Overview

Hackett River is already one of the largest undeveloped volcanogenic massive sulphide (VMS) deposits in the world and is analogous to the Kidd Creek and Noranda deposits which have been prolific large producing mines for decades.

Hackett River is a silver- rich VMS deposit located 45 km west of Sabina's flagship Back River Gold Project in Nunavut.

Hackett River Silver Royalty

Hackett River, located 45 km west of the Company's Back River gold project in Nunavut, is a silver rich volcanogenic massive sulphide project and is one of the largest undeveloped projects of its type. In 2011, the Company sold Hackett River to Xstrata Canada Corporation, Zinc Canada Division ("Xstrata") which is now Glencore Canada Corporation ("Glencore").

As consideration for the sale, the Company received $50 million in cash and retained a significant silver royalty on Hackett River. Under the terms of the royalty, Sabina is entitled to receive 22.5% of silver production up to the first 190 million ounces produced and 12.5% of all silver produced thereafter at Hackett River. 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.

Resource Estimate


The updated mineral resource estimate was originally prepared by Glencore (previously Xstrata) under the JORC code and was reported by Glencore on May 3, 2013 in its annual report of mineral resources and reserves as at December, 31, 2012. Glencore's updated mineral resource estimate has been reviewed by Sabina and is stated in the Report in accordance with NI 43-101 thus conforming to CIM Definition Standards.

Mineral Resource Estimate - Hackett River Deposits

  Mt Zn % Pb % Cu % Ag g/t Au g/t
Indicated 25 4.2 0.6 0.5 130 0.3
Inferred 57 3.0 0.5 0.4 100 0.2
  1. Source: Xstrata R&R Report (as of December 31, 2012)
  2. Mineral resources, which are not mineral reserves, do not demonstrate economic potential viability.
  3. Xstrata's normal data verification procedures have been employed in connection with the estimations.
  4. Xstrata used the JORC code and the above estimate also conforms to the CIM definition standards for Mineral Resources.
  5. The Qualified Person that prepared the resource estimate for Glencore is Aline Côté P.Geo. OGQ of Glencore.
  6. The mineral resource is not constrained by pit or underground designs.
  7. The cutoff grade is set at a $25/tonne NSR value.
An equivalent zinc grade formula (ZnEq) was used to define the outline of the mineralized zones and the ZnEq field was calculated on individual assays in the assay database using the formula:
Zn+2.88*Cu%+0.96*Pb%+0.03*Ag g/t+1.34*Au g/t
Glencore does not publish the price assumptions and recovery data behind the factors in the formula. Both Sabina and AMC have reviewed the formula for reasonableness and tested the formula using Sabina's long-term metal prices and metallurgical recoveries. Metallurgical testing completed by Sabina prior to the sale estimated recoveries of 92% for zinc, 85% for lead, 74.5% for copper, 77% for silver and 55% for gold. Sabina used long term metal prices of $1.01/lb for zinc, $0.92/lb for lead, $2.89/lb for copper, $23/oz for silver and $1,300/oz for gold (all prices in US dollars) based on consensus pricing of market analysts, consistent with industry standard practice.. The prices above are Sabina's and are not necessarily the prices used by Glencore for the mineral resource estimate.

The resource estimate utilized 39,000 assays for zinc, lead, copper, silver and gold from 629 diamond drill core holes totalling 148,920 metres. The database was rebuilt and verified by Glencore. The assay data was combined with the geological data to create three dimensional wireframe solids for the four mineral zones at Hackett: the Main, Boot, East Cleaver and Jo zones. The mineralized zones were confined and constructed using a 2.5 percent zinc equivalent grade cutoff and a minimum downhole length of 3 metres. Statistical analysis and the decile method were used to determine any capping required.

Analyses of variograms were used to determine appropriate search distances, dimensions and orientation of the search ellipses for all mineral domains. Block models with a block size of 5 by 5 by 5 meters were created for the four mineral zones and metal values were interpolated using the inverse distance squared method for all mineral zones.

The block model was validated by visual comparison of wireframes and block model along sections and in plan view and by examination of point areas with block grades. Additionally, a comparison of grades and tonnages between previous block models and current version was carried out.

Mr. Stanley Clemmer, P. Geo, and Project Manager of the Company is a Qualified Person under the terms of National Instrument 43-101 and has reviewed the technical content of this disclosure and approved its dissemination.