Excerpt from Stockwatch Gold Bruce McLeod's Sabina Gold & Silver Corp. (SBB) had a good day in the market today; Clive Johnson's B2Gold Corp. (BTO) did not -- guess who is acquiring whom. B2Gold slid 24 cents to $4.59 on 30.36 million shares on word that it is offering 0.3867 share for each share of Sabina, a premium of 45 per cent. News of the $1.1-billion friendly stock deal sent Sabina's shares up 16 cents to $1.74 on 101.4 million shares today.
Mr. Johnson, B2Gold's president and CEO, gushed that the Sabina acquisition "represents an exciting opportunity to develop the significant gold resource endowment at the Back River gold district into a large, long-life mining complex." Worry not about the hefty premium: Mr. Johnson cheers that the project has multiple high-potential mineralized zones that remain open and so he is "confident that the district has strong untapped upside with numerous avenues for resource growth."
At last report, Back River had tapped 33.45 million tonnes as indicated at 5.88 grams of gold per tonne and another 13.74 million tonnes as inferred at 6.44 grams per tonne. That is a total of over nine million ounces, from which Sabina culled a reserve of nearly 3.6 million ounces for a 2021 feasibility study. The proposed 15-year mine would run at up to 4,000 tonnes per day, yielding an average of over 220,000 ounces per year -- enough to support a discounted net present value of $1.1-billion and an internal rate of return of nearly 28 per cent.
Mr. McLeod, president and CEO of Sabina, was naturally pleased as punch. While he lauded the work his crew had completed at the "multigenerational mining district" at Back River, he conceded the project execution "did not come without risk to Sabina" as a single-asset, junior development company. And so, he believes he and his backers will be better served to endure the two-year construction period at the project by being shareholders of Kinross.