Skeena takes back 100% of Snip mine in B.C.
Skeena Resources Ltd. [SKE-TSXV] on Wednesday said Hochschild Mining Plc has terminated its option to earn a 60% interest in the Snip Gold Project in the Golden Triangle region of British Columbia. As a result, Skeena is reassuming management of the project and retaining full ownership.
In 2021, United Kingdom-based Hochschild agreed to spend about $100 million over three years to earn a majority interest in the project. So far it has spent $15 million, according to Skeena.
Hochschild CEO Ignacio Bustamante explained the decision, saying Hochschild is focused on later stage projects in the company’s portfolio, particularly the Mara Rosa project in Brazil.
Skeena will receive all data and information generated by Hochschild since the U.K. company optioned the property back in October, 2021.
Skeena were slightly lower in early trading Wednesday news, easing 0.80% or $0.07 to $8.65. The shares are currently trading in a 52-week range of $14.45 and $5.64.
Skeena acquired a 100% interest in the former Snip mine in July, 2017 from Barrick Gold Corp. (ABX-TSE, GOLD-NASDAQ]. Six months later, it secured an option to acquire a 100% stake in the Eskay Creek mine, which is also located in the Golden Triangle region of northwestern B.C.
The former Snip Mine was 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.
Approximately 60% of the production was obtained from the Twin Zone, a 0.5 to 15-metre-wide sheared quartz-carbonate-sulphide vein system that cuts through a massively bedded felspathic greywacke-siltstone sequence. Other sub parallel structures located in the footwall to the Twin Zone accounted for the rest of the production.
Snip was historically burdened with the high cost of being a stand-alone fly-in-fly out operation that was dependent on diesel fuel. Concentrates were transported from the site by hovercraft in the summer and by plane in the winter.
However, Skeena said the prospects for redevelopment have improved dramatically due to substantially higher gold prices, subsequent improvements in infrastructure and access and exploration upside, the company has said.
“We are thrilled to have 100% of Snip back in our portfolio,’’ said Skeena President Randy Reichert. “In the months ahead, Skeena plans to investigate opportunities to bolster the Eskay Creek mine life by processing ore at the Eskay Creek mill,’’ he said.
Skeena recently released the results of a feasibility study for Eskay Creek in September, 2022.
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.