Back River Gold Project

Overview

The 100%-owned Back River Gold Project, a series of gold deposits in banded iron formation, is located in southwestern Nunavut, Canada, approximately 520 km northeast of Yellowknife, NWT; 50 km southeast of Xstrata Zinc Canada's Hackett River Silver-Zinc Project; and 75 km southwest of Bathurst Inlet.

The project is advanced, hosts significant NI 43-101 gold resources and reserves and has completed a Feasibility Study and significant permitting milestones.

Moreover, Back River is an 80km long district, with highly prospective opportunities for new discoveries and for expansion from existing deposits.

District Summary

The Back River Gold District is one of Canada’s new emerging gold district.Sabina owns 100% of the district which consists of seven properties totaling ~120,000 acres that host known or observed gold mineralization in banded iron formations.Only two of these properties have been the focus of exploration and resource development to date: Goose and George.The Project is located in southwestern Nunavut, Canada, approximately 520 km northeast of Yellowknife, NWT; 50 km southeast of Glencore’s Hackett River Silver-Zinc Project; and 75 km southwest of Bathurst Inlet.

The current mineral estimate (October 21, 2014) consists of a Measured Mineral Resource of 10.3 million tonnes grading 5.3 g/t for a contained 1.7 million ounces Au, an Indicated Mineral Resource of 18 million tonnes grading 6.2 g/t for a contained 4 million ounces Au and an Inferred Mineral Resource of 7.8 million tonnes grading 7.4 g/t for a contained 1.9 million ounces Au.

Sabina purchased the Project in late 2009 and, following the discovery of multiple new deposits in 2010 and 2011, made the decision to advance the Project towards development. In the fall of 2015, the Company announced the results of an initial project feasibility study on the Goose Property at Back River.The project has now completed the environmental and permitting process.

Summary of Estimated Resources as of October 21, 2014 Including Reserves

Classification

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

CIM definitions were used for the resources.
Ms. D. Nussipakynova, P.Geo. and Dr. A. Fowler, Ph.D., MAusIMM, CP (Geo), both from AMC and Qualified Persons under NI 43-101, take responsibility for the Mineral Resource Estimates.
Open pit resources are constrained by an optimized pit shell at a gold price of US$1,500 oz. The cut-off grade applied to the open pit resources is 1.0 g/t Au.
The underground cut-off grade is 4.0 g/t Au for all George resources (LCPN, LCPS, LOC1, LOC2, GH, and Slave), 3.5 g/t Au for Goose Main, Echo, and Llama, and 4.5 g/t for the Umwelt deposit.
The George resources were estimated within mineral domains expanded to a minimum width of 2 m for the underground resources.
Drilling results up to December 31, 2013 are included, except for Echo (July 4, 2014) and LOC1 and LOC2 (July 21, 2014).
The numbers might not add due to rounding.
Measured and Indicated Resources are inclusive of Reserves.
Resources that are not reserves do not have demonstrated economic viability.

Mineral Reserve Estimate

The Mineral Reserve Estimate for the Project is based on the Mineral Resource Estimate for the Llama, Umwelt and Goose deposits completed by AMC with an effective date of October 21, 2014.

The reserves were developed by examining each deposit to determine the optimum practical mining method.Cut-off grades (COGs) were then determined based on appropriate mine design criteria and the adopted mining method.Two mining methods were chosen: shovel-and-truck open pit mining and underground mining using post pillar cut-and-fill (PPCF).

Summary of Estimated Mineral Reserve as of August 15, 2015

Area

Classification

Tonnes (kt)

Au (g/t)

Contained 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

  1. A gold price of US$1,250/oz is assumed.
  2. An exchange rate of CDN$1.15 to US$1.00 is assumed.
  3. The numbers might not add due to rounding.
  4. Notes for open pit:

Dilution and recovery factors are applied as per open pit mining method.
A COG of 2.08 g/t was used for the Umwelt Open Pit Mineral Reserve Estimate.
A COG of 2.14 g/t was used for the Llama Open Pit Mineral Reserve estimate.
A COG of 2.07 g/t was used for the Goose Main Open Pit Mineral Reserve estimate.
Notes for underground:
Dilution and recovery factors are applied as per underground mining method.
A COG of 3.86 g/t was used for the Umwelt underground Mineral Reserve Estimate.
Both the Mineral Resource and Mineral Reserve Estimates take into consideration on-site operating costs (e.g., mining, processing, site services, freight, general and administration), geotechnical analysis for both open pit wall angles and underground stope size, metallurgical recoveries, and selling costs. In addition, the reserves incorporate allowances for mining recovery and dilution, and overall economic viability.

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Feasibility Studies

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. 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 for the project has been re-estimated at C$476M for the Project with $55m of that already spent in 2018.

Initial 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 Execution and Logistics – 2018 Update

Since the Company published its feasibility study in respect of Back River in 2015 the Company has completed a series of value and detailed engineering programs with the primary objectives of investigating opportunities, setting key design criteria, improving the accuracy of the engineered and design elements, updating the project execution strategy (including procurement and contracting strategies), improving accuracy of the capital cost estimate, and revising and improving the overall execution schedule.

Sabina plans to manage all aspects of the Project excluding the Processing Plant rather than enter into an engineering, procurement and construction management (an “EPCM”) contract with a third party, as contemplated in the Feasibility Study.

Project Execution

Sabina will manage all aspects of the Back River Gold Project scope using several project execution methods and contract structures to deliver the Back River Gold Project.

The Processing Plant’s detailed engineering, procurement, construction and commissioning support is planned to be a fixed-price turn-key contract commonly referred to as an “EPC” contract, rather than utilizing a unit-rates service provider contract with multiples of sub-contracts or “EPCM”, as contemplated in the Feasibility Study. This strategy provides greater certainty over costs, schedule and design quality. Negotiation of the terms of this EPC contract is underway including process and schedule guarantees. Interim Procurement and Interim Services agreements are currently being negotiated with the CIMIC Group’s mineral processing company, Sedgman Canada Limited, to advance select engineering and procurement works in support of defining an EPC contract scope, terms, and conditions. This will yield a fixed-price contract with greater certainty of execution outcomes.

Sabina is responsible for the balance of scope outside of the Processing Plant, and as such is developing and otherwise managing the overall execution schedule, cost estimates, engineering, procurement, construction management and construction.

Bulk earthworks and infrastructure construction are planned to be managed by the Sabina project development team using a unit-rates contract where scope and works are easily quantified as demonstrated with the successful construction and commissioning of the Marine Laydown Area (the “Port”) in 2018. The Port at Bathurst Inlet was successfully constructed using both fixed-price contracts and unit rates contracts managed directly by Sabina’s project development team. In the case of mine development, these works are planned to be performed using Sabina employees supported with specialist contracts, for example, a drill and blast contract based on unit rates with productivity targets.

Infrastructure, Logistics and Procurement

The Port

During construction and operations, Sabina intends to mobilize equipment and supplies including fuel to the Back River Gold Project using annual summer sealifts to the newly constructed Port at Bathurst Inlet. Equipment and supplies will be staged at the Port until the winter, when a Winter Ice Road (“WIR”) will be constructed to move equipment across land to the proposed Goose Mine site.

At the start of 2018, there was no infrastructure at the Port at Bathurst Inlet other than a basic 10-person starter-camp left over from the 2017 geotechnical program.

Initiating development of the Port required the construction and operation of 1500 metre ice airstrips at both the Port and Goose sites in early 2018. Approximately 100 flights of Hercules and similar aircraft delivered equipment, fuel, camps and supplies to these two project sites. On the ground, a Cat Train was run from Goose site to the Port to deliver equipment and supplies for initial construction and the establishment of the infrastructure at the Port. Construction commenced in March with camp establishment and quickly progressed to developing a quarry, drilling and blasting of bulk rock materials, road building and construction of large storage pads and barge landing pads in anticipation of the impending sealift deliveries in August and September.

A new capable Port was built in four and a half months which now includes a fully-functional 45-person all season camp, 730,000 liter fuel storage depot, desalination water plant, waste management infrastructure, satellite communications, power generation, heavy equipment roads, a barge offloading shore ramp, 60,000 square metres storage/laydown pads and a 1,200 metre all-season gravel airstrip capable of Dash 7-sized aircraft landings.

To construct the Port, the Company specified and procured everything from groceries to construction equipment. Specifically, the procurement scope for the Port included bulk fuel tanks, construction gensets, large mobile earthworks and construction equipment, vehicles, HDPE liners and geotextile, ammonium nitrate, fuel, drills (for construction and mining), and spare parts currently being stored the Port. Most of the procured items will eventually be deployed to the Goose site for construction and operations but also were used for the construction of the Port and interim operations thereof.

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Logistics

With completion of the Port by early-August, two sealifts to the Port were successfully completed in August and September: one sailing comprised of three barges from Tuktoyaktuk, NT and the other, one ship from Valleyfield, QC.

In preparation for the next stage of logistics, several field reconnaissance programs were conducted to refine the design and path of the WIR. Currently, preparations are ongoing to construct and operate the first WIR for transporting freight staged at the Port to Goose in Q1 2019.

Supporting Infrastructure Development

In addition to the geophysical, satellite, and visual reconnaissance completed on the WIR, numerous other field investigations were completed to inform the setting of design basis and the engineering of other infrastructure including plant facilities. These included geotechnical drilling (surficial and underground) and geochemical, hydrological and hydrogeological testing at Goose and at the Port.

Construction has progressed at the Goose site by making use of the existing exploration infrastructure and resources. A focused effort was started in Q3 2018 to maintain and upgrade the existing earthworks and construction equipment in advance of construction planned for 2019 and onward. Additionally, earthworks commenced, including quarry development, access roads installation and stream crossing construction.

Procurement for the Planned Goose Mine and Plant Site

In 2018, procurement for the planned Goose Mine site focused on supplying pre-engineered buildings, concrete bulk materials, concrete construction equipment, upgrades to the existing Goose Exploration Camp, drills and construction haul trucks, construction mobile equipment and temporary construction trailers.

Processing

The metallurgical sampling and test programs undertaken since the Feasibility Study through 2018 have produced all the inputs required to design and specify the process for detailed engineering. Whole ore leach (“WOL”) was contemplated in the Feasibility Study, however the process plant design was advanced significantly based on flotation. Based on the metallurgical testing, a cost and risk benefit trade-off study was completed which supported the selection of WOL over flotation.

The plant has been re-engineered using the applicable optimizations from flotation but based on WOL. Engineering has effectively frozen the process flowsheet and technical equipment data sheets for procurement use. The Company is in the advanced stages of converting the EPCM estimate used in basic engineering to a fixed-price EPC bid for the plant build with the contractor providing cost, performance and schedule guarantees.

The Interim Procurement and Interim Services Agreements with Sedgman Canada Limited are advancing engineering and procurement work beyond basic engineering and before the execution of the planned EPC contract. These service agreements will further define the EPC contract scope, terms and conditions, schedule and costs to reduce overall risk of the Back River Gold Project execution.

Capital Expenditure Update

The Feasibility Study published in October 2015 (3KFS) reported capital expenditures of $414.9 million.

Since 2015, several changes were made to reduce overall project risk and update the earlier feasibility study assumptions to the current year. Based on additional detailed engineering completed since the Feasibility Study was completed in 2015, the revised capital expenditure estimate has been updated to reflect:

  • a fixed-price estimate of the Plant under an EPC-delivery strategy;
  • additional engineering;
  • a more-developed project execution and contracting plan;
  • a better defined WOL process;
  • escalation from 2015 dollars (inflation); and
  • improved cost estimates of fuel, earthworks, mobile equipment, cargo transport and other costs to be borne by Sabina, including, but not limited to: labour, project camp costs, freight and logistics, consultants, head office overhead, insurances and fees and administration.

These changes have increased the capital expenditure estimate from the feasibility study estimate by approximately 15% to a revised estimate of $475 million. Of this, approximately $55 million was spent in 2018 on Port construction, pre-development earthworks, the purchase of a significant amount of heavy duty construction equipment, spares and supplies, and sealift of this equipment and materials to the Port this past August and September.

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Permitting

Following an extensive environmental assessment process that spanned several years, in December 2017, the Nunavut Impact Review Board issued the Back River Gold Project Certificate to the Company which enabled the Nunavut Water Board (the “NWB”) to commence public review of the Type A and Type B water license applications related to the initial development, mine construction and operations at the Back River Gold Project.

In Q1, 2018, the NWB issued the Type B water license to Sabina. The Type B water license is a key authorization to complete work for the Back River Gold Project in 2018 and permits the Company to complete pre-construction infrastructure works, including preparing the Marine Laydown Area to receive necessary fuel, equipment and supplies to the Back River Gold Project, as well as pre-development earthworks to establish all weather roads between the deposits, camp sites, tailings storage facility and the mill site.

During Q2, 2018 Sabina continued to work on advancing the Type A Water License process including completion of technical meetings in Cambridge Bay, Nunavut. The Type A Water License represents a key step in the environmental permitting process and will enable activities at site including mine construction and operations.

During Q3, 2018, the Company completed final hearings for the Type A Water License with the NWB in Cambridge Bay, Nunavut. On September 21, 2018, the NWB recommended to the Minister of Intergovernmental Affairs, Northern Affairs and International Trade (the “Minister”) that the Back River Gold Project’s Type A Water License should be issued with proposed terms and conditions. On November 14, 2018, the Company received the Type A Water License, which includes development of the Umwelt open pit and underground, as well as the Llama and Goose Main open pits as envisioned in the current development plans. The Type A Water License also includes the ability to develop the Llama and Goose Main undergrounds as well as the Echo open pit and underground should Sabina choose to do so in the future. The Type A Water License also sets the closure bonding amounts for the Back River Gold Project going forward. Sabina will require additional authorizations or approvals from various federal and territorial department as well as various notifications from Sabina to various federal and territorial departments throughout the construction and operations phase of the project. These include but may not be limited to:

Authorization/Approval

Anticipated date of Receipt

MDMER Schedule 2 Listing for Tailing Storage Facility

H2 2019 to H2 2020

Fisheries and Oceans Canada Fisheries Offset Plan & Letter of Authorization

Q2 2019 and ongoing

Crown Indigenous Relations and Northern Affairs (“CIRNA”) Land Lease x2

  • Tailings Storage Facility
  • Marine environment

Q4 2018
Received in August 2018

Transport Canada Navigation Protection Program Approval (x3)

  • Desalination Plant Intake
  • Desalination Plant Discharge
  • Lightering Barge Terminal

Received June, 2018
Received June, 2018
Q4 2018

Transport Canada Navigation Protection Program Approval (x2)

  • Llama Lake Dewatering
  • Umwelt Lake Dewatering

Q2 2019
Q2 2019

The majority of these approvals or authorizations require 20 to 120 days from submission to receipt. In December 2017, Sabina commenced the process under the Metal and Diamond Mines Effluent Regulation (“MDMER”) related to operation of the tailings storage facility as contemplated in the Feasibility Study. Under Schedule 2 of MDMER, waterbodies frequented by fish must be approved and listed in the Regulations if a deleterious material is proposed to be placed in the waterbodies. The Company anticipates that the Schedule 2 process could be successfully completed in approximately 12-24 months following Environment and Climate Change Canada’s completion of the Regulatory Impact Analysis Statement, which Sabina anticipates may be completed in Q4, 2018. As such, Sabina expects the Schedule 2 process to be completed well in advance of the initial deposition of tailings targeted for Q4, 2021.

Land Tenure Agreement with the Kitikmeot Inuit Association (KIA)

The KIA, which represents the interests of Inuit beneficiaries in the region under the Agreement between the Inuit of the Nunavut Settlement Area and Her Majesty the Queen in Right of Canada signed on May 25, 1993 (the “Nunavut Agreement”), is the surface title holder of 104,278 square kilometres of Inuit owned lands in the Kitikmeot region, including the majority of the lands that comprise the Back River Gold Project, and was a participant in the project’s environmental assessment process.

On April 23, 2018, the Company jointly announced with the KIA completion of a definitive Framework Agreement (the “Framework Agreement”) on terms consistent with the binding term sheet announced on October 18, 2017. 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 and Benefit Agreement (an “IIBA”) and other obligations required by the Nunavut Agreement, including the following key provisions:

  • A 20-year term;
  • Surface access rights, including:
    • land use licenses to permit Sabina to conduct exploration work at the Back River Gold Project;
    • advanced exploration leases permitting various advanced exploration and pre-production activities at the Back River Gold Project; and
    • commercial leases authorizing the development of mines and related operations and closure activities at the Goose Property;
  • Certain payments, including:
    • annual payments to KIA of $0.5 million until the year the Company makes a production decision for the Back River Gold Project, following which the annual payments rise to $1.0 million;
    • Issuance to the KIA of 6.7 million common shares of the Company; 
    • Grant to the KIA of a 1% net smelter royalty on production at the Back River Gold Project; and
    • An initial investment of $4.0 million into regional wealth creation initiatives in the Kitikmeot.  

Geology & Exploration

Geology & Mineralization

The currently known gold deposits at Back River are comprised of Umwelt, Llama and Goose (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. The Umwelt and Llama deposits are among the discoveries Sabina has made since acquiring the property, and are the only two of the Sabina discoveries which are included in the current resource/reserve estimate and Feasibility Study.

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

On June 9, 2009, Sabina acquired the Back River Property from DPM. After the acquisition, exploration was initially confined to the Goose Site and focused on finding new gold mineralization away from the existing Goose Main deposit. All of Sabina’s exploration work on the Back River Property from 2009-2014 is briefly summarized in the table below.

Summary of Sabina’s Previous Exploration Work

Year

Location

Exploration Work

2009

Goose Site

Mapping, magnetics, IP and horizontal‑loop electromagnetic (HLEM) surveys

2010

Goose Site

Geological mapping and sampling, magnetometer and HLEM ground survey, mineralogical study

2011

Goose Site

Geological mapping and sampling, time‑domain electromagnetic (TDEM) and IP ground survey, mineralogical study, TDEM borehole surveys

George Site

Magnetometer and HLEM ground survey

2012

Goose & George Sites

Grab sample program, metamorphic gold genesis study

Goose Site

Till orientation study, mafic intrusion geochemistry and structural study, regional mapping*

2013

George Site

Geological mapping, metamorphic grade study, geochemical sampling

Boot & Boulder

Geological mapping (1:1000 and 1:5000), geochemical sampling

Regional

Regional –scale work off Property to provide wider geological context for the deposits

2014

Goose Site

IPower 3D® geophysical survey, felsic dyke geochemical characterization study

George Site

Surface mapping, follow up metamorphic study

Note: *Regional mapping was conducted at the Goose Site and surrounding areas.

Source: AMC Mining Consultants (Canada) Ltd., 2015

Exploration in 2015

In 2015, Sabina carried out two studies at the Goose Site ‑ a ground magnetics survey and a mapping and sampling program. At the Boulder Prospect, a ground magnetics survey was completed. Sabina also carried out a geochemistry data collection program from drill core pulp material which covered the Goose Site, George Site and the Boulder Prospect.

During the 2015 geotechnical drilling program, Sabina completed two shallow exploration drill holes at targets Hivogani and Nalaot at the Goose property. Results generated continue to demonstrate project‑wide gold endowment and the potential for greenfield resource growth both within the project’s conventional iron formation host and the broader sediment package that, to date, has seen little work.

The Hivogani target is located approximately 1,400 m southwest of the Goose Main deposit and lies outside of the main iron formation which is the host rock to the majority of Back River’s current resources. One drill hole, totaling 140 m, tested part of an anomalous Induced Polarization study (“IP”) response, which measures approximately 500 m by 200 m.

Preliminary exploration assay results also identified a new near‑surface high priority banded iron formation drill target at the Goose property. Rock sample assays at the now established Kogoyok target are encouraging, highlighted by the discovery of a new series of mineralized occurrences where grab samples from outcrop have returned gold values including 33.86g/t, 28.10g/t and 18.23g/t. Further gold assays associated with the Kogoyok target partially define approximately 650 meters of significantly gold‑mineralized iron formation stratigraphy.

Exploration in 2016

The 2016 exploration program at Back River, consisting of approximately 2,700 meters of drilling commenced on March 15, 2016 and was completed on April 22, 2016. The program focussed on testing the sub-surface size, continuity, and shape of near-surface mineralization at the Kogoyok prospect which has had no previous drilling (see the Company’s news release dated October 13, 2015). Drill testing also occurred at the Hivogani and Convergence target areas, two drill targets with the potential for near-surface gold mineralization in the vicinity of proposed infrastructure on the Back River Project. In addition, focused fieldwork programs were completed in June and August to advance numerous target areas at the Goose, George, and Boulder properties, while further identifying new exploration opportunities.

The Kogoyok prospect was discovered and partially characterized through 2015 field work. New high‐grade mineralization discoveries from outcrop grab samples (up to 33.86g/t Au grab sample) occur near the convergence of a previously untested segment of iron formation stratigraphy with gold-bearing felsic intrusions. The 2016 exploration drilling at Kogoyok consisted of 10 holes totalling 1,474 meters, wherein numerous mineralized intercepts were encountered over a broad area at vertical intersection depths from 20 to 130 meters (see the Company’s news release dated June 9, 2016). A large zone of gold mineralization was identified within the Kogoyok target, up to 10 meters in width over 250 meters strike length, coincident with visible gold identified within several units of the stratigraphy. Results from Kogoyok included drillhole16GSE492 (2.62 grams per tonne (“g/t”) over 2.30 meters) and drillhole16GSE494 (2.37g/t over 1.90 meters).

At Convergence, a horizontal loop electromagnetic (“HLEM”) geophysical survey grid covering approximately 12 line kilometres identified a total of 8 new anomalies that are coincident with Back River iron formation stratigraphy. Drill testing of one of the anomalies in hole 16GSE500 returned a new discovery with an intercept of 3.84 g/t over 3.70 meters including visible gold noted within multiple samples (see the Company’s new release dated June 9, 2016). Follow up drilling of an additional three holes in this zone continued to return significant gold assays analogous to Back River style mineralization. The Company is encouraged by the newly discovered gold zone with an additional five anomalies within the survey grid area remaining for exploration follow up.

At the Hivogani zone, two drill holes spaced 500 meters apart and totaling 397 meters were completed within a broadly defined 2 km target area characterized by anomalous gold values from rock and till sampling and moderate to strong IP chargeability trends. Results of the recent drilling confirmed the correlation of broad areas of gold mineralization with IP chargeability anomalies, areas of increased quartz veining, alteration, and disseminated sulphide mineralization, as first reported at Hivogani in 2015. Drill hole 16GSE509 intersected 1.0 meter of 2.68 g/t Au in a zone of increased veining and alteration (see the Company’s news release dated June 9, 2016). Sabina is encouraged by the new deposit model of clastic sediment-hosted gold within Back River stratigraphy and continues to actively explore the concept on a broad scale.

In addition to the drilling program, a focused summer field work program was completed in June and August, 2016. This work consisted largely of mapping, rock and till sampling and focussed on the advancement of several priority target areas and discovery of new target concepts at the Goose, Boulder and George properties. Geologic models at select existing drill targets at Goose and George were improved and several new till anomalies with values anomalous for arsenic and gold were delineated and highlighted for future follow up.

Exploration in 2017

During the year the Company completed a phased exploration program on the Back River Project. Initially planned as a two phase 7,000 meter drill program at the Goose property, positive results from the spring campaign during Q2, 2017 resulted in an expanded second phase to the drill program. In total the Company completed 12,603 meters of drilling over 22 holes with significant results, including successfully demonstrating the potential for growth of the existing deposits and discovery of a new significant mineralization target, the DIF horizon.

In 2017, priority drill targets were selected based on their potential to enhance project economics by adding or demonstrating potential additional mine life in the footprint of the proposed mine on the Goose property. These targets include the high-grade Vault zone at Umwelt underground, a significant step out along potential Llama underground, step out drilling at Echo, and follow up drilling of the GNS/Convergence trend and the Kogoyok target.

Vault Zone – Umwelt

During the spring program, drill testing commenced with one hole targeting the Vault zone at approximately 650 metres vertical depth where an interpreted high-grade zone occurs at the lower limits of the current Umwelt reserves. This interpreted high grade zone is partly characterized by historic drill hole 12GSE217, which returned 51.93 g/t gold over 16.1

metres including 117.31 g/t gold over 2 metres and 105.2 g/t over 1 metre, drill hole 11GSE106 which returned 10.91 g/t gold over 29.85 metres including 23.46 g/t gold over 9 meters and 44.22 g/t gold over 0.8 meters and drill hole 11GSE075 which returned 13.43 g/t gold over 24.40 metres including 34.4 g/t gold over 8.25 meters and 72.8 g/t over 3.0 meters.

Drill hole 17GSE511B targeted the expansion of this zone by stepping down dip outside the current reserves and mine plan. The results of this hole returned 16.86 g/t gold over 13.5 m from 734.00 meters to 747.5 meters, including 27.11 g/t gold over 7.95 meters from 736.75 meters to 744.70 meters. Significant sulphide mineralization exists both above and below the targeted interval including 12.3 g/t gold over 1.05 meters within lower clastic sediments from 755.5 meters to 756.55 meters.

Also during the summer drilling program, five drill holes totaling 4,195 metres were completed to continue testing robust mineralization extensions of the Vault zone. Drill hole 17GSE517 confirmed mineralization continuity in the center of the Vault zone, positioned approximately 45 meters up plunge from 12GSE217, intersecting favourable mineralization returning an intercept of 5.99 g/t gold over 33.25 meters including 26.91 g/t gold over 2.20 meters and 18.14 g/t gold over 5.40 meters. Additionally, drill hole 17GSE522B which returned 8.65 g/t gold over 31.90 meters including 91.97 g/t gold over 1.15 meters and 13.12 g/t gold over 8.90 meters has successfully expanded the down plunge length of the high grade targeted zone to greater than 45 meters south of the 2012 drill hole 12GSE217. Drill hole 17GSE523B targeted approximately 150 meters up plunge from drill hole 17GSE517 further demonstrating the continuity up plunge of the high grade corridor. This drill hole targeted the intersection of the felsic dyke with the host lower iron formation returning 9.0g/t gold over 28.7 meters. Intercepts of both drill hole 17GSE517, 17GSE522B and drill hole 17GSE523B were defined by strong alteration and

mineralization systems within a favourable Back River geological setting that is conventional to resources hosted elsewhere on the project. Alteration consists of strong silicification and amphibole and chlorite development within oxide iron formation. Mineralization consists of arsenopyrite, pyrrhotite and localized visible gold within the highly altered and veined zones.

Two other drill holes, 17GSE520 and 17GSE525 tested the eastern margins of the zone where 17GSE520 intercepted no significant mineralization with the target lower iron formation.

Llama Extension

During the spring drilling program, two drill holes totaling approximately 1,400 metres were completed to test the down plunge extension potential of the Llama mineral system to a vertical depth of approximately 600 metres. Llama underground currently has indicated resources of 211,000 ounces grading 8.72 g/t gold (which are not included in the current mineral reserves). The objective of these two holes was to take an aggressive step down plunge to test 300 metres

from the current gold resources and 200 metres from the deepest drill hole 12GSE239 which intersected 6.90 g/t gold over 8.0 metres including 15.71 g/t gold over 2.0 meters. Success from drilling within the area would demonstrate potential for significant resource growth beyond the existing Llama reserves and resources. Drill hole 17GSE512 was designed as a positioning hole on the structure and was successful in intersecting both the east and west limbs of the Llama syncline and a significant portion of upper iron formation stratigraphy. Significant assays from this drilling included 6.30 g/t gold over 2.65 meters in west limb lower iron formation. Drill hole 17GSE513 which was designed as a 60-meter undercut on the same cross section as 17GSE512 successfully targeted a significant portion of lower iron formation stratigraphy. Over 100 meters of lower iron formation was intersected in this drill hole, with numerous mineralized sections containing pyrrhotite, arsenopyrite and visible gold. Assays returning gold values that include 6.52 g/t gold over 8.30 meters from 618.90 meters to 627.20 meters. Present within the large iron formation were two felsic dykes, lithologies which are typically associated with gold mineralization in the Goose area deposits. In addition, a previously unknown near surface, low grade zone of iron formation with alteration, mineralization and quartz veins in clastic sediments was intersected from 69 m to 109.85 meters.

During the summer drilling program, four drill holes totaling 2,425 metres were completed that consisted of further aggressive step out drilling that focused on the extension of the Llama deposit in the down plunge direction. Drill hole 17GSE516B intersected 9.48 g/t gold over 38.55 meters including 14.44 g/t gold over 21.25 meters and 52.83 g/t over 1.0 meter within a strongly altered and mineralized lower iron formation package that is part of the continuation of the highly prospective, mineralized, Llama structure. This intercept is approximately 160 meters down plunge from drill hole 17GSE513. Drill hole 17GSE524, returned 6.46g/t Au over 6.35m and 8.35 g/t Au over 2.75m, successfully extending the mineralized structure 525m down plunge of the current mineral resource and 55m beyond the previously discussed drill hole 17GSE516B. This intercept projects the structure parallel to the area vertically below the Umwelt deposit and remains as an exceptional exploration environment. The Llama mineralized zone has now been intersected at approximately 737 meters vertical depth and remains open. This step out represents a significant increase in sulphide mineralization along the structure, is open in all directions and demonstrates that the Llama gold structure is robust for a continued distance along strike of over 1,650 meters from surface to a vertical depth of 730 meters. Further drilling is proposed to test this new zone, in both the up and down plunge directions.

Exploration in 2018

The 2018 exploration program at the Back River Gold Project completed approximately 22,500 metres of drilling in two drill programs, with the first 6,000 metres completed during the spring drill program from April to May and approximately 16,500 metres of drilling completed in a summer drill campaign from July through to early October. Additional exploration field work consisting of geologic mapping and rock and till sampling was completed at the Goose and Boulder properties during the summer field season.

At the Goose Property, drill testing prioritized targets with the potential to extend the current mine plan or enhance project economics in and around the footprint of existing mineral resources. Two targets at Goose were the focus of the majority of drilling: the Llama Extension target with up-plunge and down-plunge step outs and the newly discovered Nuvuyak target where drilling was focused on expanding the new high grade zone discovered in drill hole 18GSE545 which returned 11.58 g/t over 39.50 metres.

In addition to the above focus, four drill holes tested areas peripheral to the Umwelt Vault high grade zone, two drill holes tested potential for deeper mineral extensions to the Echo deposit, and four drill holes tested various exploration targets. Outside of the Goose Property, four drill holes targeted an extensive greenfield area at the nearby Boulder Property (located approximately 20 km north of the Goose camp). This first pass drilling tested portions of a 1.4 km long folded iron formation sequence where till and rock sampling identified elevated gold and arsenic values.

To date, all of the spring drilling assay results and approximately 75% of the summer drilling assay results have been received. Final assay analysis, review and release is expected to be completed by the end of the year. Significant results to date from drilling and a summary description of the geologic field programs are provided below.

Llama Extension Drilling, Goose Property

Drilling in the 2018 spring program included three holes totaling 2,220 metres to test the expansion potential surrounding the high grade intercepts reported in 2017 where mineralization was identified well down plunge (approximately 500 metres) of current deposit resources. Significant results include the following:

  • Drill hole 18GSE530 returned 15.67 g/t gold over 23.25 metres, including 32.56 g/t gold over 10.30 metres.
  • Drill hole 18GSE533 returned 15.43 g/t gold over 3.15 metres, including 34.48 g/t gold over 1.25 metres.
  • Drill hole 18GSE535 returned 28.95 g/t gold over 5.65 metres, including 47.51 g/t gold over 2.90 metres.

Drilling in the 2018 summer program consisted of six holes totaling 4,113 metres, with five holes testing the Llama gold structure up-plunge extension from the previous 2017 and 2018 drilling. Significant results include the following:

  • Drill hole 18GSE548B returned 17.96 g/t gold over 4.60 metres.
  • Drill hole 18GSE547 returned 6.20 g/t gold over 13.80 metres.

One drill hole, 18GSE546, tested the Llama Extension mineralization in the down-plunge direction, returned 11.43 g/t gold over 5.48 metres and demonstrates that the gold structure remains open at depth.

Drill targeting has added geologic confidence to a > 500 metre extent of Back River style mineralization that sits within the prospective Llama deposit stratigraphy and associated gold structure below the currently defined underground resource. This high-grade zone, which is not part of the current development plan, remains open in all directions.

Nuvuyak Target Drilling, Goose Property

First pass drilling at the Nuvuyak target during the 2018 spring program included two holes totaling 1,582 metres, whereby Sabina confirmed the presence of positive exploration elements including stratigraphic and structural markers with associated significant gold values of up to 9.50 g/t.

Follow-up drill testing in the 2018 summer program (12 drill holes totaling 9,145 metres) led to the discovery in drill hole 18GSE545 of strong zones of alteration and mineralization within a tightly folded iron formation anticlinal structure. Results included: 11.58 g/t gold over 39.50 metres, including 48.73 g/t gold over 3.15 metres and 52.12 g/t gold over 2.45 metres. Additionally, drill hole 18GSE558 returned values of 16.39 g/t Au over 13.20 metres, 7.78 g/t Au over 12.40 metres and 13.32 g/t Au over 5.10 metres over relatively tightly spaced intervals within the iron formation anticline structure in an up-plunge direction from the discovery drill hole. The Nuvuyak gold zone remains open in all directions with a number of results from the current drilling still pending.

The Nuvuyak gold zone discovery is centered approximately 850 metres along strike to the west of the Goose Main deposit and approximately 1,000 metres down plunge. The mineralization is hosted within a polyphase folded sequence of the Back River lower iron formation and coincident gold structures that are interpreted as being a significant component of the major mineralizing horizon(s) at the Goose Property. Drilling during 2018 provided further evidence that the felsic dyke at Nuvuyak and Hook is a potential continuation of the felsic dyke which intrudes parallel to the axial plane of the fold at Goose Main. Felsic dykes at Back River are interpreted to be spatially coincident with the majority of major mineralizing structures. In addition, the geometry of the antiform at Nuvuyak is very similar to that of Goose Main, with the folds being nearly isoclinal with a significant structural thickening in the fold nose. Mineralization consists of arsenopyrite, pyrrhotite and abundant visible gold over broad intercepts that are associated with quartz veining and moderate to strong amphibole and chlorite alteration. Early interpretations recognize the potential for a large-scale mineral trend extending from Goose Main to Umwelt Vault that may transect large portions of the central Goose Property, much of which is largely underexplored.

Umwelt Vault Zone Drilling, Goose Property

Drill testing of the Vault zone during 2017 continued to highlight the potential for significant widths of higher grade mineralization along a central corridor with strike potential of over 300 metres. Highlights from drilling in 2017 included drill hole 17GSE523B which returned 9.00 g/t gold over 28.70 metres.

Follow-up drilling at Vault continued in the 2018 spring program with two holes totaling 1,400 metres, with the following significant results:

  • Drill hole 18GSE532 returned 4.93 g/t gold over 23.90 metres, including 8.38 g/t gold over 11.45 metres.
  • Drill hole 18GSE534 returned 5.24 g/t gold over 17.40 metres.

Drilling of two drill holes in the subsequent 2018 summer program with 1,402 metres targeted high grade extensional opportunities to the west and the south of the main Vault zone. These drill results are expected to be released in mid-December, 2018 following receipt and compilation of the assays.

Other Drilling Targets

Drill targeting at the Goose Property also included two drill holes 18GSE550 and 18GSE554 for a total of 1,183 metres, which tested for possible extensions approximately 150 metres below the current Echo resource. These drill results are expected to be released in late December, 2018 following receipt and compilation of the assays.

Drill hole 18GSE536 was completed at a depth of 440 metres to test the Deep Iron Formation (“DIF”) stratigraphy beneath the north end of the Llama deposit and returned a wide 17.15 metres of 1.38 g/t. Drill hole 18GSE538 was completed to a depth of 221 metres to test the iron formation on the west side of the Goose Property with no significant values reported. Drill hole 18GSE539 was completed to a depth of 170 metres to test for mineralization at the south-east end of the Goose Main deposit and returned 13.95 g/t over 1.10 metres. Drill hole 18GSE552, was completed to a depth of 347 metres, to test the DIF stratigraphy beneath the Umwelt deposit, with results expected to be released in mid-December following receipt and compilation of the assays.

At the Boulder Property, one of five properties within the 80 kilometre iron formation gold trend at the Back River Gold Project, and located approximately 15 km north of the Llama deposit, geologic mapping, rock and till sampling and the drilling of four, widely spread, shallow exploratory drill holes was carried out as a first pass assessment of a 1.5 km long largely unexplored extent of prospective iron formation, collectively known as the Vega target. At the Vega target a strong gold expression was returned from drill hole 18BRP046 that targeted an interpreted up-ice source of anomalous geochemical till samples in a shallow iron formation limb setting. Results of 2.41 g/t Au over 7.9 metres including 6.35 g/t Au over one metre were returned from a pyrrhotite and arsenopyrite bearing quartz-flooded zone within chlorite altered oxide iron formation from 134.80 metres 142.70 metres.

These results are encouraging as they highlight a number of key elements proven necessary for vectoring of robust mineral zones at Goose; namely, a strongly anomalous gold signature associated with alteration and mineralization in a well-developed and folded oxide iron formation stratigraphy.

Drill hole 18BRP049, targeted as a 200 metres undercut to 18BRP046, similarly intersected approximately 100 metres of continuous oxide and silicate iron formation with zones of veining and quartz flooding associated with arsenopyrite and pyrrhotite mineralization and a limited anomalous gold signature with values up to 1.17g/t Au over 0.65m.

Drill hole 18BRP047 tested a magnetic anomaly, interpreted to be a tightly folded iron formation, approximately 450 metres north of 18BRP046 and intersected two folds of iron formation totalling approximately 60 metres with anomalous gold intercepts of 1.63 g/t Au over one metre and 1.55 g/t Au over 1.37 metres.

The 2018 drill and mapping support the interpretation that the magnetic anomaly at the Vega target is an isoclinal syncline extending several hundred metres vertically below surface. Sabina is encouraged by the geologic setting and the associated gold and alteration signatures of the Vega and Humpback target areas and believe that the area shows strong promise for discovery. A follow up program of drilling and field work is being planned for 2019.

Field Exploration

Sabina controls a series of highly prospective exploration properties over an area of approximately 80 km at the Back River Gold Project that are believed to have district scale synergies for future development. Field exploration mapping, till geochemistry and geochronology programs were completed during July to September 2018 to advance both the Goose Property and regional targeting initiatives. Field mapping and prospecting focused on the Boulder and Goose properties with additional time spent on the George and Boot claims. As part of the till sampling program, a quaternary geologist was contracted to produce a surficial map and to advise on project specific sampling protocol. In total 65 rock samples and 297 till samples were taken over the 2018 summer program with a major focus on further exploration targeting at the Boulder Property. A geochronological program was initiated and includes four samples for Re-Os dating of the arsenopyrite mineralization and nine samples for U-Pb zircon dating of the intrusives and meta-sedimentary units. Results of this work will be incorporated into ongoing geologic synthesis of the Back River Project area and assessed in exploration targeting for future programs.

Mr. James Maxwell, P. Geo. and Vice-President, Exploration for Sabina Gold & Silver Corp. is a Qualified Person under the terms of NI 43-101 and has reviewed the technical content of this disclosure for the Back River Project and has approved its dissemination.

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