Sabina continues to de-risk Back River
Last updated 1/18/2019 at 7:05am
Sabina Gold & Silver Corp. Dec. 21 reported that it has raised C$28.1 million, money that will be used to continue early mine development activities at the company's Back River gold project in Nunavut.
The bought deal financing involved the issuance of 21.09 million Sabina shares at $1.20 each for C$25.31 million. This total includes 2.32 million being issued to Zhaojin International Mining Co., a China-based investor in Sabina that elected to exercise its participation right by way of private placement.
Sabina plans to use the net proceeds from this financing to continue to de-risk the Back River gold project.
A 2015 feasibility study details plans for developing three deposits at Goose, one of seven properties that make up Sabina's larger Back River project. Ore from these deposits would feed a 3,000-metric-ton-per-day mill forecast to produce an average of 198,100 ounces of gold per year over an 11.8-year mine.
This year, the company completed several milestones in the advancement of a mine at Back River.
"We are pleased with the progress we have made in 2018," said Sabina Gold President and CEO Bruce McLeod. "This year we have obtained all critical environmental and regulatory authorizations, our land tenure agreement and Inuit Impact and Benefit Agreement with the Kitikmeot Inuit Association, constructed a port facility, made our first sea lift deliveries and made a significant new exploration discovery at Goose with Nuvuyak."
The port work on Bathurst Inlet included the construction of a permanent 45-person camp, quarry, temporary fuel storage depot, permanent laydown storage pads, barge landings, connecting roads, and permanent fuel tank pads – effectively completing the Bathurst Inlet port civil work contemplated in the feasibility study.
Some of the money raised during the December financing will be used for construction of a winter ice road from the port at Bathurst Inlet to the site of the future gold mine on the Goose property. Preparation of the winter ice road development started in mid-December with the initial opening of the camps, the building of an air strip in support of a heavy lift cargo campaign in January 2019, and the preparation of the on-site ice road equipment.
Following construction of the winter ice road, Sabina will begin hauling materials and large construction equipment purchased and staged at the marine laydown area earlier this year to the Goose site.
This will allow the exploration and mine development company to carry out high-priority pre-development civil earthworks at the Goose Site.
The funds raised will also allow Sabina to complete the detailed engineering of the process plant required to secure a construction contract for the processing plant; and advance the final licenses need for the mine.
These activities are designed to provide greater certainty on capital expenditure (CAPEX) components of the gold mine at Back River and de-risk critical logistical elements of the project. These initiatives create value and improve the Project readiness for when the time is right to make a production decision.
The total cost to develop the mine at Back River is estimated to be roughly C$475 million. Sabina has already invested about C$55 million of this capital on the port construction; pre-development earthworks at the mine site; acquisition of a significant amount of heavy construction equipment; spares and supplies; and sealift of this equipment and materials to the port.
While Sabina has been presented with a favorable debt package for the remaining funds needed to develop the mine, the company is waiting to raise the full amount.
"By completing this financing now, we can execute our planned activities for 2019 and maintain our production schedule for the interim while significantly de-risking the project over the coming months," said McLeod. "Our approach continues to focus on activities that add value to the project and to be disciplined and opportunistic in financing a production decision. We are also very pleased that both our strategic shareholders, Dundee Precious Metals and Zhaojin exercised their participation rights in connection with this financing and are encouraged by their support of the company's strategy."
Sabina is finalizing its budget for 2019, including the project advancement activities described above and will announce the budget once finalized early in the new year. The company is also finalizing its exploration plans for 2019 which will include expansion drilling at Nuvuyak and other targets within the proposed mine area on the Goose property.
The company expects to end the year with approximately C$50 million in cash and short-term investments including the net proceeds of this financing.