Skeena Resources has announced positive Definitive Feasibility Study (DFS) results for its fully owned Eskay Creek gold-silver project located in Tahltan Territory, northwest British Columbia.

The DFS was completed by geology and mining consulting services provider Global Resource Engineering (GRE) and Sedgman Canada, a CIMIC Group company.

It builds on a Feasibility Study (FS) completed in September last year and shows a large-scale project with good economics for a conventional open-pit mining and milling operation.

The new DFS shows several updates from FS 2022, including an updated Mineral Reserve statement, an optimised mine plan and an improved metallurgy, said Skeena.

Skeena president and CEO Randy Reichert said: “This Definitive Feasibility Study was a critical de-risking step for the Company in the development of Eskay Creek.

“In this study, we had multiple breakthroughs in metallurgy, increased Mineral Reserves by approximately 20% and continued to increase the Project value for our shareholders.”

The Eskay Creek project is a precious metal-rich volcanogenic massive sulphide (VMS) deposit, planned to be developed as an open-pit operation using conventional mining equipment.

The new positive DFS results show an increased Mineral Reserve estimate for the project and extend the mine life to 12 years.

It estimates a preproduction capital expenditure of C$713m, which is a 20% rise compared to FS 2022, and attributed to de-risking, unanticipated changes and cost inflation.

The DFS uses a gold price of $1,800/oz and a silver price of $23/oz, which suggests a base case NPV (5% discount) of C$2bn ($1.46bn) and an internal rate of return (IRR) of 42.9%.

It suggests proven and probable mineral reserves of 39.8 million tonnes for open-pit mining, containing 3.3 million ounces of gold and 88 million ounces of silver.

The mining operation is estimated to produce 455,000oz per annum at 5.5 g/t gold-equivalent in the first five years, generating a free cash flow of C$474m per annum.

Skeena executive chairman Walter Coles said: “With our base case after-tax NPV surpassing C$2bn, Eskay Creek stands out as a rare potential Tier 1 gold mining project, located in a politically stable jurisdiction.

“Excitingly, we see additional opportunities to increase Reserves and mine life, while continuing to advance the project through permitting, project financing, construction and production in 2026.

“We’re frustrated by the massive valuation gap between non-revenue generating mine developers and junior gold producers. However, we recognise that rapidly advancing Eskay Creek toward production and generating cash flow is the obvious path to delivering tremendous shareholder value.”