A Skeena Resources crew examines core samples at the Snip project
Credit: Skeena Resources

A Skeena Resources crew examines core samples at the Snip project

Want gold at a discount? Consider this once-proven Golden Triangle play

The stock: In contrast to **cough, cough** cryptocurrency, gold is once again showing itself to be a genuine store of value in perilous markets. The trouble with buying bullion now is that you’re paying full price.

But there’s another way of investing in gold with more potential upside—by buying gold that happens to still be in the ground. And we know there’s gold in them thar hills licensed to Skeena Resources (TSX:SKE). That’s because we’ve been there before. Skeena holds claims to the old Eskay Creek and Snip mines in northwestern B.C.’s Golden Triangle discovered by the late, legendary promoter Murray Pezim in the 1980s and among the highest-grade deposits ever mined anywhere.

The drivers: The underground mine developed at Eskay Creek produced 3.3 million ounces of gold and 160 million ounces of silver between 1994 and 2008. Snip put out a million ounces of gold from 1991 to 1999. Vancouver-based Skeena, which optioned the properties from Barrick Gold Corp., is expected to release a feasibility study for a planned open-pit mine at Eskay Creek by fall. Drill results to date peg its proven and probable reserves at 3.9 million ounces of gold. Should the project be greenlit, production would start in late 2024 and continue for approximately 10 years.

Not only is there existing road infrastructure to both of Skeena’s projects, the area is now within reach of the BC Hydro grid thanks to the Northwest Transmission Line completed in 2014. Another thing that’s changed since the 1990s is the attention Skeena is paying to environmental sustainability and a strong working relationship with the local Tahltan Nation, which invested $5 million in the project last year. Earlier this month the Tahltan signed an agreement with Skeena and the B.C. government that will see mining permits authorized by the Indigenous government, in full compliance with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP)—a first in this province.

Tracking the markets and high-risk assets generally, Skeena stock has lost nearly half its value so far in 2022, trading for $8.12 as of Tuesday. That’s as cheap as it’s been since 2020. All the while gold is holding steady around US$1,800 an ounce. So…

Word on the street: Skeena Resources shows “compelling economics and further potential upside,” writes RBC Dominion Securities analyst Michael Siperco, who has an “outperform” rating and $23 price target on the stock. “Eskay Creek screens well versus peer projects on scale, mine life, costs, and jurisdiction, and it should increasingly attract investor (and potential acquirer) attention as development milestones are met.”

Coming & going: Another Vancouver-based gold miner, Orla Mining (TSX:OLA) struck a deal June 13 to acquire Gold Standard Ventures (TSX:GSV) in a cash-and-shares transaction valued at $242 million. Gold Standard was developing two projects in Nevada.