2012 Nunavut Work
Program
As previously announced, Sabina has committed
to a significant work program on its 100% Back River gold project for
2012. The Company has recently opened the camps at George and Goose and
are in the process of a record resupply of materials to support the
largest program ever planned for the Back River.
Both camps are being upgraded to accommodate
more personnel as well as support regional programs at other Back River
claim blocks and Wishbone. It is anticipated that drilling should commence
on the Goose claim block as early as the first week of March.
"We are excited about getting back into camp,"
said Rob Pease, President & CEO. "A good component of our $65 million
budget in Nunavut is directed to advancing the known deposits towards
development and ultimately production. We are eagerly anticipating a
preliminary economic assessment ("PEA") on the project due out near the
end of the first quarter this year. That PEA will identify areas for
resource conversion drilling as well as required baseline work to include
in the next step for the project; a pre-feasibility study. We have also
committed a significant component of this year's budget for resource
expansion work and to continue looking for additional high grade shallow
new discoveries on our vast land package."
Back River has a current National Instrument
43-101 compliant indicated resource of 22.3 million tonnes at 5.62 g/t Au
for 4.03 million ounces gold and an additional inferred resource of 10
million tonnes at 6.23 g/t Au for 2.02 million ounces gold.
Back River continues to demonstrate high
quality attributes such as significant size and grade, amenable to both
open pit and underground mining. The current production concept for Back
River contemplates a through put of between 5,000-6,000 tonnes per day for
annual gold production of between 300,000 and 400,000 ounces of gold per
year. This profile envisages a relatively small footprint that would see
Dore flown from the mine to refineries in the south.
The project also has other opportunities.
There continues to remain considerable upside exploration potential for
new gold discoveries on the project as only a fraction of the land package
has been explored. Also, Sabina's properties are adjacent to the Hackett
River silver-zinc project, recently sold by the Company to Xstrata Zinc
Canada ("Xstrata"). Xstrata's payment for Hackett was comprised of an
initial cash payment of $50 million and a very significant silver royalty
held by the Company on 22.5% of the first 190 million ounces of silver
produced at Hackett and 12.5% on any silver produced thereafter. Xstrata
is also committed to spend $50 million on Hackett over the next four years
to take the project to a feasibility study.
"We view the Hackett River project as a
significant opportunity to increase the life of Xstrata Zinc's operations
in Canada and enhance our growing presence in the country," said Manuel
Alvarez, Chief Operating Officer, Xstrata Zinc Canada. "Plans are
currently being made to mobilize for our first campaign on Hackett. We
look forward to working with local stakeholders and industry as this
project moves forward."
The value and optionality of Sabina's royalty
on Hackett River should increase as Xstrata moves the project forward. The
royalty offers opportunities for financing the construction of Back River,
and/or significant free cash flow once Hackett is in production.
Once the PEA is announced, the Company will
file a Preliminary Project Description ("PPD") with the Nunavut Water
Board. The PPD would start the environmental assessment and permitting of
Back River. It is anticipated that all work required to begin a
pre-feasibility will be completed by year end, including a new resource
estimate.
Agreement with Kitikmeot Inuit
Association ("KIA")
In recognition of Inuit rights under the
Nunavut Land Claims Agreement and in light of Sabina's continuing
commitment to development of its projects on Inuit Owned Lands in Nunavut,
Sabina and the KIA signed a MOU whereby Sabina would establish and
contribute to a sustainable development trust (the "Trust").
The Trust would provide short and long term
benefits to the Inuit of the Kitikmeot region in which Sabina's Nunavut
properties are located. These benefits target KIA development projects and
initiatives including training and education as well as infrastructure
projects that will serve to support sustainable economic development in a
currently struggling region.
"We view this Trust as a vehicle to promote
the cultivation of long term relationships, to train our future employees
as well as to support infrastructure needs and growth in the Kitikmeot,"
said Rob Pease, President & CEO. "Forging relationships and agreements
with local stakeholders is imperative to moving any project forward. We
realize the need to start now to prepare for our future as a mid-tier gold
producer and to establish win-win relationships to prosper. We are proud
to deliver an initial contribution to the KIA as part of this
strategy."
"As beneficiaries of Nunavut, we view this
agreement and the first payment under the agreement, as the beginning of a
positive business relationship with Sabina and with the mining industry in
general," said Charlie Evalik, President of the KIA. "It is a clear
indication of Sabina's investment in the people and sustainability of the
Kitikmeot, and their willingness to create a mutually beneficial scenario
for both shareholders and land owners. We look forward to working with
Sabina in 2012 and beyond as they advance the Back River Project and
pursue other opportunities in the Kitikmeot."
The Company and the KIA have also agreed that
it would be mutually beneficial to enter into long-term land use
agreements for the Back River and Sabina's remaining Wishbone properties.
Key provisions which have been agreed upon in a separate Memorandum of
Understanding include an initial seven year term for exploration
activities with a provision to extend for an additional two years.
The Company is well funded to continue its
aggressive exploration and development objectives and ended 2011with $160
million in cash.
SABINA GOLD & SILVER
CORP
Sabina Gold & Silver Corp. is an emerging
precious metals company with district scale, world class undeveloped
assets in one of the world's newest, politically stable mining
jurisdictions: Nunavut, Canada.
Sabina's primary properties consist of the
Back River Gold Project, the Wishbone Claims, a vastly prospective grass
roots project and the Hackett River silver royalty all located in Nunavut.
The Company sold the Hackett River project and certain claims in the
Wishbone greenstone belt to Xstrata Zinc Canada Division (Xstrata) for
which the Company received $50 m cash and a silver royalty on Xstrata's
Hackett River silver production of 22.5% of the first 190 million ounces
produced and 12.5% of all silver produced thereafter.
Forward-Looking
Statements
Statements relating to exploration, work on
the Company's natural resource properties and the expected results of this
work are forward-looking statements within the meaning of securities
legislation of certain Provinces in Canada. Forward looking statements are
statements that are not historical facts and are generally, but not
always, identified by the words "expects", "plans", "anticipates",
"believes", "intends", "estimates", 'projects", "potential" and similar
expressions, or that events or conditions "will", "would", "may", "could"
or "should" occur. Information inferred from the interpretation of
drilling results may also be deemed to be forward looking statements, as
it constitutes a prediction of what might be found to be present when and
if a project is actually developed. These forward-looking statements are
subject to a variety of risks and uncertainties which could cause actual
events or results to differ materially from those reflected in the
forward-looking statements, including, without limitation: risks related
to fluctuations in metal prices; uncertainties related to raising
sufficient financing to fund the planned work in a timely manner and on
acceptable terms; changes in planned work resulting from weather,
logistical, technical or other factors; the possibility that results of
work will not fulfill expectations and realize the perceived potential of
the Company's properties; risk of accidents, equipment breakdowns and
labour disputes or other unanticipated difficulties or interruptions; the
possibility of cost overruns or unanticipated expenses in the work
program; the risk of environmental contamination or damage resulting from
Sabina's operations and other risks and uncertainties, including those
described in Sabina's Annual Report for the year ended December 31,
2010.
Forward-looking statements are based on the
beliefs, estimates and opinions of Sabina's management on the date the
statements are made. Sabina undertakes no obligation to update these
forward-looking statements should management's beliefs, estimates or
opinions, or other factors, change.
This news release has been authorized by the
undersigned on behalf of Sabina Gold & Silver Corp.
Rob Pease, President & CEO
