Sabina finds high-grade gold at George

Sabina Gold & Silver (SBB-T) has pulled some encouraging grades from the George deposit at its Back River gold-silver project in Nunavut ahead of a prefeasibility study (PFS) due later this year.

Over the last two years, Sabina has been working on de-risking its flagship project through drilling and engineering and environmental studies, says Rob Pease, the company’s president and CEO. While the majority of the 50,000-metres of drilling slated for 2013 will support a potential feasibility study (FS) due in late 2014, the junior is wrapping up studies for the PFS, estimated out by September, Pease says.   

Back River contains the Goose, Llama, Umwelt and George deposits. George sits 60 km north of the Goose property, and ore from the underground satellite deposit would be mined and trucked to the proposed mill at Goose.

Back River is envisioned as a combined open-pit and underground operation, where material from the four deposits will be processed at a centralized 5,000-tonne-per-day mill to churn out an average of 300,000 oz. gold a year over 12.3 years, with production starting in late 2016 or early 2017, according to a May 2012 preliminary economic assessment.

Since the past year, Sabina has been focusing on upgrading the resources at both the George and Goose deposits to include in its engineering studies and permitting activities.

The George deposit currently hosts an underground global resource of 1.9 million oz. gold grading 7.05 grams. The majority of those ounces occur on George’s Locale 1 and 2 deposits.

As part of its 2013 exploration program, Sabina has punched a total of 16 holes at Locale 2, including 13 at the deposit’s Gap zone and three at the Hinge zone.

Notable highlights from the Gap zone include 8.96 grams gold per tonne over 18.5 metres, and 13.55 grams gold over 7 metres. The best hole from the Hinge zone returned 8.75 metres of 18.34 grams gold.

Commenting on the results, Desjardins Capital Markets analyst Adam Melnyk writes “they confirm the potential for resource expansion at above-resource-average grades.” He adds: “Given the depths of these intercepts, this potential resource expansion would likely fall into the underground category.”

While the true widths of the intercepts have yet to be determined, Sabina says the assays indicate mineralization at the Gap zone extends along strike to the south end of the deposit, and that the Hinge zone has the potential for structurally controlled mineralization.

While the Vancouver-based firm continues to expand the underground resource at George, it is also testing targets that may be amenable to open-pit extraction. It says George’s Fold Forest and Lone Cow Pond targets, which it discovered through regional exploration, may potentially host near-surface mineralization.

Meanwhile, Sabina’s short-term objectives include: publishing the PFS in the third quarter; submitting a draft environmental impact statement by year-end, and finishing the potential FS in late 2014. Project approval is anticipated by mid-2015, notes Melnyk, who has a $6.75 target and speculative buy on the stock.  

With now $124 million in its treasury — thanks to a $20.6-million boost it received in June after closing a private placement of 14.7 million flow-through shares at $1.40 apiece —Sabina has a desirable cash position and appears well-funded to carry out its short-term goals. It has budgeted to spend $63 million on the project in 2013.

The junior closed July 4 up 2% at 99¢, within a 52-week trading range of 79¢–$3.55.