Sabina Gold & Silver Corp TSX:SBB announced a preliminary economic assessment of its Back River Gold Project in Nunavut. The study projects open-pit and underground operations producing 5,000 tonnes per day and 300,000 gold ounces per year. Over 12.3 years, 3.68 million ounces of gold is to be produced at an average grade of 6.13 grams per tonne and a cost of $542 per ounce, with metallurgical recoveries of 90%.
The base-case scenario (assuming $1,250-per-ounce gold) foresees a post-tax net present value (NPV) of $650 million (at a 5% discount rate) and an internal rate of return (IRR) of 25%, a pretax NPV of $1.1 billion (at a 5% discount rate) and a pretax IRR of 32%. The life-of-mine (LOM) net cashflow is $1.1 billion on gross revenues of $4.6 billion, with a payback period of three years. Pre-production capital cost is $450 million, with sustaining capital of $388 million, for a total LOM capital cost of $839 million.
President/CEO Rob Pease commented, “The results of the PEA demonstrate how valuable good grade is to a project, particularly in remote locations. We believe Back River is a world-class gold project. The high-grade and continuity of the deposits provide us with the flexibility to design and build a mid-tier gold mine with attractive operating costs for a modest up-front capital commitment. We have several financing options to contemplate as we advance the Project, including the possible monetization of part or all of the significant silver royalty we hold on Xstrata Zinc Canada’s Hackett River project. Results from this year’s ongoing exploration and infill drilling program should have a positive impact on the project going forward.”
VP Investor Relations
by Kevin Michael Grace