Sabina Gold & Silver Corp. [SBB-TSX] said Friday it has raised $5 million from a bought deal private placement of 2.13 million flow-through shares priced at $2.34 per share.
Proceeds from the private placement will be used to incur Canadian exploration expenses at the Back River Gold Project in Nunavut that will qualify as flow-through mining expenditures as defined under the Income Tax Act (Canada). Proceeds from the offering must be used to incur Canadian exploration expenditures by December 31, 2020.
Sabina is well financed and had approximately $94.5 million in cash and equivalents post-closing of a strategic equity investment in January, 2019.
The investor was Zhaojin International Mining Co. Ltd., a leading Chinese gold producer and smelting company, which agreed to invest $66.1 million in the Vancouver company, via a private placement of 24.9 million common shares at $2.65 a share.
As a result, Zhaojin owns a 9.9% stake in Sabina, which had approximately $21.9 million in cash, cash equivalents and short-term investments as at September 30, 2019.
Sabina holds a 100% interest in the Back River Gold Project, which has the potential to produce 200,000 ounces of gold annually for 11 years, according to the results of a feasibility study that was released in September, 2015.
“This financing will fund a 6,500-metre drill program at Back River this spring to focus on better defining the high-grade corridor at the Umwelt and underground deposit as well as other exploration work,’’ said Sabina President and CEO Bruce McLeod.
Both Dundee Precious Metals Inc. and Zhaojin International Mining elected to maintain their pro-rata share interests pursuant to their participation rights in connection with the offering. The company issued to them 1.92 million non flow-through common shares at $1.63 per share, raising additional proceeds of $3.1 million.
Sabina shares advanced on the news, rising 0.53% or $0.01 to $1.88. The shares are currently trading in a 52-week range of 99 cents and $2.28. Dundee owns 10.2% of the shares outstanding, according to a Sabina investor presentation.
The Back River Gold Project, a series of gold deposits in a banded iron formation, is located in southwestern Nunavut, approximately 520 kilometres northeast of Yellowknife, N.W.T., and southeast of Glencore Canada Corp.’s Hackett River silver-zinc project.
The project is advanced, hosts significant NI 43-101 gold resources and reserves and has completed a feasibility study and significant permitting milestones.
In a November, 19, 2019 news release, Sabina said the project received its final project certificate on December 19, 2017. The project received its Type A Water License on November 14, 2018 and is now in receipt of all major authorizations for construction and operations.
In addition to Back River, Sabina also owns a significant silver royalty on Glencore’s Hackett River Project. The silver royalty on Hackett River’s silver production is comprised of 22.5% of the first 190 million ounces produced and 12.5% of all silver produced thereafter.
Although Sabina is no longer the owner of Hackett River, it still considers its royalty interest in the project to be a material mineral project for the purposes of NI 43-101.
The project contains an indicated resource of 25 million tonnes, grading 4.2% zinc, 0.6% lead, 0.5% copper, 130 g/t silver and 0.3 g/t gold. On top of that is an inferred resource of 57 million tonnes, grading 0.3% zinc, 0.5% lead, 0.4% copper, 100 g/t silver and 0.2 g/t gold.