The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Peruvian miner to invest at least C$100M for 60% JV interest North of 60 Mining News – October 22, 2021
To earn a 60% JV interest in Snip, Hochschild Mining must at least double Skeena Resources C$50 million investment in this high-grade gold mine project in Northern British Columbia.
With Hochschild taking over operations at Snip, Skeena can focus its resources on exploration and potential development of a mine at its nearby Eskay Creek gold-silver project.
Skeena Resources Ltd. Oct. 16 announced that Peru-based Hochschild Mining PLC will begin spending roughly C$100 million to earn a 60% joint venture interest in the Snip gold mine project in British Columbia's Golden Triangle.
"The Hochschild team has a reputation for being among the best underground miners in the world for narrow, high-grade deposits and we are fortunate to have them as our formal partner on Snip going forward," said Skeena Resources CEO Walter Coles Jr.
Operated by Barrick Gold Corp. during the 1990s, the historic underground mine at Snip produced 1.1 million ounces of gold from 1.25 million metric tons of ore averaging 27.5 grams per metric ton gold.
Skeena has invested roughly C$50 million in the project since optioning and then acquiring the project from Barrick.
According to a 2020 calculation, Snip hosts 539,000 metric tons of indicated resource averaging 14 g/t (244,000 oz) gold; and 942,000 metric tons of inferred resources averaging 13.3 g/t (402,000 oz) gold.
Under a 2018 option agreement, Hochschild can earn a 60% interest in Snip by investing no less than twice what Skeena has already invested into exploration and development at the high-grade gold property over the three-year option period. At least C$7.5 million must be invested each year beginning on Oct. 14.
After completing a minimum spending of C$22.5 million, Hochschild may extend the option period by a year by paying Skeena US$1 million in cash.
As long as the option remains in good standing, Hochschild will be the operator at Snip moving forward, and upon completion of its earn-in, a 60-40 joint venture would 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 the requirements.
"Skeena's shareholders will benefit from Hochschild spending a potential C$115 million at Snip, before the company would be required to contribute. This will allow the Skeena management team to focus resources on aggressively exploring and advancing Eskay Creek," said Coles.
According to a prefeasibility study published earlier this year, an open pit mine at Eskay Creek would produce 2.45 million oz of gold and 79.9 million oz of silver over a 9.8-year mine life from 26.4 million metric tons of proven and probable reserves averaging 3.37 g/t gold and 94 g/t silver.
This operation, about 35 kilometers (22 miles) east of Snip, is forecast to produce an after-tax net present value (5% discount) of US$1.1 billion (C$1.4 billion) and an impressive 56% after-tax internal rate of return. These calculations consider an average gold price of US$1,550/oz and a US$22/oz average price for silver.
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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