Mining News: Northern Neighbors: Study shows feasible Back River mine

Sabina Gold & Silver Corp. May 21 reported the completion of a feasibility study for its Back River gold project in Nunavut. The study, led by JDS Energy & Mining Inc., outlines a 6,000-metric-ton-per-day mill producing an average of around 346,000 ounces of gold annually over a 10-year mine life. The ore would come from a combination of open pit and underground mining, with the bulk of the material coming from the open pit. The mine outlined in the study is expected to mill some 19.8 million metric tons of ore at an average grade of 5.7 grams of gold per metric ton and metallurgical recoveries of 93 percent. The per-ounce cost of producing the gold is estimated to be US$535 and all-in cost, including sustaining capital is expected to total US$671/oz of gold produced. The feasibility study estimates that such a mine at the Back River project could generate a post-tax internal rate of return of 21.7 percent and net present value (at 5 percent discount rate) of C$539 million. The mine is expected to generate post-tax net cash flow of C$914 million over its 10-year life with a payback period of 2.2 years. Sabina notes that the feasibility study demonstrates improved economics using a lower gold price, compared to a pre-feasibility study completed in 2013. Sabina President and CEO Bruce McLeod said “JDS has identified the potential optionality to start smaller at Back River which could kick off production on the belt. Such an opportunity would require less initial capital which in these markets may enhance shareholder value.”

- Shane Lasley