Sprott UpdateYesterday’s high-grade intercept of 24m @ 22.3 g/t AuEq from the 21A West Zone, 15m below a recently reported hit of 12.1m @ 48.5g/t in an area previously modelled as waste rock, provides a useful ounce addition to the mineable resource base.
The second intercept of 20.6m @ 5.5 g/t from 148m, 25m below the planned open-pit and within the new rhyolite-hosted mineralization is a useful confirmation of the continuity of mineralization, which, pending outstanding results could translate to a deepening of the existing pit. While these hits could improve economics by reducing local strip ratio and likely add more ounces to the MRE and NPV, higher grades in existing reserves will still dominate the NPV, hence permitting and funding progress are key in the short term. As such, we maintain our BUY rating and C$10.80/sh PT based on 0.6xNAV5%-1700.
Looking ahead, step-out and infill drilling are ongoing with a 60km drill program providing abundant news flow as the project continues to make headway this year.
The lower mudstone is one target which could add ounce-level resources which would improve the economics. Ahead of mining, infill and upgrading more reserve to proven from probable, today’s news helps to de-risking the asset.
Eskay Creek Plan view and 21A / 21A West Zone vertical section showing yesterday’s drilling Source: Skeena Delineation drilling extends 21A West Zone with 24m @ 22.3g/t; new mineralization below pit Skeena reported results from 21A West Zone delineation drilling, hitting 24.0m @ 22.3g/t AuEq from 44m, 15m deeper than a previous mineralized drill hole (12.1m @ 48.5 g/t). Another intercept returned 20.6m @ 5.5g/t from 147m, 25m below the current open pit shell. A total of 55,652m were drilled during the 2022 drilling program and the results will be included in the 2H23 MRE update.
Why we like Skeena Resources • Large high-grade open pit with SCPe >500koz upside potential in coming 12-18M • Shift in market dynamics allows concentrate sales for lower capex • Optionality from high-grade Snip mine nearby to blend concentrate or add ounces • Catalyst heavy with drilling, metallurgy, and DFS optimizations in coming 12M