Facing the Challenges of ExploringFacing the Challenges of Exploring
and Developing Projects in Remote
Mining Environments...
2
Forward Looking Statements
Statements relating to future studies and operations at the Back River project and the Hacket...
3
Challenges Facing Remote Projects
What can we do to restore market confidence in our
• Sabina and Back River Project Ove...
4
Sabina Investment Highlights
• A growing high grade gold project at Back River• A growing high‐grade gold project at Bac...
5
Sabina Investment Highlights
• Flagship assets located in Nunavut, in northern Canadag p ,
• Bathurst Inlet Port and Roa...
• Gold hosted in banded iron formation
6
Back River – A World Class Gold Project
• Acquired by Sabina from Dundee Precious...
7
Key PFS ResultsPFS – Base Case Assumptions
2013 PFS Key Deliverables
Key PFS Results Base Case
Pre‐Tax NPV5% & IRR C$471...
8
Logistics and Transportation
• Summary of the 2013 Season
• Options from the Prefeasibility Study• Options from the Pref...
9
Logistics and Transportation – 2013 Season Summary
Aircraft Type Total
• ~83,000m drilled, combination of exploration,
H...
10
Logistics and Transportation – 2013 Season Summary
11
Logistics and Transportation – 2013 Season Summary
12
Logistics and Transportation – 2013 Season Summary
13
Logistics and Transportation – 2013 Season Summary
14
Logistics and Transportation – 2013 Season Summary
15
Logistics and Transportation – 2013 Season Summary
16
Logistics and Transportation – 2013 Season Summary
17
Logistics and Transportation – 2013 Season Summary
18
Logistics and Transportation – 2013 Season Summary
19
Logistics and Transportation – 2013 PFS Options
Transport Optionsp p
Option 1: Ocean Freight to Winter Road via Bathurs...
20
Logistics and Transportation – Shipping Routes
21
Logistics and Transportation – Road Corridors
22
Recruitment and Retention
• Exploration
• Construction
• Operations
• Technical Expertise
23
Recruitment and Retention – Exploration (Current)
• Peak at ~200 employees and contractors onPeak at  200 employees and...
24
Recruitment and Retention ‐ Construction
• Peak at ~800 employees contractors and consultants• Peak at  800 employees, ...
25
Recruitment and Retention ‐ Operations
W kf 500 f ll ti l d i ti h• Workforce average ~500 full time employees during o...
26
Recruitment and Retention – Technical Expertise
Ch ll i d i h i i d i i hi h• Challenges associated with recruiting and...
27
Cost Management
• Capital Costs
• Operating Costs
• Planning and Execution
28
Cost Management ‐ Capital Cost
Capital Cost ($M)
Direct Costs
Overall Site 16
Mining 98
Ore Handling 24
Overall Site
2....
29
Cost Management – Operating Costs 
$000/a $/t Milled $/oz
Mining 77,325 43.33 269.26
Milling 42,958 24.08 149.59
G&A 25...
30
• Significant costs associated with labour at a remote site both direct
Cost Management – Planning and Execution
• Sign...
31
Summary – Challenges for Remote Projects
32
Summary – Challenges for Remote Projects
What can we do to restore market confidence in our
• Review existing and “prov...
Facing the Challenges of Exploring and Developing Projects in Remote Mining Environments-Presentation by Wes Carson, Sabin...
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Facing the Challenges of Exploring and Developing Projects in Remote Mining Environments-Presentation by Wes Carson, Sabina Gold & Silver Corp.

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Facing the Challenges of Exploring and Developing Projects in Remote Mining Environments - Presentation by Wes Carson, Vice President, Project Development, Sabina Gold & Silver Corp. at the Global Mining Summit March 17-18 2014 in Las Vegas

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Facing the Challenges of Exploring and Developing Projects in Remote Mining Environments-Presentation by Wes Carson, Sabina Gold & Silver Corp.

  1. 1. Facing the Challenges of ExploringFacing the Challenges of Exploring and Developing Projects in Remote Mining Environments Sabina Gold & Silver Corp. A Gold Miner in the Making Wes Carson, P.Eng Vice President – Project Development Global Mining Summit – Las Vegas, NV  March 17, 2014
  2. 2. 2 Forward Looking Statements Statements relating to future studies and operations at the Back River project and the Hackett River projectStatements relating to future studies and operations at the Back River project and the Hackett River project and the expected results of this work are forward‐looking information that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects” and similar expressions, or that events or conditions “will”, “would”, “may” or “should” occur. Information inferred from the interpretation of drilling results may also be deemed to be forward‐ looking information, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. This forward‐looking information is subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward‐looking information, including, without limitation: risks related to fluctuations in metal prices; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes inraising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company’s properties; risk of accidents, equipment breakdowns and labour disputes, access to project funding or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in the work program; the risk of l d l f b ’ d h k denvironmental contamination or damage resulting from Sabina’s operations and other risks and uncertainties, including those described in Sabina’s Annual Report for the year ended December 31, 2012. Forward‐looking information is based on the beliefs, estimates and opinions of Sabina’s management on the date the statements are made Sabina undertakes no obligation to update the forward looking informationdate the statements are made. Sabina undertakes no obligation to update the forward‐looking information should management’s beliefs, estimates or opinions, or other factors, change, except as required by applicable law.
  3. 3. 3 Challenges Facing Remote Projects What can we do to restore market confidence in our • Sabina and Back River Project Overview What can we do to restore market confidence in our  industry’s ability to execute large scale remote projects? • Transportation and Logistics – 2013 Season at Back River 2013 PFS Options– 2013 PFS Options • Recruitment and Retention – Exploration – Construction – Operations • Cost Management• Cost Management – Capital Costs – Operating Costs • Summary
  4. 4. 4 Sabina Investment Highlights • A growing high grade gold project at Back River• A growing high‐grade gold project at Back River  – Pre‐feasibility Study = significant high grade gold production at good  margins in a mining friendly jurisdiction  • Continued de‐risking of Back River Project  – Funded through engineering and permitting  – Many opportunities identified for mineral reserve additions and newMany opportunities identified for mineral reserve additions and new  discoveries in 2013 program  • Major silver royalty on Xstrata’s Hackett River Project  F ll i d t ti l f t h fl– Fully carried potential future cash flow  – Hackett River infrastructure would benefit Back River  • Low geopolitical riskg p – Assets located in Canada • Strong treasury and experienced management $58 3 illi D b 31 2013 b l– $58.3 million December 31, 2013 balance 
  5. 5. 5 Sabina Investment Highlights • Flagship assets located in Nunavut, in northern Canadag p , • Bathurst Inlet Port and Road Project (BIPR), a Sabina/Xstrata venture, being pursued in order to enhance infrastructure • Arctic resource development a priority for local and federal governments Back River – 100% Sabina Hackett River – 100% Glencore Wishbone – 100% Sabina
  6. 6. • Gold hosted in banded iron formation 6 Back River – A World Class Gold Project • Acquired by Sabina from Dundee Precious  Metals in 2009 • Sabina has made a number of high grade  discoveries adding ~5Moz to the resource • Significant exploration potential remains Classification Tonnes (kt) Au (g/t) Metal (koz Au)Classification Tonnes (kt) (g/t) Metal (koz Au) Measured 10,446 5.2 1,714 Indicated 17,907 6.1 3,536 Measured and Indicated 28,354 5.8 5,297 Inferred 8,179 7.3 1,927 Mi l R th t t i l d t h d t t d i i bilit Mi lMineral Resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.
  7. 7. 7 Key PFS ResultsPFS – Base Case Assumptions 2013 PFS Key Deliverables Key PFS Results Base Case Pre‐Tax NPV5% & IRR C$471M / 21.8% Post‐Tax NPV5% & IRR C$290M / 16.5% PFS – Base Case Assumptions • $1,350/oz Gold Price, 0.95 $US:$CN • Conventional open pit mine supported by  underground operations Payback 3.3 Years Mill Throughput 5,000 tpd Mined Grade 5.69 g/t • 5,000 tpd whole ore leach process plant Area Classification Tonnes  (kt) Au  ( /t) Metal  (k A ) Mineral Reserves Gold Recovery 88.0% Mine Life 8.4 years Avg. Gold Production 287,000 oz/a (kt) (g/t) (koz Au) Total Open Pit Proven 1,890 4.56 277 Probable 10,935 5.40 1,900 Total Underground Proven ‐ ‐ ‐ Probable 2 165 8 11 564 g On‐Site Op Costs C$101/t milled Avg. Total Cash Costs US$651/oz Pre‐Production Capital C$605M Probable 2,165 8.11 564 Total Property Proven 1,890 4.56 277 Probable 13,100 5.85 2,464 PFS – Other Key Results Pre Production Capital C$605M Sustaining Capital C$226M For the open pit Mineral Reserve estimate, a 1.52 g/t COG was used for the Goose deposits and a 2.00 g/t COG was used for the George deposits. A COG of 6.00 g/t was used for the underground Mineral Reserve estimate, based on an operating cost estimate of $231.30/t. A gold price of US$1,250/troy ounce is assumed. Mineral reserves are based on Measured and Indicated Mineral Resources only An exchange rate of Cdn$1 00 to US$1 00 was assumed Mineral reserve numbers have been adjusted for dilution and mining • 2.5 year construction starting Q3 2015 • Planned first gold production Q4 2017 Measured and Indicated Mineral Resources only. An exchange rate of Cdn$1.00 to US$1.00 was assumed. Mineral reserve numbers have been adjusted for dilution and mining recovery. The mineral reserve estimate for the Back River deposits was estimated by Herbert Smith, P. Eng of AMC, a Qualified Person under NI 43-101. The PFS was prepared under the direction of Tetra Tech by leading independent industry consultants, all Qualified Persons (QP) under National Instrument 43-101. The following consultants and QPs participated in the PFS: John Huang, Ph.d., P. Eng, Hassan Gharffari, P. Eng, Sabry Abdel Hafez, Ph.D.,P. Eng, Harvey Wayne Stoyko, P.Eng, all of Tetra Tech, John Morton Shannon, P. Geo, Andrew Fowler, Ph.D.MAusIMM, CP (Geo), Dinara Nussipakynova, P. Geo, Herbert Smith, P.Eng, all of AMC Mining Consultants (Canada) Ltd, Les Galbraith, P. Eng, Knight Piesold and Alistair Kent, P. Eng, Merit Consultants. The Qualified Person under NI 43-101 for Sabina Gold & Silver Corp. is Wes Carson, P.Eng Vice-President, Project Development, who has reviewed the content of this presentation and approved its dissemination.
  8. 8. 8 Logistics and Transportation • Summary of the 2013 Season • Options from the Prefeasibility Study• Options from the Prefeasibility Study
  9. 9. 9 Logistics and Transportation – 2013 Season Summary Aircraft Type Total • ~83,000m drilled, combination of exploration, Hercules 96 737 78 Electra 53 Buffalo 47 83,000m drilled, combination of exploration, geotechnical, geomechanical, infill and extensional drilling • Significant environmental baseline program to support th DEIS Buffalo 47 Dash‐7 18 Dash‐8 79 Twin Otter 81 the DEIS • 2,297 passengers, 5M lbs of freight and 2M L of diesel fuel flown into site on 517 aircraft • Mobilized earthworks fleet to site by air Dornier 50 King Air 15 Total 517 y • Pioneered quarry and completed all-season air strip
  10. 10. 10 Logistics and Transportation – 2013 Season Summary
  11. 11. 11 Logistics and Transportation – 2013 Season Summary
  12. 12. 12 Logistics and Transportation – 2013 Season Summary
  13. 13. 13 Logistics and Transportation – 2013 Season Summary
  14. 14. 14 Logistics and Transportation – 2013 Season Summary
  15. 15. 15 Logistics and Transportation – 2013 Season Summary
  16. 16. 16 Logistics and Transportation – 2013 Season Summary
  17. 17. 17 Logistics and Transportation – 2013 Season Summary
  18. 18. 18 Logistics and Transportation – 2013 Season Summary
  19. 19. 19 Logistics and Transportation – 2013 PFS Options Transport Optionsp p Option 1: Ocean Freight to Winter Road via Bathurst Inlet • Ocean freight from Belledune, NB (80%) and Hay River, NWT (20%) to Sabina built  port site 10km north of the proposed BIPR site on Bathurst Inlet L d t B th t I l t t it• Laydown at Bathurst Inlet port site • New 160km winter road from Bathurst Inlet to Goose Site (40% Land, 60% Water) Option 2: Winter Road via Yellowknife • 650km winter road access to Goose Site from Yellowknife using the existing Tibbit to Contwoyto Winter Road (currently built to the Ekati Mine turnoff, 70km from  Pellatt Lake) • Laydown at Pellatt Lake and transfer to off road tractors for remaining 220km• Laydown at Pellatt Lake and transfer to off‐road tractors for remaining 220km • New 220km winter road construction from Pellatt Lake to Goose Site (50% land,  50% water) Option 3: Air Freight via Edmonton • Would still require Option 1 or Option 2 during construction for some items • 2,500m hard surface airstrip at Goose Lake • Regular flights with DC‐10 or 767 sized wide body aircraftRegular flights with DC 10 or 767 sized wide body aircraft • Opportunities to combine passenger and freight haulage
  20. 20. 20 Logistics and Transportation – Shipping Routes
  21. 21. 21 Logistics and Transportation – Road Corridors
  22. 22. 22 Recruitment and Retention • Exploration • Construction • Operations • Technical Expertise
  23. 23. 23 Recruitment and Retention – Exploration (Current) • Peak at ~200 employees and contractors onPeak at  200 employees and contractors on  site for 2013 • Primarily seasonal contractors Skill Sets • Technical: Geology, Survey, Engineering • Operators: Drillers, Heavy Equipment • Trades: Mechanics, Electricians, Carpenters,Trades: Mechanics, Electricians, Carpenters,  Welders • Support: Kitchen, Camp/Site Maintenance,  General Labour • Supervision: Operations, Logistics, Safety,  Environmental, Geology Challenges • Training • High turnover • Northern/Local Hires
  24. 24. 24 Recruitment and Retention ‐ Construction • Peak at ~800 employees contractors and consultants• Peak at  800 employees, contractors and consultants. • Continual change in skill sets required during the 2.5 year construction  period V i d k h d l• Varied work schedules • Significant number of specialists required on site, particularly during the  commissioning phase. Challenges • Developing and maintaining project culture – Managing multiple on‐site contractors and their personnel with varying levels  of training, experience, etc. • Retention of highly mobile (when in demand) construction management  team • Managing continuous state of transition through the construction phase • Lack of communications infrastructure during early construction • Tracking project progress for both internal and external stakeholders.g p j p g
  25. 25. 25 Recruitment and Retention ‐ Operations W kf 500 f ll ti l d i ti h• Workforce average ~500 full time employees during operations phase,  with ~300 on site at any one time – Mining (~300): Supervision, Open Pit Operators, Underground Operators,  Maintenance Technical (engineering geology survey)Maintenance, Technical (engineering, geology, survey) – Process Plant (96): Supervision, Operators, Maintenance, Technical  (metallurgy) – Site Services (22): Camp Maintenance Kitchen Equipment OperatorsSite Services (22): Camp Maintenance, Kitchen, Equipment Operators,  Labourers – G+A (42): Accounting, Human Resources, Health & Safety, Environmental,  Community Relations Challenges • Recruitment of initial operating team • Initial and ongoing training for all site personnelInitial and ongoing  training for all site personnel • Competing with other FIFO operations • Recruiting and retaining technical staff E i i i ( idi l )• Ensuring continuous improvement (avoiding complacency) • Ability to communicate effectively with stakeholders
  26. 26. 26 Recruitment and Retention – Technical Expertise Ch ll i d i h i i d i i hi h• Challenges associated with recruiting and retaining high  quality technical staff • Competing with other FIFO operations, particularly the oilCompeting with other FIFO operations, particularly the oil  sands • Alternatives – Consultants – Supplier Representatives – Contractors – Remote Communications Solutions
  27. 27. 27 Cost Management • Capital Costs • Operating Costs • Planning and Execution
  28. 28. 28 Cost Management ‐ Capital Cost Capital Cost ($M) Direct Costs Overall Site 16 Mining 98 Ore Handling 24 Overall Site 2.6% Mining 16.2% Ore Handling Owner’s Costs 4.6% Contingency 13.6% g Process 68 TSF and Water Management 30 On‐site Infrastructure 55 Airstrip 3 Port Facility 21 Ore Handling 4.0% Process 11.2% Port Facility 21 External Access Roads 24 Sub‐total Direct Costs 339 Indirect Costs Project Indirects 156 Owner’s Costs 28 TSF and Water Management 5.0% On-site Infrastructure Airstrip 0.5%External Project Indirects 25.8% Owner s Costs 28 Contingency 82 Total Capital Cost 605 Infrastructure 9.1% Port Facility 3.5% Access Roads 4.0% Logistics and Transportation Costs ($94M – 16% of total CAPEX): • Logistics Freight and Brokerage $58M• Logistics, Freight, and Brokerage – $58M  • Freight on Fuel – $12M • Winter Roads – $24M Construction Labour Costs ($167M – 28% of total CAPEX):($ ) • Direct Labour – $140M ($110/hour) • Flights – $12M ($1,600/person/turnaround) • Camp Operating Costs – $15M
  29. 29. 29 Cost Management – Operating Costs  $000/a $/t Milled $/oz Mining 77,325 43.33 269.26 Milling 42,958 24.08 149.59 G&A 25,970 14.55 90.43 Surface Services* 12,014 6.73 41.83 Tailings Management 1,844 1.03 6.42 Freight Costs (Ocean/Port/Ice Roads)** 15,253 8.55 53.12 Ore Hauling (George to Goose Site)*** 5,387 3.02 18.76 Total 180,751 101.29 629.41Total 180,751 101.29 629.41 * Includes surface services at the Goose, George, and port sites. ** Excludes fuel freight costs, which are included in operating cost estimates for related areas. *** Ore haulage from the George site to Goose site is only required in Years 7 to 9. d ($ / f l )Logistics and Transportation Costs ($27M/year – 15% of total OPEX) • Logistics, Freight and Brokerage – $7M/year • Freight on Fuel – $12M/year • Winter Roads – $8M/year$ /y Operating Labour Costs ($80M/year – 44% of total OPEX) • Direct Labour – $65M/year Fli ht $7M/• Flights – $7M/year • Camp Operating Costs – $8M/year
  30. 30. 30 • Significant costs associated with labour at a remote site both direct Cost Management – Planning and Execution • Significant costs associated with labour at a remote site, both direct  salaries and indirect costs require evaluation of off‐site alternatives for as  many aspects of the project as possible (modularization, vendor packages,  factory verification, etc.)factory verification, etc.) • Logistics and transportation costs at a remote site encourages evaluation  of alternatives that would not be possible elsewhere • Costs associated with technology implementation need to be carefully• Costs associated with technology implementation need to be carefully  weighed to include “intangible” benefits and risks (employee recruitment  and retention, site culture, corporate communications and integration) • All possibilities to share costs and/or risk with suppliers contractors localAll possibilities to share costs and/or risk with suppliers, contractors, local  communities and government need to be investigated • Project controls at a remote site are essential as “minor” slipups in  schedule can have massive impacts on budget and quality due toschedule can have massive impacts on budget and quality due to  transportation costs and seasonality • Trade‐off studies and creative alternatives need to be evaluated as early  as possible during the project development processas possible during the project development process.
  31. 31. 31 Summary – Challenges for Remote Projects
  32. 32. 32 Summary – Challenges for Remote Projects What can we do to restore market confidence in our • Review existing and “proven” technologies against viable What can we do to restore market confidence in our  industry’s ability to execute large scale remote projects? • Review existing and  proven  technologies against viable  developments for cost and benefits weighed against risk. • Emphasis on planning and studies (solid engineering)p p g ( g g) • The need for innovation and creative solutions • Building technical strength within your own organization • Early stakeholder engagement • Manage project scale (right sizing a project) focusing on  profitability over reservesprofitability over reserves.  Develop realistic, achievable plans and execute them!Develop realistic, achievable plans and execute them!

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