Sabina Silver Hits Hackett River Extensions

VANCOUVER — Drilling to expand the Hackett River polymetallic deposit in Nunavut and test new zones is returning solid intercepts for owner Sabina Silver (SBB-V, SBBFF).

Sabina updated the resource at Hackett River in April, boosting its metal count considerably. In fact, the company believes 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 modelling the zone to recalculate 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 from 4.3 metres down-hole.

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 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 a 2007 Hackett River scoping study, with the new resource estimate and the results of more thorough metallurgical test work. The new test work 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 test work determined that bulk copper-lead flotation followed by zinc flotation will produce 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 metals prices of US$8.69 per oz. silver, US72¢ per lb. zinc, US$1.35 per lb. copper, US39¢ per lb. lead and US$522.50 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 go towards access. The project is located 480 km northeast of Yellowknife and roughly 75 km southwest of a proposed deepwater 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 June, the company increased its landholdings in the area when it acquired the Back River properties from Dundee Precious Metals (DPM-T, DPMLF-O), a two-part project that is also on the Hackett River Greenstone Belt.

The Back River assets consist of two main parts, the original Back River property hosting the George and Goose Lake gold deposits and a new area, the Wishbone project.

The Back River gold deposits contain a total resource of 1.2 million indicated oz. gold and 1.2 million inferred oz. gold at an average grade of 10 grams per tonne and are near the Hackett River project. Goose Lake is about 80 km southeast of Hackett River, while George is about 40 km southeast.

Sabina paid $7 million and 17 million shares for the Back River properties. The acquisition brought Sabina’s indicated resources to a total of 205 million oz. silver and 1.2 million oz. gold and the company’s inferred resources to 64 million oz. silver and 1.1 million oz. gold.

To pay for the purchase, Sabina raised $18 million in the second quarter through an equity financing.

The Goose Lake deposit, a thick folded iron unit, contains 1.6 million tonnes grading 11.9 grams gold (for 603,000 oz. gold) in the indicated category. The deposit contains 1.8 million inferred tonnes grading 9.2 grams gold for 295,000 oz. gold.

Summer drilling at Back River uncovered a new zone of high-grade mineralization about 2,000 metres away from the Goose Lake deposit. The new Echo zone returned 8.17 grams gold per tonne over 15.2 metres, including 9 grams gold over 13.2 metres in hole 09GSE26.

The summer drilling campaign started in July and concentrated on ground around Goose Lake to test priority targets that had geophysical and geological similarities with the Goose Lake deposit. The company says that after sampling, it was immediately apparent that the geological, structural and mineralization style at the Echo zone was the same as Goose Lake.

Echo lies in a broad zone of thick folded iron formation units that have been strongly altered to the extent that the magnetic signature of the iron formation has been washed out. The large 2 by 3-km target area has not been drilled before.

The zone remains open in all directions with all holes targeting mineralization no deeper than 150 metres, offering open-pit opportunities.

Assay results for three of the six holes drilled in the zone have been reported. Highlights include 8.57 grams gold over 6.1 metres in hole 09GSE08. Hole 09GSE09, which was drilled about 75 metres below hole 09GSE08, returned 5.22 grams gold over 8.6 metres, including 8.29 grams gold over 5 metres.

Hole 09GSE26, 50 metres to the east and slightly deeper than hole 09GSE09, returned 8.17 grams gold over 15.2 metres, including 9 grams gold per tonne over 13.2 metres.

And in October, Sabina announced that it has discovered a new zone (the May zone) at its Wishbone project, about 15 km east of Hackett River.

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.) Drilling this summer hit high-grade mineralization at the May zone, including 10.6 metres of 73 grams silver and 10.86% zinc in hole SWB-09-06. Other highlights included hole SWB-09-04, which returned 8.1 metres grading 45 grams silver and 15.08% zinc, and hole SWB-09-05, which cut 7.1 metres of 83 grams silver and 14.82% zinc.

The May zone is a shallow, open-pit target that could become an additional mining source for the proposed Hackett River mill, the company says. The zone has been traced to a depth of 100 metres over a length of 600 metres, defining a structure that dips shallowly to the south at about 15°
, where it remains open.

In Toronto at presstime, Sabina shares traded at 97¢ apiece. The company has a 52-week trading range of 35.5¢-$1.21 and 109.7 million shares outstanding.