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Sabina Silver Corporation: Sabina Silver Announces Q1 2009 Financial Results

^{Published on 2009-05-29 06:09:29, Last Modified on 2009-05-29 06:12:38 - Market Wire}
 

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 29, 2009) - Sabina Silver Corporation (the "Company") (TSX VENTURE:SBB) reported today the financial results for the quarter ended March 31, 2009.

Q1 Highlights

The first quarter culminated in a number of events for the Company:

- The announcement of an updated resource estimate for the Hackett River Project with improvements in tonnage and grade

- A budget was set for approximately $5m for exploration at Hackett River with drilling commencing in April

- The Company ended the quarter with a strong balance sheet of $32.7 million in cash and short term investments and $5.6 million in marketable securities

- The Company entered into an agreement to purchase the Back River assets from Dundee Precious Metals

- Long time Directors retire subsequent to quarter end.

Back River Transaction

The Back River Acquisition from Dundee Precious Metals announced on March 30, 2009 was the culmination of work done in 2008 to fulfill the corporate strategy to acquire accretive, synergistic precious metals assets in Canada.

"This is an exciting opportunity to acquire an asset that will be accretive to shareholder value, while enhancing the value of the world class Hackett River Project," said Tony Walsh, President and CEO.

The Back River Assets consist of two main components, the original Back River property hosting the George and Goose Lake hosted gold deposits and a recent new project area, the Wishbone Project. The Back River gold deposits are proximal to Hackett River, with George Lake being approximately 40 km to the south east. The Wishbone property covers a large portion of the Hackett River Greenstone Belt ("HRGB") and hosts Sabina's Hackett River Project as well as other smaller base and precious metal deposits. The combined properties total approximately 3,000 square km and cover a largely unexplored highly prospective greenstone belt.

Management believes that this transaction will add immediate value to the Company.

First, it brings a significant gold resource to Sabina. The George and Goose Lake deposits host 3.4 million tonnes grading 10.9 g/t for a total of 1.2 million indicated ounces of gold and 3.5 million tonnes grading 10.2 g/t for a total of 1.1 million inferred ounces of gold. The addition of these high grade gold ounces increases Sabina's already large precious metals component at Hackett River. Management also believes there is significant exploration upside at Back River, particularly at Goose Lake.

In addition, the Wishbone Project gives Sabina years of prospective exploration targets providing opportunities to create leverage and value while more advanced projects are pushed towards fruition. The Wishbone targets also create opportunities for the development of satellite mill feed for the anticipated Hackett River mill.

Thirdly, the acquisition enables the large fixed capital for a project dedicated road and deep sea port to be carried by a larger resource base, improving project economics as well as representing the potential for Sabina to establish itself as a regional economic driver. This could potentially enable nearby projects which are uneconomic on a standalone basis, to offset costs by utilizing established infrastructure.

To acquire the Back River Assets, Sabina will issue to Dundee Precious metals, in three tranches, upon closing, $7 million in cash and 17 million shares. Upon a decision of the Board to proceed to a Feasibility Study or production, Sabina will issue a further 5 million common shares and 2.5 million purchase warrants (tranche 2). Upon a decision of the Board to proceed to Production Sabina will issue a further 5 million common shares and 2.5 million purchase warrants (tranche 3). The Company received positive fairness opinions from Paradigm Capital Inc. and Dundee Securities on the transaction.

The Company is seeking shareholder approval for the transaction at its upcoming Annual General and Special Meeting which will be held on June 4, 2009 in Vancouver, BC. Proxy and Information Circulars were mailed to shareholders on May 13, 2009. We encourage all shareholders to vote. Proxy and Circular information can be obtained by contacting the Company at [ info@sabinasilver.com ].

Retirement of Long Time Directors

William Cummins, founder and long time Director and Chairman and Duncan Caldwell, Director and former Chief Financial Officer for the Company for many years have retired from the board effective May 22, 2009.

In 1972 Mr. Cummins personally acquired control of Sabina Industries Limited, now Sabina Silver Corporation and managed and directed Sabina until 2007 when he retired as Chief Executive Officer. Over the years Mr. Cummins shepherded the Company through its growth by adding value through assets and people while maintaining a strong balance sheet. He continued to search for and acquire many accretive projects including presiding over the Board of Directors responsible for acquiring the Hackett River project in 2003. Mr. Cummins has acted as Chair until recently, providing both management and the board with direction, support and encouragement. Mr. Cummins will continue to act as a consultant to the Board on issues that require his input and will remain honorary Chairman.

"I would like to thank Bill for his guidance and support and look forward to receiving his valued advice in the future," said Tony Walsh.

"I am very proud of the Company we've built," said Mr. Cummins "Thank you to all the people over the years whose hard work helped create what we have today. I am very excited about what the future holds for all of us, and have every confidence that Sabina's value will continue to grow."

Mr. Caldwell has been with Sabina for 14 years, 9 years as a director and officer. He started working for Sabina in 1998 as a Director and Controller, eventually becoming the Chief Financial Officer and Corporate Secretary of the Company. Mr. Caldwell has been integral in advancing Sabina through its early stages of development as a successful junior exploration Company. Upon the relocation of the Company from Ontario to British Columbia, Mr. Caldwell stepped down as Chief Financial Officer of the Company, remaining a Director until recently. He remains an objective proponent of growth for the Company and has provided his support whenever needed.

The Board of Directors and management team are truly appreciative to Mr. Cummins and Mr. Caldwell for their dedication and commitment to Sabina through the decades and are proud to be able to face the future at the helm of such a strong company in no small part, due to their contributions.

Financial Results

For the quarter ended March 31, 2009, the Company reported a net loss of $0.4 million which was the same in the corresponding period in 2008. However, in the first quarter of 2009, operating expenses were higher and interest income was lower than the same period in 2008; offsetting was an unrealized gain on held for trading investments.

The company had cash and short term investments of $32.7 million at March 31, 2009 compared to cash and short term investments of $35.0 million at December 31, 2008. Additionally the company holds Canadian equities with an estimated market value of $5.6 million at March 31, 2009 compared to an estimated market value of $4.5 million at December 31, 2008.

For the full March 31, 2009 financial statements and Management's Discussion and Analysis, please see the Company website at [ www.sabinasilver.com ].

On May 15, 2009, the Company granted 125,000 stock options at a strike price of $0.82 on a five year term to each of Mr. Cummins and Mr. Caldwell.

Quality Assurance

Mineral resources for Goose Lake and George Lake were generated by RSG Global Consulting Pty Ltd (Coffey Mining) in September 2007, and are posted on [ www.sedar.com ]. Mr. John Wakeford, P.Geo. and a Qualified Person in accordance with NI 43-101 has reviewed the resources referred to above and attached and has approved their dissemination.

SABINA SILVER CORPORATION is a Canadian public mineral exploration and development company with assets at the Hackett River silver-zinc project in Nunavut and several projects in the Red Lake gold camp. The Company is well capitalized with approximately $40 million in cash and marketable securities at December 31, 2008. The strategy to grow the company focuses on two mandates: 1) to continue to focus on enormous exploration and development potential of Hackett River Silver-Zinc project; and 2) Maintain strong balance sheet to acquire accretive precious metals assets.

Forward Looking Statements

Statements relating to the Back River Acquisition and the expected results of this transaction are forward-looking statements within the meaning of securities legislation of certain Provinces in Canada. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," 'projects," "potential" and similar expressions, or that events or conditions "will," "would," "may," "could" or "should" occur. Information inferred from the interpretation of drilling results and information concerning mineral resource estimates may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. These forward-looking statements are 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 statements, including, without limitation: risks related to fluctuations in gold prices; uncertainties related to raising 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; uncertainties involved in the estimation of metal reserves and resources; the possibility that required permits may not be obtained on a timely manner or at all; the possibility that capital and operating costs may be higher than currently estimated and may preclude commercial development or render operations uneconomic; the possibility that the estimated recovery rates may not be achieved; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in the work program; the risk of environmental 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, 2008.

Forward-looking statements are based on the beliefs, estimates and opinions of Sabina's management on the date the statements are made. Sabina undertakes no obligation to update these forward-looking statements should management's beliefs, estimates or opinions, or other factors, change.

This news release has been authorized by the undersigned on behalf of Sabina Silver Corporation.

Tony Walsh, President and CEO