Nighthawk Gold expands Colomac resource by a third

NWT | PEA due out mid-year for past-producing project

B2Gold to buy Sabina Gold & Silver for $1.1B

M&A | Deal gives B2Gold the high-grade Goose project in Nunavut

BY CECILIA JAMASMIE

Canada’s B2Gold (TSX: BTO; NYSE: BTG) is buying fellow precious metals miner Sabina Gold & Silver (TSX: SBB; US-OTC: SGSVF) in an all-stock deal worth $1.1 billion.

The transaction hands B2Gold the Back River gold district property in Nunavut, which holds multiple high-potential mineralized zones poised to boost the Vancouver-based gold giant’s reserves.

The most advanced project in the area, situated about 520 km northeast of Yellowknife, is Sabina’s Goose deposit, which is fully permitted and construction ready. Goose is expected to become Nunavut’s third operating mine in 2025, when it starts commercial production. The other two are run by Agnico Eagle Mines (TSX: AEM; NYSE: AEM).

It is also slated to average 223,000 oz. of gold annually over a 15-year life of mine from 3.6 million oz. of reserves averaging 5.97

BY COLIN MCCLELLAND

Nighthawk Gold (TSX: NHK; US-OTC: MIMZF) increased the open-pit indicated and inferred mineral resources at its Colomac project in the Northwest Territories by more than a third while also improving overall grade.

The project 200 km north of Yellowknife has an open-pit indicated resource of 59.8 million tonnes grading 1.5 grams gold per tonne for 2.8 million oz. of contained metal versus 2 million oz. in an estimate last year, a 36% jump, Nighthawk said in a news release on Feb. 10. The grade improved 5% from 1.4 grams gold.

The open-pit inferred resource increased to 10.8 million tonnes grading 2.3 grams gold for 802,000 oz. contained metal, a 34% gain from last year’s estimate of 601,000 oz., the company said, though the grade slipped from 2.4 grams gold.

Haywood Capital Markets said the new estimate bodes well for a preliminary economic assessment (PEA) on the project due by midyear and the company’s valuation.

“We are encouraged by the updated resource which favours the development of an open-pit deposit at Colomac,” Haywood mining analyst Pierre Vaillancourt wrote in a note on Feb. 10. “The upcoming PEA should help to bring focus to the economic potential of the project. We expect Nighthawk will continue to build on the existing resource and improving the potential of the project.”

Laurentian Bank noted the increase in the open-pit resource total to 3.6 million oz. from 2.7 million oz. and an increase in average grade to 1.6 grams gold from 1.5 even though the study used slightly lower cut-off grades. It also said Nighthawk stock trades at $9 enterprise value per oz. versus a peer group average of $66 enterprise value per ounce.

“Of the overall 3.6 million oz. in open-pit resources, most of these ounces continue to fall in the indicated category (78% vs. 77% previously), which should provide an increased level of confidence,”

Laurentian mining analyst Ryan Hanley wrote in a note on Feb. 10.

“Despite a growing resource base,

Nighthawk continues to trade at a sharp discount to its peers.”

The combined open-pit and underground indicated resource rose to 70.4 million tonnes grading 1.5 grams gold for contained metal of 3.4 million oz., a 26% jump from 2.7 million oz. in last year’s estimate. The corresponding inferred figures are 24.3 million tonnes grading 2.2 grams gold for 1.7 million oz., a 27% gain from last year’s estimate of 1.3 million ounces.

‘Top tier’ potential

Keyvan Salehi, Nighthawk president and chief executive officer, noted how the open-pit indicated resource estimate of contained metal rose by 415% while maintaining above-average grades compared to deposits in advanced development.

“If the project is developed, it could have the potential to be a top-tier gold project with respect to size, scale, and economics, located in a mining-friendly jurisdiction,” Salehi said in the release. “We believe there is a massive potential for discovering more gold mineralization across our 930-sq.-km district-scale property. All our deposits remain open in all directions and show great promise for further expansion in mineral resource ounces.”

The resource update is based on four deposits in Colomac Centre: the Grizzly Bear, Colomac Main, Goldcrest, and 24/27 deposits; as well as four higher grade satellite deposits 11-28 km away: Kim, Cass, Damoti and Treasure Island.

The update benefits from data collected during an additional 40 km of drilling in 2022, which targeted areas of higher-grade, near-surface mineralization, the company said.

Nighthawk acquired Colomac in 2012. It had been mined intermittently between 1990 and 1997 but was limited to one of three shallow open pits and only targeted a small portion of the 7-km strike length at the site.

Shares in Nighthawk rose more than 4% on the Feb. 10 news to 47¢ apiece, rising to 48¢ at press time in Toronto. The stock has traded within a 52-week range of 26¢ and 94¢, valuing the company at $59.4 million. TNM grams gold per tonne. This makes it one of the highest-grade gold development projects in the world.

“We are confident that the district has strong untapped upside with numerous avenues for resource growth,” B2Gold CEO Clive Johnson said in a statement.

The B2Gold team has experience building mines in the Arctic, as it built the Julietta and Kupol mines in Russia via B2Gold predecessor company, Bema Gold. The miner said it sees potential to increase Goose’s production in the first five years of the mine life through accelerated development of the underground section.

It also expects to complete optimization studies, which could improve long-term economics by allocating more capital up front.

The acquisition increases B2Gold’s reserves by 66% to 9 million oz. and its measured and indicated resources by 52% to 18.5 million ounces.

Under the terms of the deal, B2Gold will issue 0.3867 of a com- mon share for each Sabina common share held, equivalent to a value of $1.87 per share. The figure represents a 45% premium to Sabina’s closing price of $1.38 on the Toronto Stock Exchange as of Feb. 2, the date the non-binding letter of intent was signed.

By press time, Sabina shares had climbed to $1.71, in a 52-week window of 92¢ and $1.82, valuing the company at $956.2 million.

B2Gold shares traded at $4.49, in a 52-week window of $3.83 and $6.39. The company has a market capitalization of $4.8 billion.

The boards of both miners have unanimously approved the deal and Sabina’s directors have recommended its shareholders to vote in favour of the transaction.

B2Gold operates mines in Mali, Namibia and The Philippines.

The announcement comes only a week after Newmont (TSX: NGT; NYSE: NEM), confirmed it had approached Newcrest Mining (TSX: NCM; ASX: NCM), with a US$17-billion takeover offer. TNM