GOLD MINING: Arctic discount ‘no longer relevant’ – by Kip Keen ( – May 22, 2015)

Sabina Gold & Silver also fleshes out smaller mining project it plans to study further.

Bruce McLeod, Sabina Gold & Silver President and CEO, was frank about the prospects of funding a $600 million gold project in Canada’s remote North. He said financing it would be “challenging and dilutive” during a conference call held Thursday to outline the basics of a new feasibility study of the Back River gold project in Nunavut, Canada.

It’s a challenge that is especially true for Arctic mine developers. Indeed McLeod spoke of an Arctic discount owing to other mines or projects in the north that did not, at least initially, live up to expectations.

“The Meadowbank project had a difficult start,” McLeod noted. “Newmont took a significant write down on Hope Bay. And these last two events led to what we believe is a significant arctic discount.”

If that Arctic discount is something of a reality, McLeod acknowledged, it’s unwarranted, he argued. “We also believe these events are no longer relevant,” he said.

“Meadowbank is Agnico’s second best performing asset. Agnico is investing in the north. And TMAC is talking about production in Hope Bay in 2016 with an enterprise value of $200 million dollars according to the most recent documents.”

In part a response to that reality facing gold developers in Canada’s North – but also more generally in the mining sector – McLeod elaborated on new Sabina plans to downsize the Back River project. It’s a path – to pursue “scalability” in gold projects – well traveled by now by miners several years into a brutal downturn that has seen funding for mine-builds evaporate or at least come at much higher cost.

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