North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Open-pit mining the gold- and silver-rich mineralization remaining at the historic Eskay Creek property in northern British Columbia would result in rich financial returns, according to a preliminary economic assessment recently completed for Skeena Resources Ltd.

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 acquired the property from Barrick, has identified lower grade but shallower gold and silver mineralization that can be mined from the surface.

A PEA published by the company on Nov. 7 indicates that an open-pit mine at Eskay Creek would be relatively inexpensive to develop and would yield high returns.

"Eskay Creek was a remarkable discovery that became an extraordinary underground mine in 1994 and produced until 2008. This PEA demonstrates that Eskay Creek still has a bright future ahead, revitalized as an open-pit gold and silver mine, with the additional possibility for underground mining," said Skeena Resources CEO Walter Coles.

This PEA outlines plans for a 6,850-metric-ton-per day operation that would produce an average of 236,000 oz of gold and 5.8 million oz of silver annually over an initial mine-life of 8.6 years.

This operation is calculated to produce a net present value (5 percent discount) of US$491 million and a very robust 51 percent internal rate of return.

Both figures are after tax and are calculated based on US$1,325/oz gold and US$16/oz silver.

Skeena Resources Ltd.

An ongoing fall drill program, which is expected to include roughly 200 holes at an average depth of 75 meters, is expanding and upgrading the near-surface gold and silver resource at Eskay Creek.

"Also, as a brownfield site, Eskay Creek benefits from tremendous infrastructure installed by the previous operators," Coles added. "Finally, by creating a gold concentrate rather than doré, we are able to keep initial capital costs very low, at US$233 million, relative to the amount of precious metals produced."

As a result of the low initial costs and high yield, Eskay Creek is expected to payback capital expenditures in just 1.2 years.

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 calculation was completed early in 2019 and does not include any of the results from the 15,000 meters of resource upgrade and expansion drilling currently underway at Eskay Creek.

–SHANE LASLEY