Ready to go despite mining challenges in Nunavut: Sabina

Off the grid, and without infrastructure, Nunavut presents challenges for mining companies like Sabina, which uses airstrips like this one at its Goose property to ship in and out materials and personnel. (FILE PHOTO)

Sabina Gold and Silver Corporation has begun drilling operations at its Back River gold mine in Nunavut’s Kitikmeot region, the company announced this week.

This work began as the corporation’s share price hit a new low for the year, down to $3.03 from a high of $4.50 in January.

The dip in the share price was due to negative market views of Arctic gold mining, caused by unexpected troubles at other mines in Nunavut. Sabina’s president and chief executive officer Rob Pease said in a March 5 news release from Sabina.

These troubles include recent reports from Agnico-Eagle’s Meadowbank gold mine near Baker Lake, which ran into higher-than-expected costs and over-optimistic returns, and Newmont’s decision to mothball its Hope Bay gold mine project near Cambridge Bay.

“There is no question that the Arctic environment is challenging, however, it is no more so than working in any other remote region in the world that lacks infrastructure and power,” Pease maintained.

“What is clear is that successful projects need to have sufficient grade, width, continuity and mineability to support the project requirements and infrastructure. Back River’s grade is significantly higher than that of Meadowbank or Hope Bay,” he said.

And royalty agreements on sold-off claims promise to bring in added money to Sabina, he said.

Last summer, Sabina sold off its silver-rich Hackett River claims about 30 kilometres east of its Back River properties to focus on mining gold.

Proceeds from that sale amounted to $50 million, with a silver production royalty of 22.5 per cent to be received from the sale of the first 190 million ounces of the metal and 12.5 per cent afterwards.

This should help Sabina finance further gold-mining development of Back River and its extensive Wishbone claims to the east, the company said.

Some 300,000 to 400,000 ounces of gold per year will flow from Back River, drawn from 5,000 to 6,000 tonnes per day of soil and rock. Sabina then plans to fly out the gold from the mine.

A trust fund, set up with the Kitikmeot Inuit association in October, promises to share the wealth with the Kitikmeot region.

The fund includes an initial $1.4 million payment to a trust fund to support development and community programs.