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Sabina Gold & Silver Corp (SBB.T) is pleased to announce that the Company has started mobilizing its camps at Sabina's 100% owned Back River gold project, Nunavut. Also, the Company has made its first payment of C$1.4 million to the Kitikmeot Inuit Association ("KIA") pursuant to a Memorandum of Understanding ("MOU") between the parties announced last October.
2012 Nunavut Work Program
As previously announced, Sabina has committed to a significant work program on its 100% Back River gold project for 2012. The Company has recently opened the camps at George and Goose and are in the process of a record resupply of materials to support the largest program ever planned for the Back River.
Both camps are being upgraded to accommodate more personnel as well as support regional programs at other Back River claim blocks and Wishbone. It is anticipated that drilling should commence on the Goose claim block as early as the first week of March.
"We are excited about getting back into camp," said Rob Pease, President & CEO "a good component of our $65 million budget in Nunavut is directed to advancing the known deposits towards development and ultimately production. We are eagerly anticipating a preliminary economic assessment ("PEA") on the project due out near the end of the first quarter this year. That PEA will identify areas for resource conversion drilling as well as required baseline work to include in the next step for the project; a pre-feasibility study. We have also committed a significant component of this year's budget for resource expansion work and to continue looking for additional high grade shallow new discoveries on our vast land package".
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Back River has a current National Instrument 43-101 compliant indicated resource of 22.3 million tonnes at 5.62 g/t Au for 4.03 million ounces gold and an additional inferred resource of 10 million tonnes at 6.23 g/t Au for 2.02 million ounces gold.
Back River continues to demonstrate high quality attributes such as significant size and grade, amenable to both open pit and underground mining. The current production concept for Back River contemplates a through put of between 5,000-6,000 tonnes per day for annual gold production of between 300,000 and 400,000 ounces of gold per year. This profile envisages a relatively small footprint that would see Dore flown from the mine to refineries in the south.
The project also has other opportunities. There continues to remain considerable upside exploration potential for new gold discoveries on the project as only a fraction of the land package has been explored. Also, Sabina's properties are adjacent to the Hackett River silver-zinc project, recently sold by the Company to Xstrata Zinc Canada ("Xstrata"). Xstrata's payment for Hackett was comprised of an initial cash payment of $50 million and a very significant silver royalty held by the Company on 22.5% of the first 190 million ounces of silver produced at Hackett and 12.5% on any silver produced thereafter. Xstrata is also committed to spend $50 million on Hackett over the next four years to take the project to a feasibility study.
"We view the Hackett River project as a significant opportunity to increase the life of Xstrata Zinc's operations in Canada and enhance our growing presence in the country," said Manuel Alvarez, Chief Operating Officer, Xstrata Zinc Canada, "Plans are currently being made to mobilize for our first campaign on Hackett. We look forward to working with local stakeholders and industry as this project moves forward"
The value and optionality of Sabina's royalty on Hackett River should increase as Xstrata moves the project forward. The royalty offers opportunities for financing the construction of Back River, and/or significant free cash flow once Hackett is in production.
Once the PEA is announced, the Company will file a Preliminary Project Description ("PPD") with the Nunavut Water Board. The PPD would start the environmental assessment and permitting of Back River. It is anticipated that all work required to begin a pre-feasibility will be completed by year end, including a new resource estimate.
Agreement with Kitikmeot Inuit Association ("KIA")
In recognition of Inuit rights under the Nunavut Land Claims Agreement and in light of Sabina's continuing commitment to development of its projects on Inuit Owned Lands in Nunavut, Sabina and the KIA signed a MOU whereby Sabina would establish and contribute to a sustainable development trust (the "Trust").
The Trust would provide short and long term benefits to the Inuit of the Kitikmeot region in which Sabina's Nunavut properties are located. These benefits target KIA development projects and initiatives including training and education as well as infrastructure projects that will serve to support sustainable economic development in a currently struggling region.
