BUY - KZ 4,70 CAD
INVESTMENT OPINION
Site visit confirms BIPAR (Bathurst Inlet Port and Road Authority) option
for property access is the best choice available for development of this
significant resource. We feel that, at these levels, Sabina Silver represents
good long-term value.
ANALYS I S
BIPAR is key to project development: We recently had the opportunity to visit
the Hackett River project in Nunavut. As part of our site visit, we flew the two
proposed access routes by helicopter. One option is a northern road that
connects High Lake, Ulu, and Lupin to the Coronation Gulf (Arctic Ocean), and
the second option is a road eastward from the lake, on which the Lupin is
located, to the bottom of the Bathurst Inlet. The organization proposing the
Bathurst Inlet scenario is the Bathurst Inlet Port and Road Authority (BIPAR).
In our opinion, the BIPAR option is clearly the superior access route to Hackett
River. Not only is the distance shorter (105 kms), but the terrain eastward is
gentler and easier to build on. We believe that Hackett River is a significant
resource – the only question now is how best to develop the project, and site
access is an important element of the process.
New resource in early 2008: As part of the pre-feasibility process, SBB is
extensively completing in-fill drilling of the known resource. The intent is to
increase the confidence level of the resource by converting inferred
mineralization to measured or indicated. Drilling should be completed by early
fall, resulting in a new resource statement early in 2008. While tonnage should
creep higher, we expect more of the resource to be classified as measured or
indicated.
Potential for new mineralized area: In addition to in-fill drilling, SBB intends
to test a new area for mineralization called Patricia Lake, which is less than 1.0
km from the East Cleaver and Boot Lake zones, and has a similar geophysical
expression as the known deposit. Drilling is to commence shortly, and results
may be available by early August.
Strong cash position: With the recently completed monetization of SBB’s
share position in Wolfden, the company is fully funded through feasibility, with
C$52 million in cash and C$5.5 million in Premier Gold shares. The company
has C$17 million budgeted for Hackett River in 2007.
AMEC to complete feasibility: On May 31, 2007, SBB announced the
appointment of AMEC Americas Ltd. to provide technical support services and
prefeasibility assessment for Hackett River. AMEC has extensive experience
working in the Arctic, including the Ekati Diamond Mine, Pogo Gold Mine, and
the Red Dog Zinc Mine.
Waiting for snow to melt at Del Norte: The above-average snow-pack in
British Columbia this year has delayed the onset of exploration at the
company’s Del Norte gold project in the Stewart-Eskay Creek area. The
company has C$600,000 budgeted to drill the project.
Red Lake looms in the background: With drilling planned for September, SBB
has C$1 million budgeted for the property in 2007. Preliminary work has
commenced to define drill targets.
Strategic partner in place: In December 2006, Silver Wheaton purchased
14.2% (19.9% fully diluted) of SBB in a private placement. This gives SBB an
important strategic partner with downstream marketing capacity in the silver
market.
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