Positive PEA lifts Sabina stock price 5%

A positive PEA  for it Black River gold project in Nunavut, Canada gave Sabina Gold & Silver (TSX:SBB) a 5.6% bump in its stock price Tuesday.

The project is one of two Sabina properties in the West Kitikmeot Region of Nunavut and is about  75 km from tide water at Bathurst Inlet. The property is made up of a series of seven claim blocks of which only two have been the focus of exploration and resource development to date: Goose and George.

The PEA contemplates a scenario with concurrent open-pit and underground mining operations delivering mineralized material from the Llama, Umwelt, Goose and George deposits to a centralized 5,000 tonne per day ("tpd") processing facility located near the Umwelt deposit. Gold production is projected to average approx. 300,000 oz/year over 12.3 years for total production of 3,677,000 oz Au, beginning in late 2016 or early 2017. Sabina is currently funded to advance the project through feasibility and permitting. The conclusions and recommendations of the PEA are that the project may be economically viable and the company should proceed to a pre-feasibility study ("PFS").

Project Highlights (at Base Case $1,250/oz Au):

All dollar figures are in C$ and the study assumes a 1:1 US$:C$ exchange rate.

  • The Project generates a post-tax NPV-5% of $650 million and an IRR of 25%
  •  Pre-tax NPV-5% and IRR of $1.1 billion and 32%;
  • The Project generates life-of-mine ("LOM") after-tax net cash flow o $1.1 billion on gross revenues of $4.6 billion with a payback period of 3.0 years;
  • Processing rate of 5,000 tpd producing an average of approx. 300,000 oz Au per year from open pit and underground extraction;
  • Pre-production capital of $450 million. Sustaining capital of $388 million for total LOM capital of $839 million including closure and  contingencies;
  • Total cash costs of $542/oz LOM including royalties, refining and transport;
  • Capital and operating costs estimated using a combination of first principle calculations, experience and factored costs; experience includes actual results from comparable northern projects;
  • A total of 20.7 million tonnes of mineralized material to be milled over 12.3 years with a LOM average grade of 6.13 g/t gold and metallurgical recoveries of 90%;
  • Base case commodity assumptions of $1,250/oz gold and $1.20/litre diesel

Link to the full news release