The first deep drill hole in the down dip extension of the Eskay Creek deposits in northwestern B.C. has identified a new occurrence of rhyolite-hosted mineralization about 650 metres down dip of the NEX Zone in the Eskay Deeps, and at a vertical depth of 850 metres below surface, Skeena Resources (TSX: SKE; NYSE: SKE) reports.
Drill hole SK-22-1081 returned 3.79 grams gold per tonne and 59.4 grams silver per tonne over 32.19 metres, including one-metre subintervals of 10.15 grams gold and 44 grams silver, and 2.33 grams gold and 699 grams silver.
Paul Geddes, the company’s president and CEO, said in a press release that the new discovery “suggests significant exploration potential north and west of the currently defined resources for the project,” adding that it also “unequivocally demonstrates that the Eskay Creek mineralized system is still thriving at depth.”
Mining analyst Andrew Mikitchook of BMO Capital Markets noted that the intercept north of the planned open pit at the project “shows the exploration upside around Eskay Creek where the limits of mineralization have not been defined and where Skeena continues to discover and extend mineralization in various areas both within the pit and outside it.”
“We would suggest that the intercept released today points to the potential for Skeena to add underground resources north of the current Eskay Creek resource across a relatively large area.”
Mikitchook also pointed out that the company is expected to complete a resource update in the first half of 2023 and a feasibility study update in the second half of next year.
In September Skeena released a feasibility study that envisioned an open-pit average grade of 4 grams gold-equivalent per tonne, an after-tax net present value at a 5% discount rate of $1.4 billion, a post-tax internal rate of return of 50%, and a one-year payback at metal prices of US$1,700 per oz. gold and US$19 per oz. silver.
BMO’s Mikitchook has a price target on Skeena of $15 per share and an outperform rating on the stock.
At presstime in Toronto Skeena was trading at $6.34 per share within a 52-week trading range of $5.64 and $17.11 per share.
The company has about 76 million common shares outstanding for a market cap of about $480.4 million.
