Skeena Resources Ltd T.SKE

Sprott Report June 2023

[Ridgeback]

 The main key takeaway from today’s MRE update is the level of refinement presented to us which is as critical detail for a self-build debt lender as it is for potential M&A buyers who likely rebuild these models.

The exploratory and delineation drilling around the new 23 and 21A West zones generated new resources resulting in pit expansions and drove the incremental increase in the OP resource (+6% in contained ounces coming with a +4% gain on grade) and more than offset the impact of the new methodology introduced to restrict the impact of high-grade mineralization close to the mined stopes and more conservative met recoveries.

In the UG part of the resource, differences on grade/tonnes/ounces come mainly from the updated pit geometry and the positive effect after removing the 1m geotech buffer around the underground workings as now drift and fill mining method (more selective than LH) is considered, while no new resource was produced from the Eskay Deeps discovery as spacing was inadequate.

While materiality is difficult to pin down, the new resource appears more refined using enhanced geological constraints that in our view provided robust “localized” estimates vs blanket globally after incorporating dynamic search ellipse and metallurgical recovers into the block model and combined with 99% of the resource now sitting in M&I, we would expect to see perhaps a prolonged mine life, albeit not a stepchange as it will come at the end of the life of mine.

Updating for the recent raise in cash and shares, we maintain our BUY rating but lower out PT from C$12.00/sh to C$10.90/sh based on 0.6xNAV5%-1850. Looking ahead, the DFS update by year end is the main catalyst to provide more torque to Skeena’s share, alongside with early construction works and progress on permitting and financing fronts.

Material updates on permitting / detailed engineering and financing are perhaps more material now given the permitting roadmap (EA certificate by 2H24, final permits to be issued in 1H25) was recently published in 1Q23.

[metalhead666]

Thank you for that!  Good read