Sabina Silver hits Hackett River extensions

Vancouver – Drilling to expand the known mineralization and test new zones at the polymetallic Hackett River deposit in Nunavut is returning solid intercepts for owner Sabina Silver (SBB-V).

Sabina updated the Hackett River resource in April, boosting its metal count considerably. In fact, the company thinks the project already hosts enough metal to support the development of a mine, despite its remote location. But explorationists will continue to explore, and that is what drove a 12,600-metre drilling effort at Hackett River this summer.

The program was designed with three goals in mind. Sabina wanted to test for extensions to the existing open-pit deposit, probe nearby showings that had not yet seen drilling, and confirm the presence of a higher grade zone within the deposit.

The latest results are from holes drilled to test Main zone extensions. Until recently Sabina thought the Main zone comprised one folded deposit, but in modeling the zone to re-calculate its resource this spring the company realized it was actually composed of two separate zones. The Main zone West deposit, which hosts mineralization with double the metal content of that in the Main zone East deposit, is open to the north and south, as well as at depth.

Sabina was particularly interested in the northern expansion potential of the Main zone West and now its interest has been rewarded. Hole 39, collared north of all previous drilling in massive sphalerite and galena, returned 20.1 metres grading 288 grams silver per tonne, 8.28% zinc, 0.9% copper, 1.41% lead, and 1.29 grams gold per tonne from 4.3 metres downhole.

The massive sphalerite and galena, with base metal sulphides, gave way to a silver-rich chalcopyrite stringer zone down to 25 metres depth, where the core transitioned into a wide zone of intense alteration containing disseminated chalcopyrite for 150 metres.

Three additional holes drilled to the north of hole 39 also intersected copper stringer mineralization in intense alteration; assay results for these holes are pending.

Sabina also tested extensions to a satellite zone, known as the Jo zone, in its summer drill campaign. Jo sits 500 metres south of the Main zone and drilling there in 2007 returned promising grades.

The latest news from Hackett River included one result from Jo: hole 29 cut 18.8 metres grading 66 grams silver, 6.84% zinc, 0.07% copper, 0.01% lead, and 0.01 gram gold. Drilling at Jo has only tested the zone to 200 metres below surface; the zone remains open at depth.

According to the new estimate, Hackett River hosts 43.3 million indicated tonnes grading 4.65% zinc, 144 grams silver, 0.42% copper, 0.64% lead, and 0.3 gram gold. Inferred resources add 14.6 million tonnes grading 4.46% zinc, 136 grams silver, 0.31% copper, 0.57% lead, and 0.31 gram gold.

Sabina is currently working to update the Hackett River preliminary economic assessment, which was completed in 2007, with the new resource estimate and the results of more thorough metallurgical testwork. The new testwork returned significantly better recoveries, especially for silver.

Silver recovery from Hackett River ore is now expected to average 77%. Zinc recovery sits at 92%, lead at 85%, copper at 75%, and gold at 60%. The testwork determined that bulk copper-lead flotation followed by zinc flotation produced the best results.

In the 2007 scoping study Sabina investigated the merits of a 10,000-tonne-per-day operation that would simultaneously tap into open pit and underground resources. Based on US$8.69-per-oz. silver, US$0.72-per-lb. zinc, US$1.35-per-lb. copper, US$0.39-per-lb. lead and US$522.5-per-oz. gold, the project returned a net present value of $345 million discounted at 8% and an internal rate of return of 20.6%.

The study estimated capital costs to develop the mine at $911 million. A significant chunk of that cost would to towards access. The project is located 480 km northeast of Yellowknife and roughly 75 km southwest of a proposed deep-water port on Bathurst Inlet. To develop Hackett into a mine, Sabina would have to build a road to the port and then build the port itself. Even then, shipments would only be possible during the ice-free summer months.

The location has not deterred Sabina, though. In fact in the spring the company increased its landholdings in the area when it acquired the Back River properties from Dundee Precious Metals (DPM-T), a two-part project that is also on the Hackett River Greenstone Belt. The Wishbone property surrounds the Hackett River property and extends for some 90 km to the southeast; the Back River property is actually a series of small land packages to the east of Wishbone.

The Goose deposit, which hosts more than 60% of the resources at Back River, is a thick folded iron unit home to 1.8 million indicated tonnes grading 10 grams gold as well as 2.6 million inferred tonnes grading 10.5 grams gold.

Sabina paid $7 million and 17 million shares for the Back River properties. The acquisition brought Sabina’s resource count to 205 million indicated and 64 million inferred ounces of silver as well as 1.2 million indicated and 1.1 million inferred ounces of gold.

To pay for the purchase Sabina raised $18 million in the second quarter through an equity financing. At the end of the quarter the company had $38.3 million in available capital.

On news of the latest Hackett River results Sabina’s share price lost 2¢ to close at 89¢. The company has a 52-week trading range of 35.5¢ to $1.21 and has 110 million shares outstanding.