Investors looking for an emerging producer with the capability to put a medium sized gold deposit into production in a relatively politically stable jurisdiction, where costs are reasonable, and without having to dilute shareholders with a gazillion share issue, or bootstrap itself with a project financing, look no further. The timing is probably good too.
Sabina Gold & Silver published a preliminary economic assessment completed by SRK on the Back River project recently.
The news release stated the following:
“PEA contemplates a scenario with concurrent open-pit and underground mining operations delivering mineralized material from the Llama, Umwelt, Goose and George deposits to a centralized 5,000 tonne per day ("tpd") processing facility located near the Umwelt deposit. Gold production is projected to average ~300,000 oz/year over 12.3 years for total production of 3,677,000 oz Au, beginning in late 2016 or early 2017.”
SRK concluded that the project may be economically viable and that Sabina should proceed to a pre-feasibility study. It calculated an after tax NPV-5% of about $650 million and an IRR of 25% (4 year payback) at a $1250 gold price ($1.1billion and 32% IRR (pre–tax)), assuming cash operating costs of $542 per ounce, preproduction capital of $450 million, and sustaining capital of $388 million (plus a $100 million contingency). (more)
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