Sabina Gold & Silver (TSX: SBB) has completed its drill program for the year on the George property at its flagship Back River project in Nunavut, and intercepts from the shallow portion of the property’s Lone Cow Pond South zone include 24.96 grams gold per tonne over 11.25 metres and 13.46 grams gold over 12.75 metres. These and other positive assay results demonstrate that most of the high-grade mineralization encountered in the zone, so far, is over a strike length of about 200 metres and at a depth above 300 metres.
The Back River project is made up of a series of gold deposits in banded iron formation in southwestern Nunavut, about 520 km northeast of Yellowknife, 50 km southeast of Xtrata Zinc’s Hackett River silver-zinc project and 75 km southwest of Bathurst Inlet. Back River consists of seven properties altogether stretching across 120,000 acres, but so far Sabina has focused on just two: George and Goose. The George property is about 50 km to the north of Goose.
The Lone Cow Pond South zone is about 3,000 metres northeast of the main deposits on the George property, and the company believes that George could become a satellite mining centre from where trucks would transport ore to a main milling facility at Goose. A prefeasibility study on Back River is expected by the middle of October.
A preliminary economic assessment completed in May 2012 envisioned a scenario of concurrent open pit and underground mining operations that would deliver mineralized material from the Goose, George, Umwelt and Llama deposits to a centralized 5,000-tonne-per-day processing facility near the Umwelt deposit. The PEA estimated gold production would average about 300,000 ounces a year over a mine life of 12.3 years for total production of 3.68 million ounces of gold beginning in late 2016 or early 2017.
Sabina completed 43 holes on the Lone Cow Pond South zone of the George property this year and assay results have been received for thirty-one of them. Other highlights include 15.66 grams gold over 8.3 metres including 81.33 grams over 1.15 metres; 18.43 grams gold over 6.65 metres; 16.04 grams gold over 7.05 metres; and 13.46 grams gold over 12.75 metres.
“The weighted average of grade of 7.8 grams gold per tonne over an average drill-indicated length of 5.0 metres at the LCPS deposit is slightly above the existing resource grade at the George property of 7.0 grams gold per tonne,” Andrew Kaip of BMO Capital Markets writes in a research note. “Overall the drill results indicate potential to add a small inventory of open pittable resource at George.”
In July Sabina released drill results from the Umwelt deposit, the largest of Back River’s open pit and underground resources. Highlights included 19.27 grams gold over 18.60 metres and 24.13 grams gold over 21.85 metres.
Meanwhile in the second quarter, infill drilling at the Llama deposit returned assays including 15.20 grams gold over 20.90 metres and 19.86 grams over 16.65 metres.
Once the company has received and analyzed all the drill results from its 2013 program, it will complete an updated resource estimate some time in early 2014.
Total measured and indicated resources for open pit and underground currently stand at 24.20 million tonnes grading 6 grams gold per tonne for 4.66 million oz. contained gold. Inferred resources for both open pit and underground add 7.67 million tonnes grading 7.8 grams gold for 1.92 million oz. contained gold.
At the end of June, Sabina held cash and equivalents of $94.2 million.
Kaip models average annual production at Back River of 288,000 ounces of gold at total cash costs of US$630 per oz. starting around 2017 and has a target price of $1.50 per share.
David West of Salman Partners said in a note to clients that he expects to see more positive drill results into the fall and has a speculative buy rating on the stock and a target price of $5.00 per share.
At presstime Sabina was trading at $1.40 per share within a 52-week range of $0.79-$3.55.
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