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.
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.
We view this Trust as a vehicle to promote the cultivation of long term relationships, to train our future employees as well as to support infrastructure needs and growth in the Kitikmeot, said Rob Pease, President & CEO Forging relationships and agreements with local stakeholders is imperative to moving any project forward. We realize the need to start now to prepare for our future as a mid-tier gold producer and to establish win-win relationships to prosper. We are proud to deliver an initial contribution to the KIA as part of this strategy.
As beneficiaries of Nunavut, we view this agreement and the first payment under the agreement, as the beginning of a positive business relationship with Sabina and with the mining industry in general. said Charlie Evalik, President of the KIA. It is a clear indication of Sabina's investment in the people and sustainability of the Kitikmeot, and their willingness to create a mutually beneficial scenario for both shareholders and land owners. We look forward to working with Sabina in 2012 and beyond as they advance the Back River Project and pursue other opportunities in the Kitikmeot.
The Company and the KIA have also agreed that it would be mutually beneficial to enter into long-term land use agreements for the Back River and Sabina's remaining Wishbone properties. Key provisions which have been agreed upon in a separate Memorandum of Understanding include an initial seven year term for exploration activities with a provision to extend for an additional two years.
The Company is well funded to continue its aggressive exploration and development objectives and ended 2011with $160 million in cash.
SABINA GOLD & SILVER CORP
Sabina Gold & Silver Corp. is an emerging precious metals company with district scale, world class undeveloped assets in one of the world's newest, politically stable mining jurisdictions: Nunavut, Canada.
Sabina's primary properties consist of the Back River Gold Project, the Wishbone Claims, a vastly prospective grass roots project and the Hackett River silver royalty all located in Nunavut. The Company sold the Hackett River project and certain claims in the Wishbone greenstone belt to Xstrata Zinc Canada Division (Xstrata) for which the Company received $50 m cash and a silver royalty on Xstrata's Hackett River silver production of 22.5% of the first 190 million ounces produced and 12.5% of all silver produced thereafter
For further information please contact:
Nicole Hoeller, Vice-President, IR: 1 888 648-4218 email@example.com
Forward Looking Statements
Statements relating to exploration, work on the Company's natural resource properties and the expected results of this work are forward-looking statements within the meaning of securities legislation of certain Provinces in Canada. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words expects, plans, anticipates, believes, intends, estimates, 'projects, potential and similar expressions, or that events or conditions will, would, may, could or should occur. Information inferred from the interpretation of drilling results may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. These forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation: risks related to fluctuations in metal prices; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company's properties; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in the work program; the risk of environmental contamination or damage resulting from Sabina's operations and other risks and uncertainties, including those described in Sabina's Annual Report for the year ended December 31, 2010.
Forward-looking statements are based on the beliefs, estimates and opinions of Sabina's management on the date the statements are made. Sabina undertakes no obligation to update these forward-looking statements should management's beliefs, estimates or opinions, or other factors, change.
This news release has been authorized by the undersigned on behalf of Sabina Gold & Silver Corp.
Rob Pease, President & CEO 930 West 1st Street, Suite 202 North Vancouver, BC V7P 3N4 Tel 604 998-4175 Fax 604 998-1051 http://www.sabinagoldsilver.com