Sabina Gets A Green Light

2017-07-19 / @Goldfinger

 

Yesterday after the market close Sabina Gold & Silver received a positive recommendation from NIRB (Nunavut Impact Review Board) which essentially means that the company is very close to getting the full go ahead to construct a mine at Back River.

RBC sees the first gold pour at Back River in 2021 and adds:

"Overall, we believe significant long-term potential remains at Back River due to the high-grade, low-cost nature of the mine with additional exploration potential. We currently estimate annual production exceeding 200 Koz at mine-site AISC of ~$725/oz."

One of the things that has always stood out about Back River from an economic sensitivity standpoint is that the project's economics benefit tremendously from a weak Canadian dollar:

Unfortunately for Sabina the Canadian dollar price of gold has dropped nearly C$200/oz in a straight line (as the USD/CAD exchange rate has declined from ~1.35 to ~1.26) since early June when the blurb at the bottom of the above slide highlighting a C$786 million after-tax NPV was written.

Nevertheless I view Sabina as being fairly valued near C$2.75/share after the positive recommendation from NIRB. There is also significant room to upgrade the resource and perhaps add a year or two to the life of mine at Back River; Sabina recently announced encouraging step-out drill results at its Llama extension.

And to answer my own question from a blog post written last week, the chart was right:

SBB.TO (Daily)


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