Eskay Creek is located in British Columbia, Canada, 83 km northwest of Stewart. Eskay Creek is a high-grade, epithermal VMS deposit, situated on the western edge of the Stikine Terrane. The area was first prospected in the 1930s, followed by drilling and underground exploration, eventually coming under the control of Homestake Mining, which commenced commercial production in 1995. Barrick became the owner of Eskay Creek through its acquisition of Homestake in 2001, operating the mine until 2008. Following a period of reclamation and remediation, Skeena gained full ownership in 2020. Over the course of its history, 3.3 Moz gold and 162 Moz silver had been produced via underground mining.
Eskay Creek is currently planned as conventional shovel and truck operations, with a main pit and a smaller pit to the south. The project has a projected mine life of nine years, producing 40 Mt ore at a strip ratio of 8:1. Of the 318 Mt waste, 151 Mt is potentially acid generating. Ore is milled at a throughput of 3 Mtpa from Years 1 to 5, increasing to 3.5 Mtpa from Years 6 to 12. This is in part a bid to boost production amidst falling grades. The project is anticipated to produce an average of 400 koz AuEq per year for the first six years. Per the Technical Report, the project has a Pre-Tax Cashflow of C$4,553 M and pre-tax NPV5% of C$3,058 M. Using the information provided in the Technical Report, Mining Momentum calculated a pre-tax NPV10% of C$1,997 M.
| Tonnes (Mt) | Au (g/t) | Ag (g/t) | AuEq (g/t) | Au (Moz) | Ag (Moz) | AuEq (Moz) | |
|---|---|---|---|---|---|---|---|
| Reserve | 39.8 | 2.6 | 68.7 | 3.6 | 3.3 | 88.0 | 4.6 |
| M+I | 12.1 | 2.8 | 48.8 | 3.2 | 1.1 | 19.0 | 1.3 |
| OP | 10.3 | 2.4 | 40.5 | 2.7 | 0.8 | 13.4 | 0.9 |
| UG | 1.8 | 4.7 | 95.6 | 6.0 | 0.3 | 5.6 | 0.4 |
| Inferred | 0.9 | 0.4 | 11.0 | 2.7 | 0.9 | 23.7 | 0.1 |
| OP | 0.7 | 1.5 | 32.4 | 1.9 | 0.0 | 0.7 | 0.0 |
| UG | 0.3 | 4.2 | 25.4 | 4.6 | 0.0 | 0.2 | 0.0 |
What better way of marketing a project than with 4.6 Moz, six years of 400 koz production, and the name “Eskay Creek”? Grades here are truly phenomenal, however what Eskay Creek lacks is size. Mining Momentum is of the opinion that annual throughputs are beyond the optimal point for the size of the deposit, evidenced by the lack of a smooth, steady-state production profile. While this intends to improve project economics, the rapid ramp-up is a steep learning curve, increasing the risk of delays and cost overruns. Although costs contained in the Technical Report appear reasonable, the high strip ratio of the pit makes it particularly sensitive to slope angle and subsequent cost increase if poor geotechnical conditions are encountered. Additionally, environmental concerns were highlighted in the Technical Report. This poses a risk to project timeline, execution, and potential cost increases. A 20% to 30% cost increase is not unexpected. This is in line with projects at this level of study.
Bullish prices supports conversion of open pit M+I Resource into Reserve although underground potential is limited. Material immediately adjacent to the pit shell is likely non-mineable and a number of areas lack sufficient continuity to develop a viable underground extraction strategy. Likely no more than 50% underground Resource can be converted into Reserve. Finally, is the metal there? The risk of encountering voids and metal feeding grade that has potentially been mined out, presents downside risk in ounces; while this may have been accounted for in the geological model, it has not been discussed in detail. Abrupt transitions between Measured and Inferred have also been observed. Typically, Indicated forms a halo around Measured and in turn, Inferred forms a halo around Indicated. This raises the question regarding whether the geological model captures narrow vein ore underground with adequate resolution. Incorporating the 900koz Resource conversion and 20% ounce reduction, Mining Momentum estimated a 15 to 20 year open pit producing 250 koz per year. Underground mining has been left out of the mine plan entirely, although exploration potential remains. Skeena has given Eskay Creek a breath of fresh air. While some risks remain and the project still has some rough edges, what has been demonstrated is the tremendous potential present. Mining Momentum is excited to see what the future holds for Eskay Creek!
The information presented above does not constitute investment advice. This is a summary from the NI 43-101 Technical Report effective November 14, 2023 (INSERT), with commentary from the author. Statements above do not represent the views of Skeena. If any discrepancies arise, the information contained within the NI 43-101 are official and final. For latest depletion data, please refer to the AIF update.