Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Canadian explorer and developer Skeena Resources (TSX, NYSE: SKE) announced Tuesday it had closed the sale of a 0.5% net smelter returns royalty (NSR) on its Eskay Creek gold-silver project in British Columbia to Franco-Nevada (TSX, NYSE: FNV) in a cash deal worth C$27 million ($20m).
The transaction, first announced in early December, also gives Skeena an additional cash consideration of C$1.5 million ($1.1m).
Net proceeds of the sale will be used mainly to fund exploration and development activities at Eskay Creek, which the company acquired from Barrick Gold in 2020.
The British Columbia-focused company feasibility study for Eskay Creek envisions an open pit operation with an annual production of 352,000 ounces of gold equivalent a year.
Average grades are pegged at 4.57 g/t gold-equivalent, while the after-tax net present value, at a 5% discount, is estimated at C$1.4 billion, with a 56% internal rate of return and a 1.4-year payback at $1,550/oz gold.
The past-producing Eskay Creek mine was the world’s highest-grade gold operation between 1994 and 2008.
