Skeena Resources has signed a binding term sheet with Barrick Gold pursuant to which Skeena will exercise its option to acquire 100% of the Eskay Creek gold-silver project in the Golden Triangle of northwest British Columbia. In addition, Barrick has agreed to waive its back-in right on Eskay Creek. As a result of the transaction, Barrick will become a significant shareholder in Skeena.
The former Eskay Creek mine was discovered in 1988 and produced approximately 3.3 million ounces (oz) of gold and 160 million oz of silver at average plant-feed grades of 45 grams per metric ton (g/mt) gold and 2,224 g/mt silver. It was at one time the world’s highest-grade gold mine and fifth-largest silver mine by volume.
Eskay Creek is a precious and base metal-rich volcanogenic massive sulphide (VMS) deposit. The mineralization has been the focus of considerable exploration activity dating back to 1932. Exploration drilling in 1988 led to the discovery of the 21A and 21B zones, followed by underground development of the 21B zone starting in 1990.
The mine was officially opened in 1994. Approximately 2.2 million mt of ore was mined over the 14-year life of the mine, with cut-off grades ranging from 12 to 15 g/mt gold equivalent for mill ore and 30 g/mt gold equivalent for smelter ore.
Eskay Creek has excellent infrastructure, including all-weather road access and proximity to the new 287-kilovolt Northwest Transmission Line.
A 2019 preliminary economic assessment (PEA) considered development of an open-pit mine at Eskay Creek, with production averaging 236,000 oz/y of gold and 5.8 million oz/y of silver over a mine life of 8.6 years. The mine would be an owner-operated, standard truck-and-shovel open-pit, with a leased mining fleet. A 6,850-mt/d mill and flotation plant would produce a saleable concentrate.
Regarding the Barrick transaction, Skeena CEO Walter Coles Jr. commented, “Skeena is honored to have Barrick as a significant shareholder as we endeavor to revitalize Eskay Creek, the former highest-grade, past-producing gold mine in the world. The recent improvements to infrastructure in the Golden Triangle offer us an opportunity to potentially reopen closed mines and contribute to the economic development of communities in northern Canada.
“Gaining 100% ownership and operatorship of Eskay Creek is an important milestone in the evolution of our company. Skeena is well financed with almost C$50 million of cash, and we continue to believe there are meaningful opportunities to increase the grade and size of this project with aggressive exploration drilling.”
