SKE.TO · 2023-11-14 12:00:00

Skeena Completes Positive Definitive Feasibility Study for Eskay Creek: After-Tax NPV (5%) of C$2.0 Billion, 43% IRR and 1.2 Year Payback

Economic Studies

Skeena Completes Positive Definitive Feasibility Study for Eskay Creek:

After-Tax NPV (5%) of C$2.0 Billion, 43% IRR and 1.2 Year Payback

Vancouver, BC ( November 14, 202 3) Skeena Resources Limited (TSX: SKE, NYSE: SKE)

(“Skeena” or the “Company ”) is pleased to announce the results of the Definitive Feasibility Study

(“DFS” or the “Study” ) for its 100% owned Eskay Creek Gold-Silver Project (“Eskay Creek” or the

“Project”) located in Tahltan Territory in the Golden Triangle of northwest British Columbia.

Eskay Creek 2023 DFS Highlights:

• After-tax net present value (“NPV”)(5%) of C$2.0 billion at a base case of US$1,800 gold

and US$23 silver

• Industry-leading after-tax internal rate of return (“IRR”) of 43% and an after-tax payback

of 1.2 years on pre-production capital expenditures (“CAPEX”)

• Life of mine (“ LOM”) all-in sustaining cost (“AISC”) of US$684/oz gold equivalent

(“AuEq”) sold

• Proven and Probable Mineral Reserves for open-pit mining of 39.8 million tonnes (“Mt”)

containing 3.3 million ounces (“Moz”) gold and 88.0 Moz silver (4.6 Moz AuEq)

• Years 1-5: Average annual production of 455,000 oz at 5.5 g/t AuEq and average annual

after-tax free cashflow of C$474 million

• Years 1-10: Average annual production of 370,000 oz at 4.2 g/t AuEq and average annual

after-tax free cashflow of C$365 million

• Estimated pre -production CAPEX of C$713 million, yielding a compelling after-tax

NPV:CAPEX ratio of 2.8:1

The Company will be hosting a conference call to present the DFS results for Eskay Creek on

November 15 at 8:00 AM PT / 11:00 AM ET. A presentation by management will be followed by an

opportunity for Q&A.

Conference Call Webcast and Dial in Details:

Webcast URL with Audio - https://services.choruscall.ca/links/skeenaresources202311.html

Participant Telephone Numbers – Canada/US 1-800-319-4610, International Toll +1-604-638-5340

Definitive Feasibility Study Presentation - https://skeenaresources.com/investors/2023-definitive-

feasibility-study-presentation/ *presentation will be available on the morning of November 15, 2023

If you would like to ask a question, please dial in. All callers should dial in 5 -10 minutes prior to the

scheduled start time and simply ask to join the call. If you are unable to join the call, a replay will be

made available here following the completion of the call.

Randy Reichert, Skeena’s P resident & CEO, commented, “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

NR: 23-23 | November 14, 2023

continued to increase the Project value for our shareholders. This study is robust and engineered to

construct Eskay Creek.”

The Company’s Executive Chairman, Walter Coles, added “Ran dy and the team have done a

phenomenal job of improving the Project. With our base case after-tax NPV surpassing C$2.0 billion,

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 frustra ted by the massive valuation gap between non -revenue gener ating mine

developers and junior gold producers. However, we recognize that rapidly advancing Eskay Creek

toward production and generating cash flow is the obvious path to delivering tremendous shareholder

value.”

Eskay Creek Definitive Feasibility Study

The DFS for Eskay Creek was completed by Global Resource Engineering (“GRE”) and Sedgman

Canada Limited (“Sedgman”), a CIMIC Group Company. The Study demonstrates a robust Project

with industry-leading economics for a conventional open-pit mining and milling operation. The DFS is

a continuation of the September 2022 Feasibility Study (“FS”) with key updates including an updated

Mineral Reserve statement, optimized mine plan and improved metallurgy.

Summary of Key Results and Assumptions in the DFS

Table 1: After-Tax NPV(5%) and IRR Sensitivities to Commodity Prices

Lower

Case

Base

Case

Spot

31/10/23

Higher

Case

Gold Price (US$/oz) 1,600 1,800 1,997 2,200

Silver Price (US$/oz) 21 23 23.20 27

After-Tax NPV (5%) (C$M) 1,596 2,003 2,321 2,811

After-Tax IRR (%) 37.0 42.9 47.1 53.0

After-Tax Payback (years) 1.6 1.2 1.1 1.0

Average Annual After-Tax Free

Cash Flow (Years 1 - 5) (C$M) 408 474 525 605

Average Annual After-Tax Free

Cash Flow (Years 1 - 10) (C$M) 311 365 406 472

Average Annual After-Tax Free

Cash Flow (Years 1 - 12) (C$M) 270 317 354 411

• All dollar ($) figures are presented in CAD unless otherwise stated. Base case metal prices used in this economic

analysis are US$1,800/oz Au and US$23.00 Ag. These prices are supported by 3-year trailing average prices.

• Spot price taken as of October 31, 2023

Realized Improvements & Optimizations

The 2023 DFS incorporates several key enhancements and de-risking strategies relative to the 2022

FS including:

• Increase in the Mineral Reserve estimate and an extended mine life to 12-years

• Remodelled orebody based on a more selective mining approach with a smaller block size

• Pre-production mining accelerated to create a larger ore stockpile at startup, de -risking initial

production and improving ability to blend for optimal concentrates

• Metallurgical testwork completed that supports a simplified flowsheet and results in a 43%

reduction of mass pull with no material change in recovery to concentrate

• Lower concentrate tonnes at higher grade result in increased payables and decreased transport

and smelter treatment costs

• Updated capital costs to reflect a plan that is ex ecutable, technically proven and significantly

de-risked with an additional year of engineering and studies

• On-site permanent camp brought forward in plan and relocated away from mine infrastructure

to improve workforce attraction and retention , promote employee well -being and to ensure

adequate camp space during construction

Table 2: 2023 Eskay Creek DFS Project Parameters

Base Case Economic Assumptions

Gold Price (US$/oz) 1,800

Silver Price (US$/oz) 23

Exchange Rate (US$/C$) 0.74

Discount Rate (%) 5

Contained Metals

Contained Gold (koz) 3,340

Contained Silver (koz) 87,970

Mining

Strip Ratio (Waste: Ore) 8.0:1

Total Material Mined (excluding rehandle) (Mt) 357.7

Total Ore Mined (Mt) 39.8

Processing

Processing Life (years) 12

Processing Throughput (Mtpa) 3.0 (Yr 1 – 5)

3.5 (Yr 6 –12)

Average Diluted Gold Grade (g/t) 2.6

Average Diluted Silver Grade (g/t) 68.7

Production

Gold Recovery (% to Concentrate) 83

Silver Recovery (% to Concentrate) 91

LOM Gold Production (koz) 2,800

LOM Silver Production (koz) 81,140

LOM AuEq Production (koz) 3,937

LOM Average Annual Gold Production (koz) 230

LOM Average Annual Silver Production (koz) 6,674

LOM Average Annual AuEq Production (koz) 324

Operating Costs Per Tonne

Mining Cost (C$/t Mined) 3.00

Mining Cost (C$/t Milled) 26.74

Processing Cost (C$/t Milled) 19.11

G&A Cost (C$/t Milled) 5.65

• Cash costs are on an ounce payable basis and are inclusive of operating mining costs, processing costs, site

G&A costs, royalties, smelting, refining, and transports costs

• AISC are on an ounce payable basis and include cash costs plus sustaining capital and closure costs

• All dollar ($) figures are presented in CAD unless otherwise stated. Base case metal prices used in this

economic analysis are US$1,800/oz Au and US$23.00 Ag. These prices are based on 3-year trailing average

prices.

• Pre-production capital expenditure of C$713M is exclusive of initial working capital, primarily C$43.3M of pre-

production mining operating costs associated with establishing initial ore stockpile inventory

Mineral Resource Estimate

The Company’s current Mineral Resource Estimate (“MRE”) with an effective date of June 20, 2023,

forms the basis of the DFS. Mineral Resources are reported inclusive of Mineral Reserves . Mineral

Resources that are not Mineral Reserves do not have demonstrated economic viability.

Water Treatment Cost (C$/t Milled) 2.48

Total Operating Costs (C$/t Milled) 53.98

Other Costs

Transport to Smelter (C$/dmt Concentrate) 154

Au Refining Costs (C$/oz) 34.50

Ag Refining Costs (C$/oz) 1.67

Treatment Costs (C$/dmt Concentrate) 175

Royalty (Net Smelter Return (“NSR”) %) 2

Cash Costs and All-in Sustaining Costs

LOM Cash Cost (US$/oz Au) net of silver by -product 130

LOM Cash Cost (US$/oz AuEq) co-product 567

LOM AISC (US$/oz Au) net of silver by -product 296

LOM AISC (US$/oz AuEq) co-product 684

Capital Expenditures

Pre-production Capital Expenditures (C$M) 713

Expansion Capital Expenditures (C$M) 9

Sustaining Capital Expenditures (C$M) 561

Closure Expenditures (C$M) 175

Economics

After-Tax NPV (5%) (C$M) 2,003

After-Tax IRR 42.9

After-Tax Payback Period (years) 1.2

After-Tax NPV / Initial Capex 2.8

Pre-Tax NPV (5%) (C$M) 3,107

Pre-Tax IRR (%) 53.1

Pre-Tax Payback Period (years) 1.1

Pre-Tax NPV / Initial Capex 4.4

Average Annual After-tax Free Cash Flow (Year 1-5) (C$M) 474

Average Annual After-tax Free Cash Flow (Year 1-12) (C$M) 317

LOM After-tax Free Cash Flow (C$M) 3,038

Table 3: 2023 Measured and Indicated Pit Constrained Resource Reported at a 0.7 g/t AuEq

Cut-off Grade

Category Tonnes

(Mt)

AuEq

(g/t)

AuEq Ounces

(Moz)

Au Ounces

(Moz)

Ag Ounces

(Moz)

Measured 27.8 4.6 3.3 87.9 4.1 3.0 78.6

Indicated 22.3 2.1 1.6 32.0 1.5 1.1 22.9

Total M+I 50.1 3.4 2.6 63.0 5.5 4.1 101.4

1. All references to AuEq in this disclosure for the 2023 MRE have factored metallurgical recoveries as per the calculation: AuEq

= ((Au (g/t)*1700*0.84) + (Ag (g/t)*23*0.88)) / (1700*0.84). US$1,700/oz Au, US$23/oz Ag, 84% gold recovery and 88% silver

recovery

2. The Qualified Person for the estimate is Ms. Terre Lane, MMSA QP, Principal Mining Engineer of GRE who reviewed and

validated the Mineral Resource estimate

3. The effective date of the mineral resource estimate is June 20, 2023

4. The number of metric tonnes and ounces was rounded to the nearest million. Any discrepancies in the totals are due to rounding

5. Open pit-constrained mineral resources are reported in relation to a conceptual pit shell

6. Block tonnage was estimated from average specific gravity measurements using lithology and zone groupings

7. All grades within different zone groupings were capped where appropriate

8. Mineral resources are potentially amenable to open pit mining methods reported at a cut-off grade of 0.7 g/t AuEq.

9. Cut-off grades are based on a price of US$1,700 per ounce of gold, US$23 per ounce of silver, gold recoveries of 84%, and

silver recoveries of 88%, and without considering revenues from other metals.

10. Open pit key assumptions for reasonable prospects of eventual economic extraction are as follows:

a. An overall pit wall angle of 45 degrees

b. A reference mining cost of US$3.00 per tonne mined

c. A processing cost of US$15.50 per tonne processed

d. General and administrative costs of US$6.00 per tonne processed

e. Mining dilution of 5%

f. Mining recovery of 95%

g. Transportation and refining costs of US$18.5 per ounce Au.

h. Transportation and refining costs of US$7 per ounce Ag.

11. Estimates use metric units (metres, tonnes, and g/t). Metals are reported in troy ounces (metric tonne * grade/31.10348)

12. The 2014 CIM Definition Standards were used for the reporting of mineral resources.

13. The reported resource has been updated to reflect an updated topography surface and underground depletion wireframes.

Mining Overview

Eskay Creek is planned to be an open-pit operation using conventional mining equipment. Pit designs

were developed for the north and south pit areas. The initial phases were designed for the purpose of

obtaining a technical sample and necessary non-acid generating waste material (“NAG”) to create

supporting infrastructure. Open-pit mining follows down slope of the ridge where the deposit is located.

The north pit will consist of 10 phases, while the south pit will be developed as a single phase.

Mining will be executed on 10 metre benches using a combination of 400 and 200 ton excavators and

ore will be mined selectively on three sub-benches (flitches) using 200 ton excavators. Application of

selective mining techniques in ore resulted in substantial improvements to mined ore grade, compared

to non -selective ore mining that was contemplated in the 2022 FS mine plan. Selective mining

techniques w ere evaluated by reducing the resource model block size from 10x10x10 metre to

5x5x5 metre to accurately model reduced ore dilution by operating 200 ton excavators in ore to reduce

the smallest mining uni t. The mining fleet was increased compared to the 2022 FS plan to provide

higher mining rates in the no-snowfall months to compensate for anticipated lower production rates

during the winter months.

Table 4: 2023 Eskay Creek Proven and Probable Mineral Reserves

Grade Contained Ounces

Reserve

Class

Tonnes

(Mt)

AuEq

(g/t)

AuEq

(Moz)

Proven 28.0 4.1 3.0 80.9 3.7 2.7 72.7

Probable 11.9 2.3 1.8 40.1 0.9 0.7 15.3

Total 39.8 3.6 2.6 68.7 4.6 3.3 88.0

Note: This Mineral Reserve estimate has an effective date of November 14, 2023 and is based on the Mineral Resource

estimate dated June 20, 2023 for Skeena Resources by GRE. The Mineral Reserve estimate was completed under the

supervision of Terre Lane, Principal Mining Engineer of GRE, who is a Qualified Person as defined under NI 43 -101.

Mineral Reserves are stated within the final design pit based on a US$1,700/oz gold price and US$23.00/oz silver price.

An NSR cut-off of C$24.45/t was used to estimate Mineral Reserves based on preliminary processing costs of $18.22/t

ore and G&A costs of C$6.23/t ore. Gold and silver recoveries were 83% and 91 %, respectively during the LOM

scheduling. AuEq = ((Au (g/t) * 1700 * 0.83) + (Ag (g/t)* 23 * 0.91))/(1700 * 0.83). Final operating costs within the pit

design were C$3.00/t mined, with associated process costs of C$19.11/t ore processed, G&A costs of C$5.65/t ore

processed and water treatment costs of C$2.48/t ore processed.

The DFS outlines an average production profile of 455,000 AuEq oz in the first five years of operation.

It is anticipated that Skeena will have a substantial stockpile developed ahead of mill start-up. The run-

of-mine (“ROM”) and low-grade stockpile areas were increased in size to allow higher mining rates in

no-snowfall months and to provide adequate space for blending feed to the mill.

Graph 1: 2023 Eskay Creek Planned LOM Annual Production Profile

100

200

300

400

500

600

700

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12

Average Annual Head Grade (g/t AuEq)

Ounces/Year (AuEq) x1,000

AuEq Ounces/Yr AuEq Head Grade

The mine schedule plans for delivery of 39.8 Mt of mill feed grading 2.6 g/t Au and 68.7 g/t Ag (3.6 g/t

AuEq) over the 12-year life of mine. Waste tonnage from the pits totalling 317.9 Mt will be placed into

either NAG or potentially acid generating waste (“PAG”) storage facilities. The overall forecast strip

ratio is 8.0:1.

Metallurgy and Processing

Metallurgical tests were conducted through 2023 in support of the DFS to optimize the flowsheet and

to increase grades of payable metals in the concentrate.

Metallurgical Optimization

As part of the DFS, metallurgical testing was conducted on composite samples that represented a

range of 15-35% Mudstone with the balance as Rhyolite, matching the expected range to be produced

by the mine.

An alternative flowsheet compared to the 2022 FS was tested with the purpose of simplifying the

process flowsheet. The new testwork program evaluated a range of primary grinds and determined

that 40 µm is optimal prior to rougher flotation. Following rougher flotation, regrinding rougher

concentrate to approximately 10 µm was determined to provide the best flotation results.

The additional metallurgical testing has shown excellent results in producing a higher-grade gold and

silver concentrate with lower concentrate volumes, compared to previous testing. Recoveries for gold

were largely unchanged at 83%, slightly conservative based on test results, and silver recoveries

increased from 88% to 91%, as compared to the 2022 FS.

Table 5: Concentrate Comparison of 2022 FS vs. 2023 DFS

Units 2022 Feasibility

Study

2023 Definitive

Feasibility Study

Mass Yield to Concentrate (range) % 4.6 – 7.8% 2.6 – 5.3%

Mass Yield to Concentrate (average) % 6.8% 3.9%

Concentrate Production dmt 2,018,000 1,574,000

Au Concentrate Grade (range) g/t 25 – 50 40 – 95

Au Concentrate Grade (Y1-5 average) g/t 48 82

Au Concentrate Grade (LOM average) g/t 37 55

Ag Concentrate Grade (range) g/t 674 – 1,629 1,020 – 2,970

Ag Concentrate Grade (Y1-5 average) g/t 1,313 2,466

Ag Concentrate Grade (LOM average) g/t 1,024 1,595

• Concentrate production of 2,018,000 dmt in 2022 FS considered 29.9 Mt of mill feed over a 9-year life. Concentrate

production of 1,574,000 dmt in 2023 DFS considers 39.8 Mt of mill feed over a 12-year life.

The outcome of producing a high er-grade concentrate led to a substantial cost reduction of an

estimated C$400 million pre-tax over LOM in both treatment charges and transportation costs in

comparison to the 2022 FS. In addition to decreasing costs, the higher-grade concentrate also provides

an opportunity for the base metals content to be payable, and some previous penalty elements are

now neutral and do not incur penalties.

Graph 2: Eskay Creek LOM Concentrate Comparison of FS vs. DFS

Processing Overview

The process flowsheet in the DFS has been simplified and de -risked from that which was developed

for the 2022 FS. In Years 1 through 5, 3.0 million tonnes per annum (“ Mtpa”) will be processed. A

pebble crusher will be added in Year 3 to maintain production when harder ore is processed in Year 4.

An expansion will be completed in Year 5 to increase processing capacity to 3.5 Mtpa , when harder

and lower grade ore is processed starting in Year 6. Only minor upgrades will be required to the

processing plant equipment list, as most of the major equipment items, such as the mills, are pre-sized

for this higher throughput and harder ore. Mill-motor footprints will be capable of having larger electrical

motors installed at that time.

ROM material will be trucked from the open -pits and either stockpiled or d irectly fed into the primary

crusher. Primary crushing remains unchanged from the 2022 FS ; however, the location was re -

assessed due to the increase of ROM ore stockpile capacity to 17.5 Mt. Crushed material will now

report to a new ore bin with approximately 7 hours storage capacity. Emergency overflow and reclaim

will be located adjacent to the ore bin.

The ROM ore is considered relatively competent with bond rod and ball mill work indices between

14.1 kWh/t in the early years of the mine life up to 24 kWh/t later in the mine life as the 22 Zone material

is more competent. Larger semi-autogenous grinding (“SAG“) and ball mills will be installed in initial

construction to minimise any major disruptive expansion works when the thro ughput is increased to

3.5 Mtpa in Year 6. To achieve the target primary P 80 (80% passing) particle size of 40 μm, the

comminution circuit will consist of a 6.1 MW SAG mill with an 8.5 metre diameter by 4.9 metre effective

grinding length (“EGL”), a 7.9 MW ball mill with a 6.4 metre diameter by 9.8 metre EGL and a tertiary

stirred mill with 6 MW of installed power.

100

125

150

50,000

100,000

150,000

200,000

250,000

300,000

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12

Concentrate Grade g/t AuEq

Concentrate Tonnes/Year

Concentrate Tonnes - 2023 DFS Concentrate Tonnes - 2022 FS

Concentrate Grade AuEq g/t - 2023 DFS Concentrate Grade AuEq g/t - 2022 FS

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