(TheNewswire)
January 24, 2020 – Global Stocks News - On January 18, 2022 SabreGold Mines (TSX: SGLD) (OTCQB: SGLDF) published a PreliminaryEconomic Assessment (PEA) for the former Yukon goldmine Brewery Creek, targeted for a near-term re-start.
Sabre Gold holds 100% interest in two near-term North American goldproducers: the fully permittedCopperstone gold mine located in Arizona, USA , and the Brewery Creek gold mine located in Yukon,Canada , both of which are former producers .
Management intends to restart production at Copperstone followed byBrewery Creek in the near term.
Sabre Gold has approximately 1.5 million ounces gold in the Measuredand Indicated categories, and approximately 1.2 million ounces gold inthe Inferred category.
Based on January 18, 2022 market cap of CND $44 million, the SGLD gold-in-the-ground (Measured/Indicated/Inferred) is valued at less than USD$12/ounce on two brownfield formerproducing gold mines.
“The PEA and initial results confirm our plans to move to resumption of production at BreweryCreek with what will be low re-start capital with attractiveeconomics which we believe will be further enhanced in 2022,” statedGiulio T. Bonifacio, President and CEO of Sabre Gold.
Brewery Creek PEA Highlights:
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After-tax NPV at 5% of $112 million at an Internal Rate of Return (IRR) of 27.6% at$1,700 per ounce gold increasing to $157 million at an IRR of35.7% at $1,900 per ounce gold
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After-tax average annual cash flow of$36 million at $1,700 per ounce gold increasing to $44 millionat $1,900 per ounce gold
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Average Annual Production of 60,000ounces per year for a total 473,000 ounces gold over an initial8-year mine life;
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Total cash cost of $850 per ounce and all-in sustaining cost (AISC) US$966 per ounce gold
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Pre-production capital costs of$105 million with life of mine sustaining costs of $18million
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Payback period of 2.6 years at$1,700 per ounce gold
Excellent expansion potential to extend mine life and annualproduction with three openprospective resource areas and several targets within a 182square kilometers project boundary; and,
Lower technical and execution risk as a past brownfields producer with existing infrastructure androad access from previous mining operation.
A PEA answers the question, “How best can this deposit be exploitedto maximize its profits for investors?” Unlike more advancedstudies, a PEA can use inferred resources for its operational andfinancial modeling.
A positive PEA will typically create an upward re-valuation of thecompany.
Gold is currently trading around USD $1,840/ounce - down $60 since May2021, but up 40% from $1,297 in the last 3 years.
During the same time-frame, the macro arguments for gold investmenthave become more compelling.
“The COVID pandemic has added $24 trillion to the global debtmountain over the last year a new study has shown, leaving it at arecord $281 trillion and the worldwide debt-to-GDP ratio at over355%,” reported Reuters inFebruary, 2021 .
Most of that global debt is based on fiat currency (paper money),which is being printed 24/7 to bail out insolvent governments. The U.S. government has runout of money , there is no modeling that shows howthat debt can ever be repaid.
If gold prices rise, micro-cap gold developers like Sabre Gold willtypically out-perform bullion and big-cap miners.
A glance in the rear-view mirror, gives context to Brewery Creek’sproduction potential.
“The Brewery Creek Mine reached commercial production in May,1997,” reported a YukonGeological Survey .
By 1999, Brewery Creek was Yukon’s only full-time gold producer.
“Production to the end of September, 1999 from the heap leach goldmine located east of Dawson City, was 34,682 ounces at a cash costof US$289 per ounce ,” reported the YukonExploration and Geology (YEG).
“Reserves at Brewery Creek were 11.8 million tonnes grading 1.13 grams/tonne at the beginning of 1999, based on a gold price of US$375 per ounce ,”continued the YEG.
The current PEA uses foundational data, inherited from the predecessorcompany that was working on a feasibility study.
“ Sabre Gold intends to move to afeasibility level study upon completion of the advancement ofkey opportunities,” stated Bonifacio, “Our permitting efforts willalso now focus on expanding thepreviously permitted area for purposes of allowing for increases to our annual productionprofile .”
Key Opportunities to Enhance Value
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Exploration drilling to expand theleachable mineral resource with several prospective targetsidentified
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In-fill drill the areas of inferredresource in the deposits analyzed in this PEA to upgrade themto Measured and Indicated levels of confidence for future conversionto reserves
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Conduct trade off study for contractmining vs. owner mining to potentially reduce up front capitaland enhance LOM economics .
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New leach pad locations shouldbe investigated to accommodate material from additional deposits asthey are brought into minable status.
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Further evaluation of the potentialof the sulphide material at depth in all the deposits. Preliminary metallurgical testing has shown good recoveries of goldcan be obtained by a flotation process.
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Continue expanding and upgradingresources at 3 oxide deposits not included in the PEA , Classic,Lonestar and Sleeman.
The Brewery Creek Project lies with the traditional territory of boththe Tr’ondek Hwech’in and the First Nation of Na Cho Nyak Dun(NND).
To address community anxietiesaround mining projects , smartresource companies engage local stakeholders as early aspossible.
“Community and First Nation engagement has been a strong componentof the Brewery Creek Project dating to the initial mine operator,Viceroy Resources,” states SGLD.
“In 2016 Golden Predator updated and modernized the Socio-EconomicAgreement with the Tr’ondek Hwech’in (TH), which addressesenvironmental responsibilities, permitting, education and employmentas well as preferential contracting opportunities and wealthsharing,” added SGLD.
“We’re talking to the Tr’ondek Hwech’in this week,”Bonifacio told Global Stocks News on January 17, 2022, “They havebeen very supportive. The President of our predecessor company is fromthe Yukon and nurtured this relationship. They are, and will continueto be, an active participant.”
It will cost about $105 million to build the Brewery Creek mine.
“At $1,700/ounce gold, the PEA anticipates a payback period of 2.6years,” states Global Stocks News CEOGuy Bennett , “For any institutional investor ormerchant bank, the quick pay-back is a de-risker.
“A change in the price of gold from USD $1,700 to $1,900 willincrease the After Tax Cash Flow 20%,” added Bennett, “From CAD$45 million/year to CAD $54 million a year – that’s more that thecompany’s current market cap.”
“Most of the Directors and Officers are also significantshareholders,” stated Bonifacio, “We have a lot of skin in thegame. We’ve written some big checks, and we will continue to do soas needed.”
According to filings on CanadianInsider , between November 21, 2021 and December 7,2021 Bonifacio purchased 539,000 SGLD shares on the open market.
Contact: guy.bennett@globalstocksnews.com
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