Skeena progresses Eskay Creek to prefeasibility

Skeena Resources (TSXV: SKE; US-OTC: SKREF) has started a preliminary feasibility study (PFS) for the Eskay Creek gold-silver project in the province’s Golden Triangle area.

“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,” Shane Williams, the company’s COO, said in a press release.

As the work progresses, the company will remain focused on completing an extensive infill drilling campaign to upgrade existing inferred resources to the measured and indicated category.

Last year, the company released the results of a preliminary economic assessment (PEA) of Eskay Creek, which proposed an open pit mine producing precious metals concentrate sold to smelters. The mine would produce an average of 306,000 oz. gold-equivalent annually at all-in sustaining costs (AISCs) of US$757 per ounce. The associated net present value estimate, at a 5% discount rate, came in at $638 million with a 51% internal rate of return. The mine would yield diluted head grades of 3.23 grams gold per tonne and 78 grams silver per tonne (4.17 gram per tonne gold-equivalent).

Based on the PEA results, Skeena has identified additional opportunities to optimize the value of the project. These include additional work to improve the metallurgy to produce a higher-value concentrate as well as geotechnical work for pit optimization studies.

Open-pit resources for Eskay include 12.7 million indicated tonnes at 4.3 grams gold and 110 grams silver for a total of 1.7 million oz. gold and 44.7 million oz. silver. Additional inferred resources include 14.4 million tonnes at 2.3 grams gold and 47 grams silver for 1.1 million gold oz. and 21.7 million silver ounces. These are estimated using a 0.7 gram gold-equivalent cut-off. Resources in the underground classification feature 819,000 indicated tonnes grading 6.4 grams gold and 139 grams silver, with an additional 295,000 inferred tonnes at 7.1 grams gold and 82 grams silver — these are derived using a 5-gram gold-equivalent cut-off.

Skeena has retained Ausenco Engineering Canada, SRK Consulting and AGP Mining Consultants to complete the study, which is expected to be complete next summer.

Eskay Creek produced 3.3 million oz. gold and 160 million oz. silver between 1994 and 2008. Skeena also holds the exploration-stage, past-producing Snip gold property.

Skeena may exercise the option to acquire a 100% interest in Eskay Creek from Barrick Gold (TSX: ABX; NYSE: GOLD) by December. It would need to make a $10 million payment and put up a bond; the total amount is capped at $17.7 million. Once this option is exercised, Skeena would enter the permitting process.

— This article first appeared in the Canadian Mining Journal. The Northern Miner and Canadian Mining Journal are part of the Glacier Resource Innovation Group.