Skeena builds strong mining partnerships

To advance a new era of mining in Eskay, Snip in Northern BC Mining Explorers 2021 – January 27, 2022

In an effort to revitalize the historic Eskay Creek and Snip gold mines, Skeena Resources Ltd. develops its resources and builds strong partnerships in these exceptional precious metals projects in British Columbia’s Golden Triangle.

As a testament to the enormous potential of Eskay Creek and Snip, and Skeena’s responsible approach to bringing them back into production, the central government of Tahltan invested C$5 million to acquire C$1.6 million shares of this company working on the traditional territory of the Tahltan First Nation.

“By partnering with Skeena, the Tahltan Nation is evolving and taking important steps in becoming meaningful partners in these projects,” said Tahltan Central Government Chairman Chad Day. “The property provides the Tahltan Nation with a strong seat at the table as we continue our quest toward empowerment and economic independence for the Tahltan people.”

The 95,933 square kilometer (37,040 square mile) territory of the Tahltan Nation covers 70% of British Columbia’s Golden Triangle, an area extremely rich in gold, copper, silver and other precious metals.

Both located in the southern part of Tahltan Territory, Eskay Creek and Snip are home to historic underground mines operated by Barrick Gold Corp. from around 1990 to 2008.

Towards his vision for a new era of mining in both cases, Skeena is rapidly advancing what promises to be a financially robust open pit mine at Eskay Creek and has handed over the reins of Snip to Hochschild Mining PLC, a miner based in Peru. particularly adept at exploiting high-grade gold deposits.

Impressive Eskay stream

A pre-feasibility study for the development of a mine at Eskay Creek has confirmed what most suspected – strong financial returns for the company developing an open pit mine at this historic gold-silver project in the Golden Triangle. British Columbia gold.

“Eskay Creek has a rare combination of attributes: scale, impressive grade and location in a Tier 1 mining jurisdiction with strong First Nation support,” said Skeena Resources CEO Walter Coles Jr.

Over a 14-year period ending in 2008, Barrick produced 3.3 million ounces of gold and 160 million ounces of silver at Eskay Creek from ore averaging 45 g/t of gold and 2,224 g/t silver, making it the highest in the world at the time. high-grade gold mine and fifth largest silver mine.

With precious metals prices strengthening, along with more than C$2 billion invested in industrial power supply and other infrastructure upgrades in the Golden Triangle since the closure of Eskay Creek, Skeena struck deals with Barrick in 2017 for Eskay Creek and Snip, a high-grade gold mine that was also operated by the global miner.

Since the Eskay Creek option, Skeena has built a near surface resource that has supported its idea of ​​developing an open pit mine in this previously mined precious metal rich volcanogenic massive sulphide project.

According to an April calculation, Eskay Creek hosts 37.65 million metric tons of measured and indicated open pit mineable resources averaging 4.2 grams per metric ton (3.76 million ounces) of gold and 82.8 g/t (100.3 million oz) silver; plus 5.24 million metric tonnes of open pit inferred resources grading an average of 1 g/t (174,000 oz) gold and 25 g/t (4.2 million oz) silver.

This resource serves as the basis for an EFP that details an open pit mine at Eskay Creek that would produce 2.45 million ounces of gold and 79.9 million ounces of silver over a ten-year period from 26.4 million metric tons of proven and probable reserves averaging 3.37 g/t gold and 94 g/t silver.

The recovery plant at this proposed mine would process approximately 2 million metric tonnes of ore in the first year of operation, increasing to 2.9 Mt/yr in the second through fourth years, and then stabilize at a rate of 2.7 Mt/yr as material hardness increases over the last six years considered in the PFS.

The open-pit gold-silver mine detailed in the PFS is expected to produce an after-tax net present value (5% reduction) of US$1.1 billion (C$1.4 billion) and an incredible rate after-tax internal return of 56%. These calculations assume an average gold price of US$1,550/oz and an average silver price of US$22/oz.

Given the financial strength of the operation, it is expected to take only 1.4 years to repay the estimated costs of US$381 million (C$488 million) to develop the mine. ‘Eskay Creek.

As impressive as those numbers are, Skeena has an even bigger and better vision for Eskay Creek.

A bigger vision

While the April resource supports a financially robust mine capable of producing an average of 249,000 ounces of gold and 7.22 million ounces of silver per year for a decade, Skeena is working to expand reserves to support a mine even greater to detail in a feasibility study scheduled for the first quarter of this year.

“We expect further increases in the annual production profile as we transition to feasibility in the first quarter of 2022, and beyond,” Coles said. “Our goal is to create a mine producing 500,000 ounces of gold equivalent per year for 10 years.

To achieve this objective, Skeena completed a drilling program of approximately 35,000 meters focused on upgrading inferred resources and exploring near-mine expansion targets identified by company geologists.

In addition to bringing new hard rock resources into the mine plan, Skeena is also exploring a potentially large and easily processed source of ore at a facility containing waste rock from Barrick’s former mining operation at Eskay Creek.

Barrick’s underground mine development was largely excavated into the mineralized footwall rhyolite of the mudstone sequence that hosts the very high-grade gold-silver mineralization that Eskay Creek is famous for. While much of this volcanic rock would be considered ore at today’s precious metal prices, the rhyolite-hosted mineralization was deemed unprofitable due to low gold and silver prices during the previous era of mining.

As a result, this development rock, along with the mill tailings, was deposited at the Albino Waste Management Facility southwest of the mine for storage underwater.

In early 2021, when there was still ice to support a drilling rig, Skeena completed initial testing of gold and silver enriched waste and tailings stored at Albino.

Highlights of the eight holes completed during the initial phase of drilling included:

16.01 meters grading an average of 4.17 g/t gold and 160 g/t silver in hole SK-21-841.

12.16 meters grading an average of 4.18 g/t gold and 190 g/t silver in SK-21-842.

22.8 meters grading an average of 4.16 g/t gold and 204 g/t silver in SK-21-843.

19.76 meters grading an average of 3.13 g/t gold and 127 g/t silver in SK-21-844.

15.2 meters grading an average of 3.97 g/t gold and 130 g/t silver in SK-21-845.

Given the over 15 meter thickness of this waste with gold and silver grades comparable to current Eskay Creek reserves, the 128,900 square meter waste management facility could provide a significant source of material already mined in the mining plan.

To further investigate this potential, Skeena has launched a second phase of drilling at Albino designed to test the remainder of the waste management facility at 50 meter drill spacings. These 27 additional holes were completed from a floating barge.

Depending on the results of this drilling, Skeena plans to return to Albino for a third phase of drilling to close the drill spacing at 25 meter centers.

Combined with additional resources on and around the near-surface deposits already delineated, this could potentially help increase reserves to a level that meets Skeena’s objective of increasing the annual gold and mineral production profile. about 10% in the feasibility study due to be published early this year. year.

A Snip Option

As Skeena focuses its resources on advancing to mining at Eskay Creek, the company has partnered with Hochschild Mining to do the same at Snip.

Under an option agreement that was finalized in October, Hochschild agreed to invest approximately C$100 million in exploration and development to acquire a 60% stake in Snip.

“The Hochschild team has a reputation as some of the best underground miners in the world for high-grade narrow deposits and we are fortunate to have them as an official partner for Snip in the future,” Coles said.

Operated by Barrick Gold Corp. in the 1990s, the historic underground mine at Snip produced 1.1 million ounces of gold from 1.25 million metric tons of ore at an average grade of 27.5 grams per metric ton of gold gold.

Since acquiring Snip from Barrick, Skeena has invested approximately C$50 million in exploration and other work on the high-grade gold mine project.

According to a 2020 calculation, Snip hosts 539,000 metric tonnes of indicated resources averaging 14 g/t (244,000 oz) gold; and 942,000 metric tonnes of inferred resources grading an average of 13.3 g/t (402,000 oz) gold.

Under a 2018 option agreement, Hochschild can acquire a 60% stake in Snip by investing no less than twice what Skeena has already invested in exploring and developing the high-grade gold property in during the three-year option period.

At least C$7.5 million must be invested each year starting October 14. After making a minimum expenditure of C$22.5 million, Hochschild may extend the option period by one year by paying Skeena US$1 million in cash.

As long as the option remains in good standing, Hochschild will operate Snip going forward, and upon completion of its integration, a 60-40 joint venture will be established between the parties. The option agreement also provides Skeena with C$15 million of dilution protection in the event that Hochschild’s investment in Snip exceeds requirements.

“Skeena shareholders will benefit from Hochschild spending a potential C$115 million at Snip, before the company is required to contribute. This will allow Skeena’s management team to focus its resources on the aggressive exploration and advancement of Eskay Creek,” said Coles.

Authors biography

Shane Lasley, Editor

In his more than 14 years of mining and mineral exploration coverage, Shane has become renowned for his ability to report on the sector in a manner technically sound enough to inform industry insiders while being easily understood by a wider audience.

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