Sabina Gold & Silver (SBB) - Construction Ready, Adaptive & Funded

Sabina Gold & Silver is a Canadian precious metals company on track to become a mid-tier gold producer. The Company has a portfolio of properties in Canada at different stages of development. The Company’s flagship projects are currently located in Nunavut, in the Canadian North.

Through these Nunavut assets, Sabina Gold & Silver is currently evolving from a successful exploration company to a developer.

We talk to Bruce McLeod, President & CEO of Sabina Gold & Silver about the company's progress and the plans for 2021 having spoken previously to the company back in 2019.

Company Overview

Sabina iGold & Silver s a Gold explorer who has now transitioned to a developer. There are 2 assets, the first is their active asset in the Back River Gold District which they’ve been advancing. It's an 80km-long banded iron formation, gold property with a total resource of just over 5.2Moz at 6g/t as a measured and indicated resource. It has another 2Moz of inferred resource within that belt. They have advanced through Feasibility and are now fully permitted, and with additional exploration over the last few years they also have new resources to release very shortly. 

In addition, they also have the passive asset, which is a Royalty on the Hackett poly-metallic Silver deposit in Southwestern Nunavut.

Sabina marine port facility - Sabina Gold & Silver 2020

2020 Overview: Successes & Issues Faced 

Sabina Gold & Silver is now in the construction contract review stage and in the middle of the detailed engineering for the full project at Back River. The most challenging part of the project is not the resource, the reserves or the metallurgy, but the infrastructure and logistics which means they need to be very precise on the quantities they bring to the site. 

There have been very few cases of Covid in Nunavut until very recently. Temperatures have now dropped to -20-25 degrees and people are spending more time indoors together so Covid rates have escalated. There were restrictions in place in Nunavut very early on to limit any interaction with the small, isolated communities so some of Sabina employees who came from those communities, were not allowed to work on the Sabina site. Sabina now has a full testing procedure in place to try and keep Covid under control and out of their site. 

Under Covid regulations, they have had to reduce the number of people in their camp but overhead costs remain the same which has been challenging. From a safety perspective on site, they will be demobilising after they finish the preparations for the box cut for going underground and expect to be out around the 14th December, the final demobilisation date. Sabina has had to adapt their safety regulations during Covid and have had to accept some higher costs in order to achieve them. 

Plan for 2021: How Much Will 2020 Affect the Future? 

Sabina Gold & Silver hopes to make a construction decision early in 2021 which is planned to be a relatively light year for construction and on-site operations. They are continuing with the underground rail and will continue with the site preparation of the process plant crusher, fuel tank farm and accommodation complex. Most of the road networks between those are almost complete. They have to make a start with procurement for things that are needed in late summer of 2021, and are anticipating their main problem to be the global supply chain which has been severely affected by Covid.  

Materials and equipment being loaded at the marine port facility for transport on the ice road - Sabina Gold & Silver 2020.

Sabina Gold & Silver is now advancing a new Feasibility for a much larger project. There will be more Gold on an annual basis and on a life-of-mine basis which will help the economics of the project. 

They have moved their debt process along in parallel and have a fundamentally different project today than when they ran the previous debt process. It will be a higher capital cost, but on a per ounce basis, will be a much better project in terms of total capital/oz. They hope to have the debt package in place soon after they issue the Feasibility.

Sabina Gold & Silver needs an element of military precision to ensure that the key elements required on site, particularly for the first sealift and those coming afterwards, arrive on time. It is essential that delivery times have been calculated accurately and precisely to receive them when they are required. Backup plans might be necessary if goods cannot be received on time and perhaps some equipment will need to be flown in which of course has cost implications.

The Money: Cash Position, Burn Rate, Debt 

Sabina has around CAD$60M in cash currently. They believe they have the best Gold project in Canada that isn’t owned by a major or mid-tier. In terms of quality ounces and annual production, their goal is to take this from 200,000oz and move it to something close to 300,000oz/pa in terms of annual production, particularly in those early years. 

The Sabina assets are up in northern Canada where it is very cold and they have to be able to deal with those problems which affect the machinery and infrastructure. They are able to specify equipment that operates in the cold and might have to accept some down time for weather delays and extreme cold which will incur associated costs. They need to overcome logistics and the infrastructure and have taken a lot of extra time to build their port facility and to build and operate their winter ice road and will operate from consolidation points in Lower Canada.

Materials being transported on the ice road - Sabina Gold & Silver 2020.  

The Business Plan: Value Generation & Upside Potential

Sabina Gold & Silver has a contingency plan for M&A but that is not their strategy. They are open to having those discussions at the appropriate time, but will need to take into account the full value of the asset. The project is getting to a size where a major might be interested and the infrastructure they have in place now, makes it a much easier conversation. 

Their aim is to create a project which will deliver the ounces and produce safely for the environment, the stakeholders, and the shareholders. Sabina has 568,000m of core that's been drilled during exploration and they are continuing to add value to the project with further exploration. They anticipate delivering in Q1/21 with close to 300,000oz and have a large land package for exploration once they start development at Goose. It is a dual path, but the big one is project development and moving forward to cash flow. The smaller component is continuing to add value at the drill bit and exploration.

Timeline: When Does Sabina Take Off?

The biggest change ahead for Sabina is to deliver a better project by mid-year 2021. They have a new Feasibility which will be the basis of a production decision going forward. They aim to deliver a higher grade to make this a project even better which will get the equity market and lenders involved. The timeline of early-mid-2021 is still in place to make the construction decision and go into production from there.

The poly-metallic project

With the Hackett project, Zinc is the largest component with a little bit of Copper and Lead too. They have a Silver Royalty on Hackett which is on 22.5% of the first 190Moz Silver produced in a Royalty form, and 12.5% thereafter. The project is owned by Glencore, and Sabina doesn’t control it. When Glencore advances the project, it will be a big financial windfall for the Sabina shareholders but there are problems they need to overcome first before that is able to happen.

Why should we invest in Sabina?

The valuation, based on the last Feasibility and looking at peers of Sabina looks relatively well-valued. They anticipate delivering something that has much more value and from next spring will be starting work, they have the equipment on site and will be ready to go underground in the spring. 

Their largest land package in terms of a Gold-bearing iron formation is the George property which is 50km away which has about 4x the iron formation than at the Goose property where they're developing and moving forward now. The George property is likely to be their second standalone mine. They have strategies to continue to add value to the company so it would seem a worthwhile investment. 

Sabina aims to see the process through to production and they are excited to move forward to the next stage. This is moving towards being a multi-Billion dollar business carefully and ably being steered by McLeod.  

 To find out more, go to the Sabina Gold & Silver Website.