The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Expansive drill program, PFS on the docket for balance of 2020 North of 60 Mining News – June 19, 2020
Skeena Resources has two drills turning at Eskay Creek and will phase in six to eight additional rigs in accordance to newly developed workflows associated with its COVID-19 strategy.
Skeena Resources Ltd. June 16 announced the start of a preliminary feasibility study aimed at further de-risking Eskay Creek and developing a strategy to efficiently advance this rich gold and silver project in British Columbia's Golden Triangle toward production.
Barrick Gold Corp. operated an underground mine at Eskay Creek from 1995 to 2008 that produced roughly 3.3 million ounces of gold and 160 million oz of silver from ore that averaged 45 grams per metric ton gold and 2,224 g/t silver.
Skeena, which secured an option to acquire this project from Barrick, has identified lower grade but shallower gold and silver mineralization that can be mined from the surface.
A preliminary economic assessment completed in November that outlines plans for an open-pit mine and 6,850-metric-ton-per-day mill at Eskay Creek that would produce an average of 236,000 ounces of gold and 5.8 million oz of silver annually over an initial 8.6-year mine life
This operation is calculated to produce a net present value (5% discount) of US$491 million and a very robust 51% internal rate of return.
Both figures are after tax and are calculated based on US$1,325/oz gold and US$16/oz silver.
This PEA is based on 12.71 million metric tons of surface mineable indicated resource averaging 4.5 g/t (1.82 million oz) gold and 117 g/t (47.79 million oz) silver; plus 13.57 metric tons of surface mineable inferred resource averaging 2.2 g/t (984,000 oz) gold and 42 g/t (18.46 million oz) silver.
This resource does not include any of the results from roughly 15,000 meters of resource upgrade and expansion drilling carried out last year.
"The PFS is the next step in the evolution of Eskay Creek as we move this high-grade, open-pit project towards development and through to commercial production," said Shane Williams, who recently joined Skeena as chief operating officer.
A key part of this evolution is an extensive infill drill program to convert a large portion of the inferred resources into the measured and indicated category, much of which will be elevated to reserves with the completion of the PFS.
And the company has the funds to rapidly pursue these targets.
"Skeena has spent almost C$25 million at Eskay Creek since we optioned the project from Barrick. Due to the exercise of warrants expiring last week, Skeena's cash position is approaching C$50 million. The company is fully funded for an exploration budget that will total approximately C$45 million for the balance of the year as we look to aggressively advance Eskay Creek," said Skeena Resources President and CEO Walter Coles.
This expansive program includes the resumption of the initial phase of 2020 drilling, which is slated to include 24,000 meters of drilling primarily focused on upgrading the inferred gold and silver resources.
Skeena launched a 28,000-meter drill program at Eskay Creek earlier this year but idled the drill after completing 4,237 meters due to COVID-19 restrictions.
The company has restarted this program with two drills and will increase the number of rigs in accordance with newly developed workflows associated with the company's infection prevention strategy. Once ramped up to full capacity, Skeena expect to have eight to 10 drills turning for the balance of the year.
Skeena has applied for permits for 137,000 meters of additional drilling to test exploration targets in the immediate resource area, as well as across the wider Eskay Creek property.
In addition to the robust drill program, the Skeena team will carry out work on optimizations and enhancements identified in the PEA.
This includes optimizing the metallurgy and the concentrate quality and to optimize the flow sheet; and gaining a better understanding of the geotechnical characteristics in the open pit, which will allow for further pit optimization studies.
Subject to its agreement with Barrick, upon exercise of the option to acquire full ownership of Eskay Creek by the end of the year, Skeena plans to enter the permitting process for the expanded Eskay Creek project.
The company has already begun the comprehensive environmental studies that are required for permitting and has initiated community engagement and consultation with First Nations.
Skeena has targeted next summer for the completion of the Eskay Creek PFS.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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