Skeena Resources (TSX:SKE) - 465,000 oz pa High-Grade Gold Production

Interview with Randy Reichart, President and CEO of Skeena Resources Ltd. Our previous interview: https://www.cruxinvestor.com/posts/skeena-resources-ske-293m-annual-after-tax-free-cash-flow-2588 Recording date: 20th November 2023 High-Grade Past Producer Reimagined as Major Gold Operation with Robust Economics Skeena Resources has uncovered the rich potential of reinventing the formerly high-grade Eskay Creek mine in Canada into a prominently larger open pit operation. The company recently completed an enhanced Definitive Feasibility Study (DFS), optimized by its experienced leadership team, to develop a technically straightforward project producing over 450,000 low-cost gold-equivalent ounces per year. With an initial capital expenditure of C$592 million, Skeena emphasizes the attractiveness of Eskay Creek’s rapid 1.2-year payback period. The after-tax economics are stellar, boasting a C$2 billion NPV at a 5% discount rate alongside a 43% internal rate of return over a 14-year mine life. Benchmarked against comparable development projects, these figures place Eskay Creek as an extremely lucrative asset. Its current valuation at just 0.2 times NPV represents a substantial underpricing. Skeena is led by a proven mine building team who have addressed prior concerns by simplifying the process plant design and mining methods. By enhancing metallurgical performance, they’ve also managed to achieve significantly higher concentrate grades while requiring far lower shipment volumes. Real optimizations like these increase operational efficiency as well as investor confidence. With the DFS results now released, Skeena is focused on securing financing over the next 6 to 12 months. The company is pursuing a funding package across various alternatives like equity, stream financing, and debt. Concurrent permitting activities are also underway on key items such as the Environmental Assessment, targeting receipt by mid-2025. If everything progresses smoothly, construction would commence in 2025 for an 18-month build period. This supports Skeena’s goal of achieving first gold production in mid-2026. During the 3-4 month ramp-up phase to full capacity, the output is still anticipated to reach an impressive 230,000 ounces in the first year. Looking longer term, over the first 5 years of operation, Skeena is projecting a head-turning annual average production of 465,000 low-cost gold-equivalent ounces. This would immediately propel it into an intermediate producer tier amongst global gold miners. Eskay Creek’s established infrastructure from past mining, extensive existing permits, and located in a top-tier mining jurisdiction in Canada check all the right boxes for investors. With gold prices forecasted to rise amidst inflationary pressures, the market conditions align strongly as well. For risk tolerant investors with a 3-5 year time horizon, getting in early on a world-class project like this, managed by a capable team and on the cusp of critical de-risking milestones, holds exciting asymmetrical upside potential. The market appears slow to currently price in the prospectively substantial value add if Skeena executes successfully on bringing this revived gold asset through development into production. View Skeena Resources company profile: https://www.cruxinvestor.com/companies/skeena-resources Sign up for Crux Investor: https://cruxinvestor.com