The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News - December 20, 2024
The exploration camp at Skeena Resources' Eskay Creek gold-silver mine project in B.C.'s Golden Triangle.
Eskay Creek lies within the traditional territory of the Tahltan Nation in Northern B.C.
Skeena Resources Ltd. Dec. 16 announced that the British Columbia Ministry of Mining and Critical Minerals has approved a permit for the company to extract a 10,000-metric-ton bulk sample at Eskay Creek, an authorization that keeps development of the Northern British Columbia gold-silver mine project on track for production as early as 2027.
"The receipt of the Bulk Technical Sample permit is a major milestone for the company as it grants us the necessary authorizations for all planned development activities at Eskay Creek in 2025," said Skeena Resources Executive Chairman Walter Coles. "It is also significant because it is a key condition precedent for the release of US$200 million in gold stream project funding from Orion Resource Partners."
The gold streaming agreement is part of a $750 million financing package Skeena secured from Orion for mine development at Eskay Creek. This financing package includes:
• $100 million equity financing that closed earlier this year, which elevated Orion's Skeena shareholdings to 14.5%.
• $200 million gold stream, with option for Skeena to buy back up to 66.7% for a 12-month period after start of commercial production.
• $350 million of capital for a senior secured loan.
• $100 million cost over-run facility in the form of an additional gold stream.
The $200 million gold stream is to be drawn in tranches. Skeena drew an initial $5 million, with a second $45 million tranche contingent upon the approval of the bulk sample permit that has now been issued by the provincial government. Three additional $50 million tranches, the $350 million loan, and the optional $100 million cost contingency package will support mine construction.
Once in operation, the mine at Eskay Creek is forecast to produce 2.8 million oz of gold and 81.1 million oz of silver over the 12 years outlined in a feasibility study completed in 2023. This comes to an annual average of 324,000 oz gold-equivalent, which accounts for the value of both the gold and silver.
At $2,200/oz gold and $27/oz silver, the open-pit mine detailed in the 2023 Eskay Creek feasibility study is expected to generate an after-tax net present value (5% discount) of C$2.81 billion (US$2.06 billion) and a 53% after-tax internal rate of return.
At the current gold price of around $2,600/oz and silver price of around $30/oz, the financial returns are expected to be even higher, though some of the gains will be offset by inflationary pressures on development and operational costs.
Eskay Creek lies within the traditional territory of the Tahltan Nation in Northern B.C.
Additionally, Skeena is working with the Tahltan First Nation and B.C. government to complete the permitting process for mine development at Eskay Creek. In 2022, The Tahltan Central Government and the province entered into a consent-based decision-making agreement under the Declaration on the Rights of Indigenous Peoples Act, which will make Eskay Creek the first mining project to have its Environmental Assessment Certificate authorized by a First Nations government.
"Over the next twelve months, Skeena will continue advancing Eskay Creek through BC's Environmental Assessment process, in close collaboration with our Tahltan First Nation partners," said Coles.
It is currently expected that Skeena will receive the permits required for full-scale development and operation of a mine at Eskay Creek by the end of 2025, with initial production beginning in 2027.
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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