Sabina finding deeper mineralization at Goose claims

Vancouver – Sabina Gold & Silver (SBB-T) continues to churn out drill results as it works towards resource updates and a scoping study for its Back River project in Nunavut.

The latest drill results come largely from the Umwelt target on the Goose claim block, while recent results have also come out of the Llama target 1.5 km away.

At Umwelt the drilling has expanded the G2 zone that plunges south and downwards to from the main resource to roughly 600 metres depth. Hole 121 hit 28.3 metres grading 14.24 grams gold per tonne from 648 metres depth, hole 92 returned 23.2 metres grading 6.18 grams gold from 608 metres downhole, and hole 102BW cut 10 metres grading 7.62 grams gold from 699 metres depth. Overall the company’s 2011 drilling at Umwelt has extended the zone 900 metres along strike and is still open as it plunges downwards.

The company reports that the mineralized zones at Umwelt are hosted within a turbiditic sedimentary sequence containing silicate and oxide facies iron formations, with gold dominantly occurring with quartz veining and arsenopyrite in the iron formation. Drilling at Umwelt has identified an anti-form structure with a fold hinge that plunges to the south.

At Llama, the company has managed to effectively extend the strike length by 150 metres to the south this year, now at 700 metres, with the resource still open in that direction. Hole 77, a 100-metre step-out south, hit 9.8 metres grading 10.88 grams gold from 396 metres depth. But Sabina moved drills off the target early, reporting that Llama has been challenging to expand, with a complex structure marked by faulting and displacement of the host iron formation.

The latest results from Umwelt come not long after Sabina released an updated resource for the Goose deposit, sitting within the same 5 km corridor as Llama and Umwelt. The proposed open-pit deposit now contains 7.7 million indicated tonnes grading 4.45 grams gold for 1.1 million oz. gold, plus 436,500 inferred tonnes grading 3.53 grams gold for roughly 50,000 oz. gold. The resource added 358,000 oz. gold in all the categories to the previous resource.

The Umwelt target has a resource of 4.6 million tonnes grading 6.1 grams gold for 900,000 contained oz., plus an inferred resource of 1.1 million tonnes grading 6.43 grams gold for 221,000 oz. gold. Llama hosts 1.9 million indicated tonnes grading 9.41 grams gold for 562,000 oz. plus 981,000 inferred tonnes grading 5.71 grams gold for 180,000 oz. gold.

The company wants to make Goose, Umwelt and Llama into three open pits supplying a central facility, with the above quoted resources modelled on open pits. The Goose target also has a 570,000-tonne inferred underground resource grading 5.81 grams gold and the George target, 50 km away, has an indicated resource of 1.8 million tonnes grading 10 grams gold for 590,000 oz. and an inferred resource of 2.6 million tonnes grading 10.5 grams gold.

Sabina plans to have updated resources on the Llama and Umwelt targets out later this year to incorporate 2011 drill results. The company also expects to have a preliminary economic assessment out on the project early next year, though it had earlier expected it out sometime this year.

The company is well-financed, with roughly $140 million in cash on hand. Sabina raised $97.5 million earlier this year at $5.50 per share or $6.60 per flow-through share. The company also sold its Hackett River project to Xstrata (XTA-L) for $50 million, while retaining significant silver royalties.

Sabina’s share price has plunged along with the markets in the latter-half of September, down to around $3 from a September high of $5.25, and a 52-week high of $7.63 reached in April. The company has 160 million shares outstanding or 190 million fully diluted.