UPDATE 1-Sabina Gold says begins drilling at Ontario project

* Says begins first stage of C$1.09 mln drilling program

* Phase 1 of drilling to complete by year end

* Says drilling at 50 pct owned Newman-Madsen project

* Sabina to bear half the cost, Premier Gold the rest

* Shares up 6 pct in morning trade



Oct 25 (Reuters) - Canada's Sabina Gold & Silver Corp said it has begun the first phase of the C$1.09 million drilling program at the Newman-Madsen property in Ontario, sending its shares up 6 percent.

The precious metals explorer said it will bear half the cost of the drilling in the property, located in the Red Lake Gold district -- an early stage exploration project held in a fifty-fifty joint venture with Premier Gold Mines, with Sabina as the operator.

The project, located in close proximity to the Madsen Mine, which has historically produced 2.4 million ounces of gold, will likely help Sabina continue its exploration activities through the winter shutdown at its Nunavut projects.

Under the phase 1 drilling program, which is expected to be completed by the end of the year, a series of four holes will be drilled to test the Madsen Mine Trend target at a budget of C$545,000, the company said in a statement.

Shares of Sabina have gained over 65 percent in value since it discovered gold at its Back river project in the Nunavut province in June. They were up as much as 6 percent, before paring some gains to trade up 4 percent at C$4.12 Monday on the Toronto Stock Exchange.

(Reporting by Gowri Jayakumar in Bangalore; Editing by Vyas Mohan)

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Keywords: SABINAGOLD/

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