Skeena Resources Ltd T.SKE

Sprott Report

[Ridgeback]

While never coming as fast as investors would like, that today’s charter syncs in well with previously published build schedules de-risks the existing project / valuation today given the three-way agreements between issuer, government and First Nations. In fact, the consolidation of federal and state assessments into a single federally-acceptable state process could be seen as being just as useful, as would prepermitting works expected this year and next.

With construction completion scheduled for 2H25 we model 22koz payable AuEq pre-production gold ahead of 410koz production / 364koz payable in CY26 ‘Y1’, which we maintain now. Modelling the 0.5% NSR sold to Franco for C$27m and rolling our model forward, we maintain our BUY rating lift our PT from C$10.80/sh to C$11.00/sh PT based on 0.6xNAV5%-1700.

Although a short window from permits to concentrate sales, we anticipate this to be de-risked by project funding this year and completion of civils / roads and mill buildings even in CY23/24 to compress timelines, although timing of course remains a risk.

The offset to that risk ironically is time, with 1xNAV5% rolled forward to CY26 of C$19.36/sh at our LT US$1,700/oz and US$20/oz Au/Ag, lifting to C$26.23/sh at spot US$1,915/oz and C$24.06/oz Ag.

Permitting process charter signing syncs to CY26 production; 0.5% NSR sale for C$27m, PT lifted Permitting: Skeena has signed a permitting ‘Process Charter’ with the Tahltan Central Government, and the Government of BC, establishing a workplan for EA and permitting targeted for 2H24 and 1H25, respectively, in line with project timelines.

The project received a ‘Readiness Decision’ in 4Q22, including consolidation of twin Federal / BC impact assessments into a single BC assessment that meets state and federal requirements. Royalty sale: On December 30th 2022, Skeena closed the sale of 0.5% NSR on Eskay Creek to Franco-Nevada in return for C$27m cash and contingent cash of C$1.5m. In connection, Skeena terminated Franco-Nevada’s right of first refusal to purchase a 0.5% NSR on Eskay Creek.

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 Catalysts

• 1H23: Potential funding / for early works

• CY23-24: Early works / civils / roads / bridges • CY25: Permitting, construction completion • CY26: First concentrate sales

[hcarbon]

I can´t find any info regarding mangaments holdings! Do they have skin in the game?