Back River Gold Project

Overview

Back River is Sabina's flagship project.  The project is advanced, large, district scale, fully permitted with social license in hand and is in Nunavut, Canada: one of the world's best mining jurisdictions.  At US$1150 gold (2015 Feasibility Study) the Project delivers a 24.2% IRR: at 6g/t, these are the highest grade undeveloped open pits in the world.  Pre-development construction has begun with the Project's Port Facility and Winter Ice Road being completed.  The Project has been through the debt process and reviewed by the lender's independent engineer and it is currently undergoing detail engineering.  In addition, only 8km of the 80km district is the focus of the first mine (Goose Project) where an additional 1.2km of mineralized trend has been found since the last resource update in 2014.  The Company is now currently working on infill drilling to update its resource estimate as well as an updated Feasibility Study to update costs and Project economics at current gold prices.  Sabina is also waiting for an opportunistic window to raise the equity portion of the Project financing.

The 100%-owned Back River Gold Project is an 80km long belt, with a series of gold deposits in banded iron formation, located in southwestern Nunavut, Canada, approximately 520 km northeast of Yellowknife. The Project was purchased from Dundee Precious Metals in 2009 who remains a shareholder.

The 80km district hosts six properties: Goose, George, Boulder, Boot, Del and Bath, with most work being done at George and Goose.  The Goose Project is the District's proposed first mine where the majority of the resources are.  The current global resource estimate (Goose(70%) & George(30%)) sits at:

Mineral Resource
Estimate
Oct/14

Tonnes (kt)

Au (g/t)

Metal (koz
Au)

Measured

10,273

5.27

1,740

Indicated

17,969

6.22

3,593

Measured and Indicated

28,242

5.87

5,333

Inferred

7,750

7.43

1,851

Included in the resource are reserves of:

Mineral Reserve
Estimate Aug/15

Classification

Tonnes (kt)

Au (g/t)

Au (koz)

Total Open Pit

Proven

6,983

5.97

1,340

Probable

1,885

5.52

335

Total Underground

Proven

20

9.52

6

Probable

3,471

7.37

822

Total Back River Property

Proven

7,003

5.98

1,346

Probable

5,356

6.72

1,157

Click here for Summary of Mineral Reserves and Resources Estimate

The focus for initial production has been at the Goose Project which is significantly advanced. A feasibility study was completed on an Initial Project contemplating a 3000 tonne per day operation that would produce approximately 200,000 ounces a year and deliver an after-tax Internal Rate of Return of 24.2% at US$1150 gold.  The Corresponding technical report for the feasibility study was filed on www.sedar.com.

Since the receipt of its final Project Certificate in late 2017, the Back River Project has continued to progress. From the years 2018 to 2020 there have been significant advancements in the Project.

Advancements in the past few years include:

  • Completion of marine Port facility earthworks with camp, airstrip, and 10 million litre diesel tank, as well as receipt of equipment over 2 sea lift seasons.
  • Winter ice road completion and delivery of materials and equipment from the marine Port facility to the Goose property.
  • Preliminary earthworks and quarrying at the Goose site.
  • Optimization of basic engineering and advancement of a Fixed Price Bid and performance guarantee on the construction of the Project.
  • Demonstration of mine life extension through significant resource growth and resource optimization with the discovery of the Nuvuyak zone, discovery of a high-grade corridor at Umwelt underground, and extension of the Llama gold structure.
  • Application and successful receipt of over 27 approvals and permits for ongoing exploration, construction, and operations.
  • Finalization and implementation of the Framework Agreement with the Kitikmeot Inuit Association (KIA).
  • Continued successful community engagement and maintenance of social licence and release of Sabina's first ever Environmental and Social Governance Report.
  • Advancement of Back River project financing with engagement of financial advisor and completion of debt proposal process.
  • Completion of flow-through eligibility ruling from Canada Revenue Agency (CRA) for application for exploration activities at the Umwelt deposit, including a ramp to underground extension of resources.
  • Continued pursuit and cultivation of supportive capital market participants to enable suitable financing to build and operate the mine at Goose.

Click here for Study QA/QP

The Qualified Persons as defined by NI 43-101 as pertains to the Back River Project, are Angus Campbell, Vice-President of Exploration, for the Company and Vincy Benjamin, Director of Engineering for the Company. They have approved of the written disclosure set out above.

Back River Project Geology and Exploration

Geology & Mineralization

The currently known gold deposits at Back River are comprised of Umwelt, Llama, Goose, Echo and Nuvuyak (all on the Goose Property), and the George deposits approximately 50 km to the north of the Goose Property. The Goose and George deposits are historical deposits which formed the resource basis upon which Sabina acquired the property in June 2009.

Most of the known or observed gold mineralization identified on the Back River Project is associated with quartz veins, silicification and shearing. The mineralization occurs within silicified and variably sulphidized iron formation and to a lesser extent sedimentary units that appear to have a spatial association with narrow porphyritic felsic dykes and mudstones. Sulphide minerals observed on the Back River Project include pyrite, arsenopyrite, and pyrrhotite. Sulphide mineralization may be associated with accessory chlorite, carbonate, hornblende and grunerite. Visible gold is locally present, especially when sulphides are greater than 10% and when coarse-grained arsenopyrite is present.

On the Goose Property, gold mineralization on the Goose deposit is predominantly structurally controlled. The deposit is situated within the lower iron formation and underlying sediments beneath the Goose antiform structure, which resides within a 500m + wide corridor of widely spaced, subparallel north to northeast trending southeast dipping, normal faults that have up to 30 m of left-lateral displacement and a down dropping of individual fault blocks of up to 75m. The Umwelt and Llama deposits are underlain by similar geology to Goose. Suphidized oxide and silicate facies banded iron formations are cut by felsic and gabbroic dykes. Airborne and ground magnetics suggest that the iron formations are strongly folded. Recent drilling at Llama confirms the complexity of the structural history of that area, but tighter drill spacing in 2012 is allowing a continuous high grade gold bearing antiform structure to be defined.

Gold mineralization at George is located within oxide iron formation near the stratigraphic base of this unit. Less significant gold mineralization is also hosted within silicate iron formation. Gold bearing zones are associated with sulphide concentrations in the iron formation and are commonly accompanied by increased quartz veining and attendant alteration of the surrounding rocks.

For further details on the geology and mineralization of the Back River Project please see the Company’s latest AIF and NI 43-101 report available in the Public Filings section of this website.

Exploration

In 2018 and 2019, exploration work at the Goose property has focused on new discovery and resource extension and optimization at the Goose Main, Umwelt, and Llama deposits, the new Nuvuyak discovery and to a lessor extent the Echo Deposit.

This work was undertaken with the objectives of further improving the economics and life span of future mine operations. Throughout this time period, exploration drilling successfully discovered mineralization extending over an additional 25% of plunging iron formation. Between the Llama Extension and Nuvuyak zones, Sabina identified an additional combined 950 m of gold mineralized iron formation along plunge from known deposits. Additional work and evaluation will be required to better understand the impact of these new potential mineral resources to the project, but it is likely that the current mine life (as outlined in the Sept 2015 43-101 feasibility report) will be significantly extended.

The 2018 exploration programs at the project consisted of two drilling programs completing approximately 22,500 m. The spring drill program, running from March to May, drilled 6,000 m, where the summer drill program completed 16,500 m from July to October. In addition, exploratory field work consisted of geological mapping and rock and till sampling on the Goose and Boulder properties during the summer field season.

The 2019 exploration programs at the project consisted of a spring drilling program and a summer trench mapping program. During the spring program, running from April to June, 6,467 m were drilled on the Goose property. The summer field program focused primarily on mapping the re-excavated and extended historic (2004-2005) trenches over the Goose Main deposit with additional small field work excursions at the Del and Goose properties.

Table 1: Exploration Spending 2018 and 2019

Year Drilling Completed Spend Field Work Completed Spend Total Spend
2018 22,500 m in 40 drill holes. Majority at Goose Property with additional scout holes at the Boulder Property 12.00M Geologic mapping, prospecting, till sampling, structural study, age dating study, deposit modelling updates, surficial geology study 0.29M 12.29M
2019 6,468 m in 8 drill holes. All drilling at the Goose Property 4.70M Geologic mapping, rock sampling, trenching, structural study, and geophysical compilation 0.12M 4.82M

Figure 1: Idealized long section of the 8 km long Goose Property gold complex showing approximate strike lengths of mineral zones and possible extensions for targeted growth towards 10 million gold ounces

Key advancements in resource optimization, discovery, and geoscience include:

  • The significant extension of the Llama underground gold structure. Mineralization from the bottom of the Llama open pit reserve now extends for greater than 1,200 m down plunge. Recent successes include the extension from the existing Llama underground resource (which is not in the current development plan) adding an additional plunge length of approximately 580 m, as well as the discovery of higher-grade mineralization over numerous drill holes within this plunge extension. The mineralizing structure at Llama underground remains open to depth.
  • The new discovery of a significant zone of gold mineralization, the Nuvuyak Zone, located approximately 1,000 m west of the Goose Main deposit. The Nuvuyak gold zone has now been tested by 14 drill holes which confirm a strongly mineralized, folded iron formation package over a plunge extent of 370 m, open both up and down plunge. The Nuvuyak gold zone is analogous in size and mineral robustness to the other Goose deposits and is the most important discovery since the Umwelt discovery in 2010.
  • The definition and expansion of a thickened, high grade corridor of mineralization within the Umwelt underground, initially at the Vault Zone and more recently in the up-plunge direction. Recent drilling and modelling show that the high-grade zone or corridor extends through Vault, up and down plunge with excellent potential for significant optimization through additional drilling. Early development of the Umwelt underground has the potential to add over 80,000 ounces a year of gold production to the Back River gold deposit.
  • Key components of relevant data sets have been integrated into a 3D platform to facilitate construction of a robust geological model that has greatly enhanced the ability to interrogate, review and prioritize exploration targeting. Some of the key outcomes include: a better understanding of ore controls, a stronger and more detailed model of all important stratigraphic units, a better understanding of key structural components and the effect on iron formation and ore deposit geometry, and a better understanding of gold distribution and related mineralogy.

Description of Currently Defined Goose Project Advancement Through Recent Drilling and Discussion of Resource Opportunities

Llama Underground - Llama Extension

The Llama Deposit contains an estimated 3,557,000 tonnes at 6.50 g/t Au for 743,000 ounces of gold in the Measured and Indicated categories, and an additional 295,000 tonnes at 6.77 g/t Au for 64,000 ounces of gold in the Inferred category. Of this, 1,749,000 tonnes at an average grade of 7.15 g/t Au for 402,000 ounces in the Proven and Probable categories make up the open pit Reserve. The current Feasibility Study does not contemplate an underground development at Llama. Exploration at Llama in 2017 aimed to test the down plunge continuity of the deposit, successfully returning significant high grades such as 9.48 g/t Au over 38.55 m in drill hole 17GSE516B and 15.67 g/t over 23.25 m in drill hole 18GSE530. To date 15 drill holes have extended the gold mineralization shell down plunge from the Inferred Mineral Resources (outside of the open pit shell) by approximately 580 m with grades and thicknesses greater than those intersected in the current Llama underground Resource. This drilling has extended the total “outside” of the pit gold mineralization at Llama to over 1,200 m of strike extent and it remains open to depth.

Current combined Measured, Indicated and Inferred Underground resources total 1,160,000 tonnes at 7.94 g/t Au for 295,000 ounces.

Figure 2: Llama long section showing current resource and reserves in red and the new Llama Extension mineral zone in green with recent drilling and select significant gold intercept values

Nuvuyak Discovery

The Nuvuyak Zone was discovered in 2018 with drill hole 18GSE545 that returned 11.58 g/t Au over 39.50 m. The mineral zone which is located approximately 1,000 m down plunge of the Goose Main deposit has now been drilled over 370 m of plunge length in 14 drill holes and exhibits many of the geologic and mineralogic characteristics of the existing Goose property deposits; Llama, Umwelt, and Goose Main. The deposit is open both up and down plunge, as well as in the down dip direction along the limbs of the anticlinal fold. Examples of select significant intervals from recent Nuvuyak drilling include; drill holes 18GSE559W1 which returned 12.41 g/t Au over 8.70 m, 18GSE558 which returned 16.39 g/t Au over 13.20 m, 18GSE558W2 which returned 5.81 g/t Au over 34.60 m and 19GSE566 which returned 10.04 g/t Au over 18.00 m.

Figure 3: Nuvuyak Zone discovery mineral zone with drill holes and modeled iron formation interpretation

Figure 4: Goose – Hook – Nuvuyak unfolded and idealized long section showing gold structure connection to the Goose Main deposit and high grade nature of many of the Nuvuyak discovery and follow-up drill hole values

The Nuvuyak geometry, fold amplitude, extensive strike length of the mineralized structure, considerable thickened iron formation in the hinge zone, and axial planer positioning of the felsic dyke/mineralizing structure allow for preliminary positive modelling and scoping of a large-scale mineral zone. To date current drilling at Nuvuyak shows a higher than Back River average grade of 7.86 g/t.

High Grade Corridor - Umwelt Underground

The underground portion of the Umwelt Deposit that is planned for development currently hosts an estimated 3,491,000 tonnes of 7.38 g/t for 829,000 ounces of gold in Proven and Probable Reserves. The underground mineral structure is contiguous with that of the open pit which hosts 2,668,000 tonnes of 6.49 g/t Au for 557,000 ounces of gold in Proven and Probable Reserves. Exploration at Umwelt since the Mineral Resource Estimate in October of 2014 has focused on targeting a higher grade and thickened host rock corridor demarked by a Quartz-Feldspar Porphyry (QFP) intersection with the Lower Iron Formation (LIF). The Vault Zone is situated along the QFP-LIF intersection at depth, and drilling during 2018 and 2019 illustrated that the exceptional high grade and thick intersections seen at Vault are present up-plunge from the Vault Zone; drill hole 18GSE532 returned 8.38 g/t Au over 11.45 m and drill hole 19GSE569 returned 14.97 g/t Au over 21.75 m. These recent drill intercepts suggest an opportunity to improve the current grades and thicknesses within the existing Mineral Resources at Umwelt.

Figure 5: Umwelt Underground and Vault zone drilling with highlighted high grade intercepts

Additional down plunge opportunity is significant and untested by drilling where the Umwelt structure remains open. There is a strong opportunity to increase the high grade mineralization within the existing resource along the QFP/LIF intersection up-plunge from Vault and along the upward plunge of the intersection towards the open pit. The more recent drilling has given confidence to the concept that the iron formation and mineralization is thicker and higher grade near this central QFP/LIF intersection which provides significant opportunity to impact the resource.

To properly scope the higher grade and thicker mineralized intersections within an approximate 100 m wide corridor in the prospective area would require approximately 6,500 m of additional drilling. The proposed optimization drilling (yellow stars) is indicated in Figure 6 below.

Figure 6: Umwelt Long Section Showing High Grade Corridor and Planned Drilling

Geology and Exploration Targeting Advances

Several field programs and geoscience initiatives were undertaken at Back River between 2018 and early 2020 to complement the drilling programs and further advance new target generation, target testing, and mineral system/ore deposit understanding. The geoscience initiatives were detailed studies contributing to a broad mission of establishing the structural evolution and the paragenesis of gold mineralization with a primary goal of improving regional exploration criteria. Initiatives included: reconnaissance drilling, focused oriented core audits and structural data review, geological mapping and rock sampling, trenching and detailed structural mapping, targeted structural studies, quaternary mapping and till sampling, and age dating studies of key host rocks and prominent sulphide minerals.

The strong focus on geoscience and detailed observation resulted in several products and recommendations that have improved and aided in the updating of the Goose property stratigraphy and structural model. All data sets have been integrated to some degree into a 3D platform to facilitate construction of a robust geological model that has greatly enhanced the ability to interrogate, review and prioritize exploration targeting. Some of the key outcomes include; a better understanding of ore controls, a stronger and more detailed model of all important stratigraphic units, a better understanding of key structural components and the effect on iron formation and ore deposit geometry, and a better understanding of gold distribution and related mineralogy.

Figure 7: Goose property iron formation modelling, deposit mineralization and select targeting locations

The development of this multi-focus approach and integrated 3D exploration model along with a comprehensive target-log book and re-defined exploration tool box has allowed the exploration team to advance a number of priority targets including opportunities; outside the conventional iron formation host rock, targets extensional to defined ore bodies, and higher grade resource optimization targets within ore bodies at the Goose property.

Evidence of the success of this approach is highlighted by the discovery of Nuvuyak a mineral zone fast approaching 1,000,000 oz in scope, the identification and expansion of a high grade corridor within the Umwelt underground and the large drilling step-outs that resulted in the significant extension of the Llama underground deposit.

The increased understanding of gold mineralization controls at the Goose property and the geological evolution of the Back River basin continues to be evolved. With better understanding and incorporation of these new understandings and continued refined exploration methods Sabina has increased potential for success in future exploration through the Back River gold complex.

2020 Plans

A planned 8,500 meter drill program will target additional high grade potential at Umwelt, infill and plunge extension at Llama and other new high potential exploration targets within the 8km Goose Property gold complex. An initial focus will be at Umwelt to test the high-grade underground corridor continuity up plunge from Vault towards the bottom of the planned open pit. Exploration will also commence infill drilling at Llama with the objective of extending resources from the bottom of the current Llama underground resource model, further down plunge and potentially beyond the limits of recently established mineralization intercepts.

An additional focus of drilling will be the testing of a select number of new exploration targets. These targets have been identified through an intensive re-evaluation of the exploration model leading to a target ranking exercise based on potential impact and prospective geological characteristics. The exploration team continues to strongly review and improve its understanding of the gold mineralization system to strengthen the ability to find new gold zones but also to help define and trace high grade structures within known deposits. Exploration targeting will be supported and advanced by a field program that includes an airborne geophysics survey, trenching , rock sampling and mapping.

Back River Feasibilities and Project Development

A feasibility Study was completed entitled “Technical Report and Feasibility Study for the Back River Gold Property, Nunavut” (the “6K FS”) dated June 22, 2015 and filed on SEDAR at http://www.sedar.com. This study envisioned production from both the George and Goose properties, feeding a 6,000 tonne per day mill producing approximately 350,000 ounces Au per year for approximately 10 years. The 6K FS was positive, indicating the Project could generate a post-tax Internal Rate of Return (“IRR”) of 24.2% and net present value(5%), (“NPV”) of $480.3 million with a rapid pay back of 2.9 years at a gold price assumption of $1,200 USD/oz. However, initial capital for the 6K FS was projected to be approximately $700 million. Given prevailing market conditions and the lack of access to capital for smaller cap companies, a new study was undertaken with a focus on reducing initial capital while maintaining robust economics and generating significant gold production. The nature of the high-grade continuous deposits at Back River is conducive to such an approach as was demonstrated in the subsequent Initial Project Feasibility Study, announced in September 2015, the Initial Project Feasibility Study (the “IPFS”). The new study is based on a processing rate of 3,000 tpd with an average head grade of 6.3 g/t Au producing an average of 198,100 oz Au per year over an 11.8 year mine life at a Life of Mine (“LOM”) cash cost of US$534/oz Au. Initial capital in the Feasibility Study was C$415, which has escalated since 2015

While initial capital has escalated on the project, so has the gold price. The Company plans to complete detail engineering which will enable a lump sum bid on the construction for the project. Infill drilling on new discoveries will also be undertaken to update the resource estimate. This work will be compiled into an updated Feasibility Study to be delivered in H1 2021, which will provide updated CAPEX, economics and opportunities for the Project going forward. In the interim the Company plans to continue to advance the Project towards a production decision while waiting for an opportunistic window to raise the equity financing.

Project Feasibility Study Highlights

The FS was initiated in June 2015 by the same consultants that completed the 6K FS led by JDS Energy & Mining Inc. (“JDS”) (mining, on-site infrastructure, off-site infrastructure, logistics, capital costs, operating costs, financial analysis and report preparation) and contributed to by Hatch Ltd. (“Hatch”) (processing and layout), Canenco Canada Inc. (metallurgy and gold recoveries), SRK Consulting (Canada) Inc. (“SRK”) (geotechnical, hydrology, tailings, waste and water management), AMC Mining Consultants (Canada) Ltd., (“AMC”) (geology), and Knight Piésold Ltd. (“KP”) (geomechanical). All consultants have extensive Arctic experience.

All currencies are in Canadian dollars unless otherwise specified. Base case economics are based on a gold price of US$1,150/oz Au and an exchange rate of 0.80(US$:C$).

The Study’s highlights include:

  • The Project could generate a post-tax IRR of 24.2% and NPV (at 5% discount rate) of $480.3 million;
  • The Project could generate LOM post-tax net cash flow of $782 million on gross revenues of $3.2 billion with a payback period of 2.9 years (from start of operations);
  • Processing rate of 3,000 tpd could produce an average of ~198 koz Au per year over an 11.8 year mine life (upon commencement of commercial production), with an average of ~244 koz Au per year for the first 8 years;
  • Majority of production from open pit (72% LOM), with no underground production scheduled until Year 3 (after payback);
  • Initial capital estimate of $415 million and sustaining capital estimate of $185 million;
  • Total LOM cash cost estimate of US$534/oz Au (including third party royalties, refining and transport). LOM all-in sustaining cash cost estimate of US$620/oz Au LOM (including sustaining capital & closure costs);
  • A total of 12.4 million tonnes of ore could be milled over 11.8 years with a LOM average grade of 6.3 grams per tonne (“g/t”) Au and metallurgical recoveries of 93%;
  • Base case assumptions of delivered diesel price of $0.91/L for power generation; and

Open pit strip ratio of 10.5 over LOM.

The Corresponding technical report for the feasibility study was filed on www.sedar.com.

Project Development and Activities

During 2018 and 2019, activities were focused on high value initiatives that continued to both advance and de-risk the project in critical areas with the purpose of maintaining flexibility around timing of a full construction decision.

During 2018, significant advancements were completed in engineering design work, priority purchases, logistics planning, and physical works that included the completion of the Port facility at Bathurst Inlet, receipt of equipment and material at the Port through a summer sealift and construction and operation of the of the winter ice road route.

During Q1 2020, negotiation of the EPC contract was well advanced. The preliminary EPC contract price had been estimated to be $196.1 million which compares to an EPCM estimate of $125.1 million in the 2015 FS. The increase of $71.0 million (or 57%) resulted from: (a) change of execution strategy (to EPC from EPCM); (b) inflation and escalation costs since 2015 (approximately 12%); and (c) various changes to scope ($36.8 million). Changes to scope includes facilities and equipment which would provide for lower risk and increased equipment reliability and/or lower operating costs, such as purchase of an oxygen plant rather than a third-party contract service. It also includes the estimated cost of logistics for all process plant materials and equipment which is a transfer of scope to the EPC contractor from owner managed execution.

However, as a result of factors impacting the business model of the service provider, a modified EPC structure was proposed, the details of which are being negotiated. Due to ongoing market volatility, supply chain disruptions and fluctuation of foreign currency exchange rates, largely driven by global impacts of the evolving COVID-19 pandemic, the Company made the decision to put efforts on advancing the EPC contract on hold. Given the increased uncertainty of impact on financial markets, management considers it prudent to delay the negotiation process for a fixed price contract. In the interim, the Company plans to complete detailed engineering on the project which will enable a lump sum bid on the construction components of the Project. This is anticipated to be completed in the first half of 2021.

Site works included construction of a fuel storage facility at the marine Port, summer sealift, receipt of equipment and materials, and the completion of the inaugural winter ice road and transport of equipment and materials to Goose site.

2018 Key Activities and Summarized Costs

Recruitment and organization of an Owner’s team to manage oversight of all work programs including logistics, site supervision, construction management, engineering management, cost control, contract management, purchasing and camp operations. Additionally, the Owners team provided internal engineering support for all project aspects.

Construction of the marine Port Facility located at Bathurst Inlet to initiate receipt of equipment and materials for the annual summer sealift required during construction and operations. Sabina purchased all construction equipment and infrastructure (i.e., bulldozers, haul trucks, drilling and blasting equipment, fuel storage, camp facilities and infrastructure), and fully managed the construction, completed over a three-month period. The marine Port facility included construction of a fully winterized 40 person camp, fuel storage facility, lay down areas, a 900 metre (m) air strip, equipment maintenance and material storage structures, and barge receiving jetties.

Receipt of two summer sealift shipments from the east and west sea access routes, which enabled verification of routes and advancement of logistical planning detail. The sealift program received one sailing from the east using a large shipping vessel with lightering barges and one sailing from the west using ocean barges which can offload directly onto shore (3 in tow) with an ocean tugboat. Equipment and materials shipped are included in Table 9.

Figure 1: Sabina’s marine Port facility as the first sealift arrives (September 2018)

Figure 2: Off-loading of sealift materials at the Port facility (August 2018)

  • Advancement of engineering and procurement activities were undertaken throughout the year including joint development of an EPC contract model with partners SCGT (Sedgmen Engineering and Clark, Gisborne, Tarpon (CGT Industrial)). The engineering review process resulted in the identification of strategic purchases required to fulfill planned schedule and engineering, most notably; processing equipment vendor data for engineering, building shell engineering data, overhead crane purchases, bulk rebar, bulk explosives, and immediate need and long lead construction equipment. The strategic purchases are categorized within as construction equipment, infrastructure, and process plant.
  • Select test work programs were executed during the year to support the ongoing basic engineering efforts and confirm processing decisions. Whole ore leach was selected over flotation, FLSmidth regrind mills were definitively selected over others in the same market space, and an additional gravity concentrator was added to ensure no free gold was lost to tailings. Test work was also conducted on a natural esker source found on the Goose property which concluded that the material could be used for concrete design instead of the previous assumption that concrete aggregate would require crushed and screened material at a significantly higher cost.
  • Basic engineering efforts during the year enabled Sabina to finalize the process plant and truck shop layouts, plant site location, process plant orientation on the plant site, fuel farm location, site wide road network, water management features and tailings storage facility design.
  • Completed site works at Goose included construction of a road network, laydown pads, and stream crossings. The work at the Goose property lasted 3 months and during that time Sabina completed a permanent road from the airstrip quarry to the exploration camp, installed two bridges across Gander Creek, and a pioneer road with length approximately halfway to the finalized plant site.
  • During the last quarter of 2018, Sabina initiated work on establishing the Winter Ice Road for transportation of the sealift materials received in August, to the Goose camp and plant site. Preparation for the winter ice road, which would see completion in 2019 included the hiring of a contractor workforce, preparing the marine Port Facility, and making select purchases.

Figure 3: First of two Gander Stream bridge crossings at the Goose Site (August 2018)

Figure 4: Sabina’s marine Port facility with laydown area, camp, fuel tank farm, and airstrip (September 2018)

2019 Key Activities and Summarized Costs

  • Completion of upgrades to key infrastructure at the marine Port Facility including warehousing, laydowns, fuel storage, and fresh water supply were undertaken throughout the year when camps were open. Additionally, during the summer a 10 million litre diesel storage tank and a 500 thousand litre diesel storage tank were erected in a dedicated containment area at the marine Port facility. The tanks are part of a larger tank farm requirement for operations of 40 million litres. While the marine Port facility was open, the remainder of construction equipment purchased in 2018 and the 2019 purchases were sealifted to the marine Port facility. The sealift consisted of a single sailing from the west and all materials were successfully offloaded and stored at the marine Port facility in early September.

Figure 5: 10 million litre fuel tank under construction at the marine Port facility (August 2019)

Figure 6: Line up of purchased equipment awaiting transport to the Goose Site at the marine Port facility (September 2019)

  • Engineering and procurement activities were ongoing through the year along with progression of the EPC execution contract model, as well as continued basic engineering and project optimization work.
  • Engineering for the balance of the project was focused on all aspects at the basic engineering level. With project optimization completed, design criteria/layout effectively frozen, and basic engineering substantially completed, Sabina was able to perform an internal CAPEX update using first principles.
  • Evaluation during the EPC process highlighted additional strategic work and purchases in the categories of construction equipment, infrastructure, and the process plant. Works and equipment included processing equipment vendor data for engineering, additional construction equipment, and diesel fuel tank materials.
  • During the first half of 2019, Sabina completed the construction of the 172 kilometre (km) winter ice road from the marine Port facility at Bathurst Inlet to the Goose site. The inaugural construction was initially pushed from a single base at the marine Port facility and later advanced with additional use of a mobile mid-point camp. Construction of the full 172 km winter ice road and haulage of approximately 70 loads of construction equipment and materials from the marine Port Facility to Goose site was completed in April.
  • While the Goose property was open during operation of the winter ice road the decision was made to stockpile fuel at the site in preparation for a potential limited earthworks program. To this end, 400,000 litres of diesel was stockpiled at the Goose diesel tank storage facility.

The Owner’s team covered all oversight aspects of the work programs: logistics, site supervision, construction management, engineering management, cost control, contract management, purchasing and camp operations.

Figure 7: Materials being loaded for transport down the winter ice road at the marine Port facility (May 2019)

Figure 8: Transportation of material and equipment along the winter ice road (May 2019)

Figure 9: Line up of purchased equipment delivered to Goose following winter ice road construction (May 2019)

Figure 10: Receiving fuel delivery at the marine Port facility (April 2019)

See here for QA/QP

The Qualified Person as defined by NI 43-101 as pertains to the Back River Project, is Vincy Benjamin, Director of Engineering for the Company who has approved this disclosure.

Back River Environment & Social Governance

With the Project Certificate in place in late 2017, focus shifted in 2018 and 2019 to the completion of other approvals needed to advance the project, implementation of approvals already in place, finalization and implementation of the Framework Agreement with the Kitikmeot Inuit Association, and maintaining or improving environmental and social governance including the release of Sabina’s first Environment and Social Governance Report.

Permitting

The project received its final Project Certificate from the Nunavut Impact Review Board in December 2017. Following receipt of the Project Certificate, Sabina commenced work to obtain specific authorizations, permits, and leases required for full mine construction and operation. By the end of the first quarter of 2020, twenty-seven approvals were in place for ongoing exploration, construction, and operation.

Table 1: Sabina Authorization Registry

Authorization No. Expiry
(yr-mo-day)
Agency Description
N/A N/A Govt. Canada Schedule 2 listing on MDMER (enabling tailing deposition for Goose Project)
PC No. 007 N/A NIRB Back River project NIRB Project Certificate
2AM-BRP1831 2031-12-31 NWB Back River Type A Water License
KTCL-18D001 2038-04-20 KIA Commercial Lease - Goose
KTCL-18D002 2038-04-20 KIA Commercial Lease - Port
KTCL-18D003 2038-04-20 KIA Commercial Lease – Winter Road
KTAEL-18C001 2023-04-20 KIA Advanced Exploration Lease – George
LUL-XX 5 years from Effective Date KIA Land Use Licence as per KIA Framework Agreement
KTL312C004 2020-04-25 KIA Wishbone-Malley Exploration Activities
N2018F0021 2023-10-29 CIRNAC CAT Train Beechy Lake Area
N2017F0016 2022-07-20 CIRNAC CAT Train connecting Bathurst Inlet - Back River project
N2016C0011 2021-10-26 CIRNAC Back River Exploration Activities
N2018F0017 2023-10-11 CIRNAC Winter Ice Road Back River project
Lease No. 76J/12-7-2 2048-08-14 CIRNAC Marine environment land lease – adjacent to Port
Lease No. 76J/9-1-2 2048-04-26 CIRNAC Goose Lake Tailings Storage Facility
2BE-GOO2028 2028-02-18 NWB Goose Water Licence (Type B)
2BE-GEO2025 2025-05-29 NWB George Water Licence (Type B)
2BE-MLL1722 2022-06-29 NWB Wishbone-Malley Water Licence (Type B)
12-HCAA-CA7-00007 2031-12-31 DFO Fisheries Act Authorization – Back River project
18-HCAA-00185 N/A DFO Letter of Authorization – Gander Culvert
18-HCAA-00971 N/A DFO Letter of Authorization – Port
18-HCAA-01626 N/A DFO Letter of Authorization – Winter Ice Road
04 009 19R-M 2020-12-31 NRI Back River project Scientific Research License
2012-600767-002 N/A TC Navigation Protection Act – Port Discharge Pipeline Authorization
2012-600767-003 N/A TC Navigation Protection Act – Port Intake Pipeline Authorization
2012-600767-006 N/A TC Navigation Protection Act – Port Lightering Barge Authorization
2012-600767-004 N/A TC Navigation Protection Act – Umwelt Lake Dewatering Authorization
2012-600767-005 N/A TC Navigation Protection Act – Llama Lake Dewatering Authorization

CIRNAC = Crown-Indigenous Relations and Northern Development Canada; DFO = Fisheries and Oceans Canada; KIA = Kitikmeot Inuit Association; Port = marine Port facility or Marine Laydown Area; NIRB = Nunavut Water Board; NRI = Nunavut Research Institute; NWB = Nunavut Water Board; TC = Transport Canada

Social & Community

Sabina continued to engage with the communities of the Kitikmeot region and other parties, including the KIA, throughout 2018 and 2019. In 2018 an additional 13 sessions were held in the North with an additional 13 completed in 2019. This included visits to each of the Kitikmeot Communities as well as meetings with Nunavut regulatory bodies. The project continues to have significant support from all parties.

Figure 1: Community Meetings Completed (December 31, 2019)

In April 2018, Sabina announced completion of a definitive Framework Agreement with the KIA. The Framework Agreement, which provides the commercial leases authorizing mine development and operations, is a comprehensive agreement which sets out rights and obligations with respect to surface land access on Inuit owned land and includes an Inuit Impact Benefit Agreement and other obligations required by the Nunavut Agreement. The Framework Agreement includes requirements for: 1% NSR, annual payments, issuance of 6.7 million SBB common shares (completed), and other programs over the length of the agreement. In return Sabina received a 20 year mining lease and certainty on how the land and social requirements will be met.

In 2019, Sabina released its first Environmental and Social Governance Report. The report highlights Sabina’s efforts to build a strong culture focused on protecting the environment and building positive relationships with Inuit and others in Canada’s North.

Figure 2: Sabina President Bruce McLeod and KIA President Stanley Anablak Celebrate at the Celebration Ceremony (October 2018)