalent cutoff grade and based on data from 300 drill holes (64,000 metres of core). An additional 5.1 million inferred tonnes at 189 grams silver, 5.18% zinc, 0.25% copper and 0.74% lead was also reviewed at the same cutoff grade.

The company envisions open-pit operations at Hackett River targeting the East Cleaver, Boot Lake and Main A zones that host the defined resource.

Sabina acquired Hackett River from Cominco, now part of Teck Cominco (TEK.B-T, TCK-N), in early 2004 by paying $430,000 to the major and Etruscan Resources (EET-T, ETRUF-O), and spending $7 million on exploration and development.

Teck Cominco, which retains a 2% net smelter royalty, declined to exercise its back-in option in 2005, giving Sabina a 100% interest. Etruscan holds a 10% net profits interest capped at $2 million.

Shares of Sabina rallied 10% on the news to close up 18 at $1.88 apiece. The stock has a 52-week trading range of 81 to $1.93.