Increased mine life and gold production with reduced execution risk showcases a world class project
Post Tax IRR/NPV(5%) of ~28% and C$1.1 Billion(US$860 million)
Assumes a gold price of US$1,600/oz and exchange rate of 1.31:1 (C$:US$)
Webcast February 25, 2021 at 5:30am Pacific Time

All Dollar Figures in CAD unless otherwise Noted

Vancouver, BC – Sabina Gold & Silver Corp (SBB.T, SGSVF- OTCQX), (“Sabina” or the “Company”) is pleased to announce the results of the Updated Feasibility Study (“UFS” or the “Study”) for the Goose Property (“Goose Property” or “Project”) at its 100%-owned Back River Gold District (“Back River” or the “District”) in Nunavut, Canada.

“After significant work and several new discoveries, we are very pleased to announce the UFS for the Goose Property, the first planned mine on the Back River Gold District,” said Bruce McLeod, President & CEO, “Ongoing work over the last five years has enabled us to significantly advance the Project through many critical de-risking phases. The UFS supersedes the 2015 feasibility study and showcases a gold project with greater capital efficiency, a higher production profile and longer mine life and has also received the required environmental authorizations and social license to commence construction and operations. We have constructed and operated our logistics and supply chain, successfully delivering goods to the mine site overland, reducing a key risk to the project.

We have also continued to demonstrate the robust tenor of the mineralization at Goose by adding 1 million ounces of gold to the mineral reserves as well as significantly increase the total mineral resource estimate. With a million new inferred resources at Llama extension and Nuvuyak at a historic conversion rate of 73% to reserves, and with and all deposits open, we believe we will be mining at Goose long past the 15 year mine life in this study.

The UFS is rigorous and provides a high level of confidence in our project economics through basic and detailed engineering studies. Additionally, we have taken our own experience and that of other companies in the north and made adjustments to the Project scope and execution plan that we believe provide for greater certainty of success. We believe that the Back River Gold District will become a full scale mining camp in Canada. Next, we have already started to focus on refreshing the Project debt process with a view to obtaining financing to make a production decision this year.” he said.

The Company initiated the UFS following the completion of five years of exploration success in adding to the already significant resources within the Goose Property. The Study indicates the Project generates a post-tax internal rate of return (“IRR”) of 27.7% and net present value(5%), (“NPV”) of C$1.1B (US$860M) with a rapid pay back of 2.3 years. Using U$1,800 and a 1.26 exchange rate, the IRR would be 31.3% and NPV would be $1.3B (US$1.1B).

The UFS is based on an initial processing rate of 3,000 tonnes per day (“tpd”), with an expansion to 4,000 tpd at the end of year two. The mine plan envisions average gold production of ~287 koz Au per year for the first 5 years, and ~223 koz Au per year over the 15 year mine life (upon commencement of commercial production) at a cash cost of US$679/oz Au and All In Sustaining Costs (“AISC”) of US$775. Initial capital (“CAPEX”) is estimated at C$610M (US$466 M) with sustaining capital and closure of C$419M (US$320M).

Project Improvements in the UFS

The UFS reflects considerable work done on, and significant changes and advancements made to the Project since the 2015 Initial Project Feasibility Study (“IFS”) including the following:

An updated gold price of US$1,600/ounce and exchange rate of $C:US$ of 1.31:1.00;
A 56% improvement on capital efficiency compared to the IFS (NPV/Initial CAPEX);
Increased CAPEX due to: changes to scope to de-risk the project including;: earlier underground development to access high grade ounces at Umwelt; early stripping at Echo for stockpiling and tailings deposition to eliminate need for Tailings Storage Facility (“TSF”) and an overall 12% cost escalation since IFS. The higher CAPEX provides for lower operational risk and environmental bonding;
Elimination of over the fence contracts for both the assay lab and oxygen plant at a modest increase to CAPEX also lowers project risk and provides for decreased OPEX of those cost centres;
An increase in mineral resources of approximately 1M ounces in the Measured & Indicated categories, and 1M ounces in the Inferred category (see press release dated January 20, 2021), resulting in approximately 1M of mineral reserves growth since the IFS;
The incorporation of new high-grade underground zones at Umwelt earlier into the mine life increasing annual gold production, particularly in the first years of production with peak production of 312 koz Au in year 3;
Expansion of the Process plant from 3,000 tpd to 4,000 tpd, coming online at the end of year two of production;
New mining areas added: Echo open pit and underground, Goose Main underground and Llama underground. Also, additional mineral reserves have been added at depth at the Umwelt deposit;
Rather than constructing a 1.7km long TSF as proposed in the IFS, the Echo open pit will be mined out prior to the commencement of milling operations to enable tailings deposition. This eliminates the most complicated and highest civil capital risk to the Project. After Echo pit, the Umwelt and Llama open pits will be also used for tailings storage;
Implementation of progressive reclamation throughout operations to further de-risk and streamline the reclamation process;
Pre-production mining at Echo and Umwelt open pits will make available 2.2 Mt and 372 K oz, in stockpiled material, sorted by grade, sufficient for two years of production prior to commencement of milling operations;
A more robust power generation plant for better operation, maintenance and heat recovery;
Underground mining starts earlier and continues to the end of mine life;
Open Pit versus underground mining is now approximately 53%/47% (tonnes) versus IFS of 72%/28%;
Optimization of civil works required for water retention structures with more flexibility;
All environmental authorizations to commence construction and operations have been received; and
Completion of comprehensive framework agreement on land tenure and Inuit Impact and Benefits Agreement (IIBA), providing greater certainty of surface access rights and Inuit benefits and social license.
On Site Improvements since IFS

Key earthworks have been substantially completed on site including preparation for commencement of the underground exploration ramp, roads, the all-weather airstrip extension as well as site preparation for the process pad and accommodation complex;
Project logistics infrastructure constructed including the Marine Laydown Area (“MLA” or “Port”), with three sealifts from both the east and west successfully testing the Project logistics and supply chain from the South;
Successful construction and operation of a 172km Winter Ice Road (“WIR”) from the Port to the Goose Property, gaining valuable experience in the Project’s key infrastructure;
Significant infrastructure including fuel tanks, batch plant, construction crushers and construction/mobile equipment mobilized in 2019/2020 with two maintenance shops;
Basic engineering completed with detailed engineering substantially completed on the process plant and balance of the plant. Additionally, Sabina engaged with an experienced Arctic construction team as part of a constructability and operability review. This level of work significantly de-risks the Project, bringing a high level of certainty to capital and contingency estimates when compared to most feasibility studies; and
A prominent Original Equipment Manufacturer (“OEM”) has been engaged to complete the process plant equipment design, working towards a fixed price contract with operational performance guarantee.
For a detailed economic comparison between the IFS and UFS please refer to Table 1.

UFS Economic Highlights

The UFS was initiated in September, 2020, led by Sacré-Davey Engineering Inc. Other companies providing expertise and support in the preparation of this Technical Report are AMC Mining, Mining Plus, Canenco Consulting Corp., DT Engineers Ltd., Knight Piésold Ltd., and SRK Consulting (Canada) Inc.

A full list of QPs and their areas of expertise is listed at the end of this news release.

All currencies are in Canadian dollars unless otherwise specified. Base case economics are based on a gold price of US$1,600/oz Au and an exchange rate of 1.31:1 (C$:US$)

The Study’s highlights include:

The Project generates a post-tax IRR of 27.7% and NPV (at 5% discount rate) of $1.1 B;
The Project generates Life Of Mine (“LOM”) post-tax net cash flow of ~$2.0 B on gross revenues of $7.0 B with a payback period of 2.3 years (from start of operations);
The mine plan envisions an average gold production of ~287 koz Au per year for the first 5 years, with a peak gold production of 312 koz in year 3 and ~223 koz Au per year over the 15 year mine life (upon commencement of production);
Approximately half of mine production to come from open pits with underground production scheduled from year 1 to year 15;
Initial capital estimate of $610 million and LOM sustaining capital and closure costs of $419 million;
Total LOM cash cost estimate of US$679/oz Au (including third party royalties, refining and transport);
LOM all-in sustaining cost estimate of US$775/oz Au LOM (including sustaining capital & closure costs);
A total of 18.7 million tonnes to be milled over 15 years for a total of 3.3M oz Au with a LOM average grade of 6.0 grams per tonne (“g/t”) Au and LOM average metallurgical recoveries of 93.4%;
Base case assumptions of delivered diesel price of $0.91/L for power generation and $0.95/L for mobile and stationary equipment; and
Average open pit strip ratio of 10:1 over LOM.
GOOSE PROPERTY – UFS

Economic Assumptions and Sensitivities:

Discount rate of 5%;
Costs and prices based on nominal 2020, Q4 Canadian dollar values;
No application of inflation or other price escalation;
Values are presented on a 100% ownership basis and do not include financing costs;
Exclusion of pre-financing costs and sunk costs (i.e., exploration and resource definition costs, engineering, field work and studies costs, environmental baseline study costs, pre-development, etc.), with the exception of applicable sunk costs as allowable tax pools;
Includes estimated third-party net smelter royalties (including the 1% NSR granted to Kitikmeot Inuit Association (“KIA”)) which average 4.8% over LOM;
Mineral royalties as required by the Nunavut Mining Regulations have been evaluated as part of the after-tax analysis. This royalty is payable to the federal government and is deductible from income taxes. It is levied on a mine-by-mine basis and is equal to the lesser of 8% of the net value of mine output during a fiscal year, and an escalating rate from 0% to 14% on incremental levels of net value of the mine output during a fiscal year;
Federal tax rate of 15% and a NT 12% rate were used to calculate income taxes;
Canadian Exploration Expense (CEE) and Canadian Development Expense (CDE) tax pools were used with appropriate opening balances to calculate income taxes; and
Specific capital cost class Capital Cost Allowance (“CCA”) rates were applied and used to calculate the appropriate CCA the Company can claim during the entire life of the Project.
Post-tax financial performance is summarized in Table 1.

A sensitivity analysis was conducted on post-tax net IRR and NPV5% for individual parameters, including the gold price, foreign exchange rate, head grade and recovery, operating costs, and capital costs. The results are shown in Tables 2, 3 and 4. The Project proved to be most sensitive to changes in the foreign exchange rate and gold price. The Project showed least sensitivity to operating costs.

Opportunities for further de-risking at Goose and future growth for Sabina on the Back River District

Pre-production stockpile of 2.2 Mt of mill feed on the ground at commissioning;
Early bulk sampling prior to commissioning to validate ore sorting opportunities to reduce tailings production and increase head grade;
Sabina is also in the process of defining a performance guarantee with the Original Equipment Manufacturer for the process plant;
High confidence in conversion of further resources into reserves at all deposits with a historical 73% conversion rate. Llama Extension and Nuvuyak deposits are currently inferred resources with a strong probability of effective conversion to reserves;
Effective access and potential delineation of additional high-grade material from a planned exploration decline at Umwelt UG;
All deposits in the UFS are open to depth with both new resources at Llama Extension and Nuvuyak showing significant expansion potential along trend.
With detailed engineering near completion, Sabina is well positioned to engage an experienced Arctic construction team to negotiate lump sum pricing;
Sabina has invested in site located data collection units and environmental studies on wind energy and has advanced engagement with companies on alternative energy generation for reduced carbon footprint options;
The exhausted Goose Main open pit is only partially filled with water at the end of the mine life which could allow for additional deposition of tailings, waste rock, contact water or saline ground water to support operations or during upset hydrological conditions (extreme storm events);
The initial TSF, which is not envisioned as part of the UFS remains fully permitted and may be constructed and used for deposition of tailings, waste rock, contact water or saline ground water;
Additional time, resources and funds for testing, commissioning, start-up and ramp-up have been incorporated into the economic analysis;
Expansion and development of the 1 M oz Au each of Indicated and inferred George site resource as a second potential mine; and
Strong additional discovery potential of new economic gold zones with continued district exploration over the 80km Back River gold belt.
UFS Parameters

The Back River mineral resources are located at the George and Goose Properties. Each site has six gold deposits with the majority of the resources located at the Goose Property. The UFS contemplates only Goose Property. The Goose UFS is based on conventional open pit and underground mining operations that feed a 3,000-4,000 tpd whole-ore leach process plant. The parameters developed for the UFS are shown in Table 5. The plant will produce an average of approximately 223 koz Au per year as doré bullion over a 15 year operating life.

A total of 18.7 million tonnes (“Mt”) will be mined at a mill head grade of 6.0 g/t Au with a projected overall average gold recovery of 93.4%. A total of 3.35 Moz Au is estimated to be recovered over the LOM with cash costs of approximately US$679 per oz Au including royalties. All-in sustaining costs (including sustaining capital and closure costs) are approximately US$775 per oz Au.

For the UFS Parameters see Table 5.

Initially, tailings will be stored in the mined-out Echo Pit, followed by deposition into the exhausted Umwelt and Llama open pits. Mine construction and ongoing operations will be facilitated by an annual sealift during the summer months to Port located at Bathurst Inlet and trucked over a 172 km seasonal WIR to the Goose site in the winter months.

Geology and Mineralization
see & read more on
https://www.sabinagoldsilver.com/news/sabina-gold-and-silver-announces-updated-feasibility-study-on-goose-property-at-the-back-river-gold-district-nunavut