The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
B2Gold offers 45% share premium to gain ownership of Sabina North of 60 Mining News - February 13, 2023
A Hercules 737 delivers supplies to the Goose camp during the 2013 exploration program at Back River. Today, equipment and supplies are delivered by ship via a port owned by Sabina.
Sabina's assets include five gold properties and port facility in Nunavut, Canada.
Looking to add a high-quality, development-stage gold mine project in Canada to its portfolio, B2Gold Corp. has made a roughly C$1.1 billion (US$820 million) offer to buy out Sabina Gold & Silver Corp., owner of the Back River gold project in Nunavut.
Back River is a district-scale project that includes five claim blocks along an 80-kilometer (50 miles) belt in the Kitikmeot region of western Nunavut.
In September, Sabina's board officially approved the development of a roughly 223,000-ounce-per-year gold mine at Goose, the most advanced project within the larger Back River land package.
This decision followed a feasibility study updated in 2021 that details plans for an initial 3,000-metric-ton-per-day mill that will be expanded to 4,000 metric tons per day by the end of the second year.
The operation outlined in the study is expected to produce a total of 3.34 million oz of gold over 15 years from 18.7 million metric tons of proven and probable reserves averaging 5.97 grams per metric ton (3.6 million oz) gold, including 287,000 oz of gold annually over the first five years of commercial production.
Sabina already has all the permits in place to build the Goose Mine detailed in the updated feasibility study and has made significant progress on derisking the operation.
Overall, the Back River property hosts 33.45 million metric tons of measured and indicated resources averaging 5.88 g/t (6.2 million oz) gold and 13.74 million metric tons of inferred resource averaging 6.44 g/t (2.9 million oz) gold.
With the Goose Mine slated to pour its first gold in 2025 and the exploration upside across the wider property, B2Gold made an offer to buy out Sabina.
"The acquisition of Sabina represents an exciting opportunity to develop the significant gold resource endowment at the Back River Gold District into a large, long life mining complex," said B2Gold President and CEO Clive Johnson.
Under the agreement, B2Gold has offered to issue Sabina shareholders 0.3876 B2Gold shares in exchange for each Sabina share held.
Based on a 20-day volume weighted average price of the two companies as of Feb. 10, this offer comes to roughly C$1.87 per Sabina share, for a total consideration of C$1.1 billion. This represents a 45% premium to Sabina shareholders based on the 20-day average.
If this deal is finalized as proposed, Sabina shareholders would own 17% of the merged company, with current B2Gold shareholders owning the remaining 83%.
The share price premium offered by B2Gold, coupled with the benefits of becoming part of a 1.1-million-oz gold-producing company able to take the Goose Mine across the finish line, is compelling to Sabina's management and board.
"The execution of the Goose project by Sabina did not come without risk to Sabina as a single asset, junior development company with capital constraints," said Sabina Gold & Silver President and CEO Bruce McLeod. "With a two-year construction period until first gold production, we believe that additional value can be unlocked by participating as shareholders of a major gold producer with the northern experience and financial resources to optimize the Goose project and this prolific belt."
"Shareholders will also benefit from exposure to B2Gold's continued growth and healthy dividends," he added.
If the buyout is finalized, Back River will mark the first Canadian asset in the gold mining company's portfolio.
B2Gold's current producing mines are in Mali, Namibia, and the Philippines. The company also has exploration and development assets in Mali, Colombia, Finland and Uzbekistan.
For the Vancouver, British Columbia-based mining company, Back River represents a fairly high-grade gold mine development asset in a Tier 1 mining district that adds additional geographic diversity to its portfolio.
"The Back River Gold District has multiple high-potential mineralized zones which remain open, and we are confident that the district has strong untapped upside with numerous avenues for resource growth," said Johnson. "Our extensive due diligence reinforced the scarcity of a gold district of the quality of Back River, as well as the excellent work that the Sabina team has completed to date in taking the asset from an exploration project to a near-term operating mine."
The boards of both B2Gold and Sabina have approved the transaction. Subject to Sabina shareholder and regulatory approvals, finalization of B2Gold's buyout of Sabina is slated for completion before mid-year.
Further details on Back River and Sabina's progress on derisking and predevelopment activities at the Goose Mine can be read at Sabina greenlights Goose gold mine in the September 7, 2022 edition of North of 60 Mining News.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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