Sabina Gold announces $110 million bought deal

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Sabina Gold & Silver Corp. (SBB-TSX) said Tuesday it is raising $110 million from a bought deal sale of 71 million common shares priced at $1.55 per share to an underwriting syndicate led by BMO Capital Markets.

The company said it has granted the underwriters the option to purchase an additional 15% of the common shares issued to cover over-allotments, if any. That option remains open for 30 days after the closing of the offering, which is expected to occur on March 30, 2022.

Net proceeds will be used to fund development at the company’s Back River Project in Nunavut, Canada where the first gold is expected to be produced in the first quarter of 2025.

The bought deal has been arranged jus weeks after Sabina unveiled details of a US$520 million financing package that will also be used to fund development of the Goose gold mine. Under agreements with Orion Mine Finance and Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE), Sabina said the package would consist of a US$225 million senior secured debt facility; a US$75 million gold prepay facility, a US$125 million gold stream arrangement and a US$95 million private placement of Sabina common shares.

On Tuesday, Sabina said it has delivered a financing notice to Zhaojin International Mining Co. Ltd., which has a 48-hour right to elect to maintain its 9.9% stake in Sabina by purchasing a number of shares by way of a private placement at the offering price needed to maintain its current interest level.

Zhaojin can also elect to subscribe for 33% of the common shares sold under the offering.

OMF FUND 111 (MT) LLC and Wheaton Precious Metals can also elect to purchase an amount of shares at the offering price by way of a private placement in order to maintain their 14.2% and 6.4% holdings in Sabina respectively. Any such participation will occur by way of a concurrent private placement.

On Tuesday, Sabina shares eased 10.6% or 19 cents to $1.60 on volume of 1.95 million. The shares are currently trading in a 52-week range of $2.14 and $1.23.

Sabina holds a 100% interest in the Back River Gold District, an 80-kilometr- long belt containing a series of gold deposits in banded formation, located in southwestern Nunavut, approximately 520 kilometres northwest of Yellowknife.

Goose will be the first mine in the district. An updated feasibility study envisages a project that will produce 223,000 ounces of gold annually for 15 years, including 287,000 ounces per year in the first five years, and 312,000 ounces annually at peak production. The capital expenditure for the project is US$466 million, with first gold pour anticipated by the first quarter of 2025.

The project received its final major authorizations in June, 2020, and is now in receipt of all major permits, and authorizations for construction and operations.

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