Skeena rallies on Eskay feasibility news
Skeena Resources Ltd. [SKE-TSXV, SKREF-OTCQX, RXFB-FRA] shares rallied Thursday after the company tabled results of a feasibility study for its Eskay Creek gold-silver project, which is located in British Columbia’s Golden Triangle area.
The shares jumped 8.2% or 51 cents to $6.74 on volume of 145,220, and now trade in a 52-week range of $17.11 and $5.80.
Skeena is engaged in a bid to revive two of Canada’s most successful high-grade precious metal mines – Snip and Eskay Creek. Both are located in the Golden Triangle area.
The company’s primary activities are the exploration and development of Ekay Creek, which produced 3.3 million ounces of gold and 160 million ounces of silver from 2.2 million tonnes of ore from 1994 until closure in 2008.
Snip was also a high grade mine that produced approximately one million ounces of gold from 1991 to 1999, at an average gold grade of 25 grams per tonne at a 12 gram-per-tonne reserve cut off.
Eskay Creek ranked as highest-grade gold mine in the world at the time that it was in production. It was also the world’s fifth highest grade silver producer.
The feasibility study pegs the after-tax net present value at $1.41 billion at a base case gold price of US$1,700 an ounce and US$19 an ounce for silver.
In years one to five, the study envisages average annual production of 431,000 gold equivalent (AuEq) ounces, placing Eskay Creek as a tier one operation. Life of mine production is expected to be 3.2 million AuEq ounces from 2.4 million ounces of gold and 66.7 million ounces of silver.
The all-in-sustaining cost is forecast at US$652 an ounce AuEq recovered in concentrate, with estimated pre-production capital expenditures pegged at US$592 million.
The study is based on proven and probable open-pit mineral reserves of 29.9 million tonnes, containing 2.87 million ounces of gold and 75.5 million ounces of silver (combined 3.85 million AuEq ounces).
“The feasibility study confirms the robust economics of the world-class Eskay Creek Project originally shown in the pre-feasibility study but with improved definition,’’ said Skeena President Randy Reichert. “The open pit mineable, high-grade ore combined with the existing infrastructure at the Eskay Creek site and nearby hydropower provides for an extraordinary project that can be developed by Skeena,’’ he said. “While the team continues to work on the optimization of the project, my primary focus will now shift to advancement of the permitting process as we move Eskay Creek toward construction.’’
The Eskay Creek Project is planned to be an open-pit operation using conventional mining equipment. The potential for an underground mining component to the project is still being evaluated. It is anticipated that Skeena will have a stockpile developed ahead of mill start up of approximately 600,000 tonnes of ore.
The proposed gold-silver concentrate from Eskay Creek will be transported to a nearby port via highway.