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Past-producing Eskay Creek ‘still has a bright future’

Mountain view at Eskay Creek, British Columbia.

Mountain view at Eskay Creek, British Columbia.

8th November 2019

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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The share price of Vancouver-headquartered Skeena Resources advanced 14% on Thursday, after the company outlined the potential of its Eskay Creek gold/silver project in a preliminary economic assessment (PEA).

Located in the Golden Triangle of British Columbia, Eskay Creek is a past-producing mine that operated as an underground mine until 2008. The PEA outlines a plan for the mine to reopen as an openpit site, producing an average of 306 000 gold-equivalent ounces (GEO) a year, with a diluted mill feed grade of 4.17 g/t GEO.

The GEO production will comprise 236 000 oz/y of gold and 5.81-million ounces a year of silver. The all-in sustaining cost is forecast at C$983/GEO.

The processing capacity of 6 850 t/d will result in a production lifespan of 8.6 years.

“The PEA demonstrates that Eskay Creek still has a bright future ahead, revitalised as an openpit gold and silver mine, with the additional possibility for underground mining,” commented CEO Water Coles.

The PEA is derived from the pit-constrained resource estimate and does not include results from the recently initiated and ongoing 2019 Phase I infill drilling programme.

The pit-constrained resource has a total indicated resource of 12.65-million tonnes at a grade of 5.8 g/t GEO, 4.3 g/t gold and 110 g/t silver, for 2.34-million GEOs, or 1.74-million ounces of gold and 44.66-million ounces of silver.

As a brownfield site, Eskay Creek has extensive infrastructure and by creating a gold concentrate, rather than dore, initial capital costs were kept at C$303-million. This, Coles said, was very low relative to the volumes of precious metals that the mine would produce.

The PEA calculated an after-tax net-present value at a 5% discount of C$638-million and an internal rate of return of 51% at $1 325/oz gold and $16/oz silver.

The payback period is 12 years.

Skeena Resources traded at C$0.64 a share on the TSX-V on Thursday afternoon.

Edited by Creamer Media Reporter

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