Western Nunavut miner calls feasibility study “very compelling”
But Sabina Gold and Silver Corp. will look at trimming project costs
“Very compelling” — that’s how Sabina Gold and Silver Corp. describes the results of a new feasibility study for its Back River gold project in western Nunavut.
Bruce McLeod, Sabina’s president and CEO, said in a May 20 news release that the feasibility study “demonstrates the potential of Back River to be a significant Canadian gold producer.”
But getting the mine up and running will take deep pockets.
The feasibility study calculated the initial capital cost of the Sabina mine at $695 million, with another $539 million needed to sustain operations.
On the other hand, over the mine’s 10-year proposed lifespan, its gross revenues could reach $4.5 billion.
However, Sabina said it recognized that “financing such a project in current market conditions would be challenging.”
So Sabina may look for a “more easily financeable project in the current capital markets environment,” the release said.
Based on a US $1,200-per-ounce gold price and an exchange rate of 0.87 Canadian dollars for one U.S. dollar, the study shows a scenario where the project can produce about 50,000 ounces of gold a year for 10 years with “a rapid payback of 2.2 years of capital costs,” the May 20 release said.
Moreover, the project’s production cost per ounce would be lower than for Agnico Eagle’s Meadowbank gold mine or TMAC’s Hope Bay gold mine project, also in Nunavut’s Kitikmeot region.
Sabina is proposing a gold mine complex on seven properties about 400 kilometres south of Cambridge Bay, south of Bathurst Inlet, that would produce 300,000 to 400,000 ounces of gold per year, possibly starting in 2017.
For its projections, the feasibility study used a lower gold price than used in Sabina’s pre-feasibility study, which, in 2012, showed there was at least $1.1 billion worth of gold on the project’s properties.
But the feasibility study was also able to look at a longer mine life from increased resources and with more ounces of gold that could be recovered by improved processing.
Among other areas, the study looked at mining, infrastructure, logistics, capital costs, operating costs and tailings design.
When in operation, the mine would employ peak total workforce of about 1,333, including all contract labour.
The majority of production would be from open pit mines; its construction and operations could be facilitated by sealift during the summer months, and an ice road from the “marine lay down area” in Bathurst Inlet in the winter, the study said.
And the accommodation camps would be portable, modular units constructed off-site.
The construction and operation periods at Bathurst Inlet would require accommodations for up to 75 workers, at the Goose site for up to 465 workers, and at the George for up to 150 workers, the study said.
“Based on the information available and the proposed design, there appears to be no adverse environmental or socio-economic aspects that could limit the development of the Project,” Sabina stated in its May 20 release.
The company’s Draft Environmental Impact Statement was scrutinized at technical hearings this past November and accepted in January.
Many of the comments on Sabina’s draft EIS, which were submitted to the Nunavut Impact Review Board, asked for more attention in the final EIS to caribou and the impact of the Back River project on the dwindling Bathurst caribou herd, whose numbers are down from about 60,000 in 2006 to less than 10,000 in 2014.
Most recently the NIRB rejected a request from Sabina to exempt some early development work from the environmental review of the Back River gold project.