Vancouver – Aspiring Nunavut silver-zinc producer Sabina Silver (SBB-V, SBBFF-O) has secured a new major shareholder with Silver Wheaton (SLW-T, SLW-X) stepping up to invest $12.87-million in the company.
Silver Wheaton will purchase 7.8 million Sabina units at $1.65 apiece in the non-brokered private placement. Units will consist of a common share and a half-warrant with each full warrant exercisable at $2.75 over four years.
Following closure of the financing, Silver Wheaton will own 14.2% of Sabina and can boost its interest up to 19.9% if all its warrants were to be exercised. Additionally, Silver Wheaton acquires right of first refusal on the sale of silver production from any of Sabina’s projects. It will also hold the right to maintain its percentage interest in Sabina by participating in any future financings.
Sabina is advancing its flagship Hackett River silver-zinc project in western Nunavut. A preliminary economic assessment is underway on the development stage project. The company recently tabled a new indicated resource of 23.7 million tonnes grading 181.4 grams silver per tonne, 6.48% zinc, 0.29% copper and 0.95% lead using a 343 gram silver equivalent cut-off grade and based on data from 300 drill holes (63,745 metres of core). An additional 5.1 million inferred tonnes at 189 grams silver, 5.18% zinc, 0.25% copper and 0.74% lead was also reviewed at the same cut-off grade.
The company envisions open pit operations at Hackett River targeting the East Cleaver, Boot Lake and Main A zones that host the defined resource.
Sabina acquired Hackett River from Cominco, now Teck Cominco (TEK.B-T, TCK-N), in early-2004 for payments of $430,000 to the major and Etruscan Resources (EET-T, ETRUF-O) and incurring exploration and development expenditures of $7 million. Teck Cominco, which retains a 2% net smelter royalty, declined exercise of its back-in option in 2005, setting Sabina with its 100% interest. Etruscan holds a 10% net profits interest capped at $2 million.
Shares of Sabina rallied 10% on the news to close up 18 at $1.88 apiece. The stock has a 52-week trading range of 81-to-$1.93.