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By Shane Lasley
Mining News 

PFS details robust Eskay Creek gold mine

Skeena seeks to boost gold-silver reserves ahead of 2022 FS North of 60 Mining News – July 23, 2021


Last updated 7/29/2021 at 3:37pm

British Columbia BC Golden Triangle Skeena Resources Barrick gold silver mine

Skeena Resources Ltd.

Based on current reserves, Eskay Creek would produce 2.45 million oz of gold and 79.9 million oz of silver over 9.8-years.

A prefeasibility study for developing a mine at Eskay Creek has confirmed what most have suspected – robust financial returns to the company that develops an open-pit mine at this historic gold-silver project in British Columbia's Golden Triangle.

"Eskay Creek has a rare combination of attributes: scale, impressive grade and location in a tier one mining jurisdiction with strong First Nations support," said Walter Coles Jr., CEO of Skeena Resources Ltd., the company advancing Eskay Creek. "In the first five years of operation, it is anticipated that Eskay Creek will produce, on average, 450,000 gold-equivalent ounces per year."

Over the 9.8-year mine span consider in the PFS, the open pit mine proposed for Eskay Creek would produce 2.45 million oz of gold and 79.9 million oz of silver from 26.4 million metric tons of proven and probable reserves averaging 3.37 grams per metric ton gold and 94 g/t silver.

The plant will process at least 2 million metric tons of ore (5,480 metric tons per day) during the first year of operation before ramping up to 2.9 million metric tons (7,945 tpd) in years two through four, before settling in at 2.7 Mt/y (7,400 tpd) during the final six years considered in the PFS due to an increased hardness of the material.

This open pit gold-silver mine is expected to produce an after-tax net present value (5% discount) of US$1.1 billion (C$1.4 billion) and a whopping 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.

Given the financial robustness of the operation, it is only expected to take 1.4 years to pay back the US$381 million (C$488 million) estimated costs to develop the Eskay Creek mine.

Open-pit resources

The mine detailed in this PFS leverages Eskay Creek's extensive existing infrastructure, including all-weather access roads, previously permitted tailing storage facilities, and proximity to the 195-megawatt hydroelectric power grid in northwestern BC.

Much of this infrastructure was established to support Barrick Gold Corp.'s previous underground mine at this high-grade gold-silver project.

Over a 14-year span ending in 2008, Eskay Creek produced 3.3 million oz of gold and 160 million oz of silver from ore averaging 45 g/t gold and 2,224 g/t silver, which at the time made it the world's highest-grade gold mine and fifth-largest silver mine.

With strengthening precious metals prices, and more than C$2 billion invested in delivering industrial power and other infrastructure upgrades in Golden Triangle since the closure of Eskay Creek, Skeena cut deals with Barrick in 2017 for Eskay Creek and Snip, a nearby high-grade gold mine that was also operated by Barrick.

Since optioning Eskay Creek, Skeena has built a near-surface resource that supported its idea of developing an open-pit mine at this precious metal-rich volcanogenic massive sulfide project previously mined from underground.

According to an April calculation that served as a basis for the PFS, Eskay Creek hosts 37.65 million metric tons of open pit minable measured and indicated resources averaging 4.2 grams per metric ton (3.76 million ounces) gold and 82.8 g/t (100.3 million oz) silver; plus 5.24 million metric tons of open pit inferred resource averaging 1 g/t (174,000 oz) gold and 25 g/t (4.2 million oz) silver.

Boosting reserves

While the April resource supports a financially robust mine capable of producing an average of 249,000 oz of gold and 7.22 million oz of silver a year for a decade, Skeena is working toward expanded reserves for a feasibility study slated for the first quarter of next year.

"We expect further increases to the annual production profile as we move to the feasibility study in Q1 of 2022, and beyond," said Coles. "Our goal is to create a mine producing 500,000 gold-equivalent-ounces per year for 10 years.

The company is currently carrying out a 35,000-meter drill program focused on achieving this objective by upgrading inferred resources and exploring near-mine expansion targets identified by company geologists.

Skeena has also identified a potentially significant and easily processed source of ore in waste rock from Barrick's previous mining at Eskay Creek.

The previous underground mine development was largely tunneled in the often-mineralized rhyolite in the footwall of the mudstone sequence that hosted the very high-grade gold and silver mineralization. Although volcanic rocks tunneled through possessed variable gold and silver grades, the rhyolite-hosted mineralization was considered uneconomic due to the low prices of gold and silver at the time.

As a result, this development rock was transferred to the Albino Waste Facility southwest of the mine to be stored underwater.

Drilling this spring indicates that this discarded material has grades comparable to the current Eskay Creek reserves.

Highlights from drilling the Albino waste facility include:

16.01 meters averaging 4.17 g/t gold and 160 g/t silver in hole SK-21-841.

12.16 meters averaging 4.18 g/t gold and 190 g/t silver in SK-21-842.

22.8 meters averaging 4.16 g/t gold and 204 g/t silver in SK-21-843.

19.76 meters averaging 3.13 g/t gold and 127 g/t silver in SK-21-844.

15.2 meters averaging 3.97 g/t gold and 130 g/t silver in SK-21-845.

13.68 meters averaging 8.68 g/t gold and 330 g/t silver in SK-21-846.

British Columbia BC Golden Triangle Skeena Barrick gold silver mine map

Skeena Resources Ltd.

Near-surface expansion targets and the Albino Waste Facility could provide added resources ahead of an Eskay Creek feasibility study slated for early 2022.

The Albino facility covers roughly 128,900 square meters. Considering the more than 15-meter thickness of waste material indicated by the initial drilling, this could provide a sizable source of already mined material at grades similar to those in the resource being considered for a future open-pit mine at Eskay Creek.

The eight holes completed during the first phase of drilling at Albino only tested about 5% of the entire waste facility.

Although more holes were planned, deteriorating ice conditions forced an early end to the spring drilling. Based on the encouraging results from the initial eight holes, Skeena plans to resume drilling at the Albino Waste Facility toward the end of this year.

In combination with added resources at and around the near-surface deposits already delineated, this could potentially help boost reserves to a level that meets Skeena's objective of increasing the annual gold and silver production profile by about 10% in the feasibility study due out early next year.

Author Bio

Shane Lasley, Publisher

Over his more than 15 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.

Email: [email protected]
Phone: (907) 726-1095


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