Sabina Gold arranges US$520 million financing

Sabina Gold & Silver Corp. (SBB-TSX) on Tuesday unveiled a US$520 million financing package that will fund development of the Goose gold mine at the company’s Back River Project in Nunavut, Canada.

The company said it has completed the final documentation with Orion Mine Finance and Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) with respect to a package that will 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.

“This is a major milestone for Sabina,” said the company’s President and CEO Bruce McLeod. “We are proud to welcome Orion and Wheaton as significant Sabina equity holders.” “The financing enables Sabina to continue on our path to producer status and to first gold at the Goose Mine which we expect in Q1, 2025,” he said.

On February 7, 2022, Sabina shares closed at $1.34 and currently trade in a 52-week range of $2.84 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.

In connection with the financing, Sabina has executed final documentation with respect to the following:

• The provision by Orion of a senior secured project finance debt facility of US$225 million and a gold prepay facility of US$75 million.
• The purchase by Orion of 100% of the annual refined gold production from the project based on prevailing market prices.
• The purchase by Orion, on a private placement basis, of US$75 million in Sabina shares.

The US$225 million debt facility is to be funded in four equal tranches and available from the date of the gold prepay facility is fully drawn down until December 31, 2024.

Concurrently, Sabina has executed final documentation with respect to a definitive precious metal purchase agreement under which Wheaton will pay Sabina US$125 million up front to acquire payable gold production form the project. Wheaton will also buy US$20 million worth of Sabina shares on a private placement basis.

In return, Wheaton will receive 4.15% of the gold production from the project, dropping to 2.15% after delivery of 130,000 ounces and dropping to 1.5% following the delivery of 200,000 ounces.

Wheaton will make ongoing payments equal to 18% of the spot gold price, until the deposit has been reduced to zero, thereafter increasing to 22% of the spot price upon delivery.

Following the closing of all tranches of the private placement common share subscriptions, Orion will own approximately 15.9% of Sabina, and Wheaton will hold 6.8%. That includes Sabina shares currently held by Wheaton.