Sabina forges ahead on its own with western Nunavut gold project
“We feel we can build it and operate it and give better benefit for everybody”
Sabina Gold and Silver Corp. plans to move ahead with its Back River gold mine project in western Nunavut without seeking a sale to a foreign buyer, such as TMAC Resources Ltd. aims to do with China’s Shandong Gold Mining Co. for its nearby Hope Bay project.
Matthew Pickard, Sabina’s vice-president of environment and sustainability, said Sabina is a “world-class project” that can stand on its own feet.
“We feel we can build it and operate it and give better benefit for everybody by doing it,” Pickard said when asked whether the junior Vancouver-based mining company was seeking a buyout.
The Back River project will cost roughly $400 million to build.
“We will probably finance the mine with equity, stock and debt,” Pickard said.
Meanwhile, signs are encouraging: the price of gold has increased to nearly USD $2,000 per ounce, up nearly $500 per ounce from a year ago.
While Pickard can’t say when the company will move into construction, “the plan is definitely to move forward,” he said.
Sabina does have a Chinese partner, Zhaojin International Mining Co. Ltd., in the background.
The gold mining giant holds a 9.9 per cent stake in the western Nunavut mine, as well as a seat on Sabina’s board.
In December 2017, Zhaojin International, a subsidiary of Zhaojin Mining Industry Co. Ltd., which is a leading Chinese gold producer and one of China’s largest gold-smelting companies, agreed to purchase 24,930,000 common shares in Sabina for more than $66 million.
In connection with the financing deal, Sabina and Zhaojin International also signed a shareholder agreement that could allow Zhaojin International to increase its shareholding to up to 19.9 per cent of common shares, providing up to 33 per cent financing for the project, subject to certain terms and conditions.
This past June, when Sabina offered up more shares, Zhaojin International paid roughly $5.8 million to secure an additional 2,882,082 shares and maintain its 9.9 per cent stake.
Through this share offering in June, Sabina raised about another $60 million.
But COVID-19 had an impact on the company this summer: Sabina decided to shut down its camp in March and didn’t reopen until June.
“We waited and we started planning immediately for what the site could look like,” Pickard said.
For now, no Nunavut-based workers are at the camp of 90, and all incoming workers are tested for COVID-19 before they board aircraft in Edmonton to fly directly to the mine site, he said.
So far, there have been only confirmed negative test results for the new coronavirus.
This summer’s efforts concentrated on exploration, expanding the airstrip and working on the project’s engineering, Pickard said.
He continued to get inquiries from western Nunavut residents about employment.
“During COVID, some of those benefits aren’t happening, but long-term Sabina is going to be there with the employment side and all the other benefits of the IIBA [Inuit Impact and Benefit Agreement]. We will get there eventually,” Pickard said.
As for the timing of construction, “there’s no date obviously, but as soon as possible, as soon as we get the proper terms,” he said.
“Depending on the exact timing it will take about three years to get to first gold pour, so probably 2024. Hopefully, in 2021, when we know we have a fully financed construction project.”
Sabina’s plans for Back River include a chain of open-pit and underground mines.
The pits are expected to be operational for at least 10 years and would involve filling, damming or draining lakes and streams, and building a 157-kilometre road from the mine to a seasonal port and tank farm at Bathurst Inlet, about 120 km south of Cambridge Bay on the mainland.
After an initial construction investment of roughly $415 million, Sabina hopes to produce about 200,000 ounces of gold per year.
Sabina did have groups of caribou move through the Back River site in late July and early August, Pickard said.
Based on collar data provided by the Government of the Northwest Territories, these caribou were from the Beverly-Ahiak herd, not the Bathurst herd, he said.
“Over this time Sabina implemented the agreed-upon mitigations including halting heavy equipment, blasting, fixed wing and helicopter flights,” he said. “The groups of caribou were still on the move during this period and thus only interacting with site for a few hours. Mitigations were observed to be effective with the herd continuing their migration.”