Sabina Gold advances Back River
New drilling should beef up final feasibility study
Walter Strong
Northern News Services
Published Monday, October 13, 2014
KINNGUAK/BATHURST INLET
After a commitment this spring by Sabina Gold and Silver Corp. (TSX:SBB) to spend approximately $19 million this year on advancing the company's 100 per cent owned Back River Gold project, the company gave an update last week on progress to date.
A 737 flies over Sabina Gold and Silver Corp.'s Back River gold project camp last year. The company is nearing the completion of its final feasibility study which will build on extensive drilling completed since the company's 2013 prefeasibility study. - photo courtesy of Sabina Gold and Silver Corp. |
This year, Advancing on its 2013 pre-feasibility study, Sabina Gold this year contracted a group of engineering and environmental firms - with JDS Energy and Mining Inc. as the lead - to complete a formal feasibility study based on the most recent data.
The final feasibility study, expected to be complete in the first half of 2015, will take into account the results of more than 82,000 metres of drilling completed last year on the property located 80 km south of Bathurst Inlet. That drilling expanding the project's resource base significantly.
The current combined measured, indicated and inferred resource estimates on Back River give 7.2 million ounces of gold.
Individually, measured gold resources are 1.76 million ounces of gold in 10.4 million tons of ore (grading 5.2 grams per ton (g/t) gold). This is an improvement from the 2013 prefeasibility study which included only 304,000 ounces of gold measured.
Indicated resources are 3.54 million ounces of gold in 17.9 million tons of ore (grading 6.1 g/t gold); and an inferred resource of 1.93 million ounces of gold in 8.2 million tons of ore (grading 7.3 g/t gold).
Another significant improvement in the project's economics comes from recent metallurgical testing which raised gold recovery to an estimated 93.9 per cent over the life of mine from the 88 per cent the 2013 prefeasibility was based on.
When the final feasibility study is released next year, it is expected to show an improvement of up to 20 per cent on gold production over the life of the mine. This could mean 344,400 ounces of gold per year over the life of the mine, compared to the 287,000 ounces of gold per year built into the prefeasibilty study.
"There's lots of gold there, and all the deposits are open to depth,"
Nicole Hoeller, Sabina Gold VP of communications, told Nunavut News/North. "We don't know how much of that will translate into mine reserve, but we do anticipate that mine life will be longer than what it was in the (2013) prefeasibility study."
The current mine life is anticipated to be 8.4 years. Hoeller said it was too early to speculate on what the new life of mine could be but she expects it will be extended in the final feasibility study.
The capital cost to construct the mine and bring it into production is $605 million over two years. The mine would pay for itself within 3.3 years of initial gold production. The 2013 prefeasibility study was based on a cash cost, including royalties, of $685 per ounce.
With gold trading at around $1,200 per ounce, and all-in operating costs of the project, including reclamation, of around $1,000 per ounce, the project sits a little shy of the margins Sabina would be looking for before advancing to construction.
"You wouldn't look to build a project with that kind of margin," Hoeller said. "We would wait for an improvement (in the price of gold)."
Hoeller added that the project is not scalable, given the fixed costs associated with building a mine in Nunavut.
But waiting out the current slump on gold appears to be fine for the company.
Sabina Gold reports it will end the year with $30 million cash, leaving the company fully financed to carry the project through the completion of both the final feasibility study and final environmental impact study next year.
Earlier this year, the Nunavut Impact Review Board accepted Sabina's draft environmental impact study. Public community roundtables and a pre-hearing conference are set for Nov. 17 to 19 in Cambridge Bay at the Luke Novoligak Community Hall.
