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Eskay Mining is hoping to find the next Eskay Creek mine, which was once the richest gold mine in the world

Published: 08:00 03 Oct 2022 EDT

tent in forest with cars and wood beams around
Eskay owns 177 claims encompassing 52,600 hectares surrounding the Eskay Creek deposit

At one point in time, the Eskay Creek mine in British Columbia was the richest gold mine in the world.

Barrick Gold produced very profitable results from the rich deposit. The remaining assets were sold to Skeena Resources, who recently published a great feasibility with less than one year payback on the buildout - a plan which includes a much lower grade, but open-pit deposit. 

From around 1995 to 2008, the operation produced about 3.3 million ounces of gold that averaged 46 g/t gold and 150 million ounces of 2,000 g/t silver over the life of the mine, making it one of the most precious metal-rich volcanogenic massive sulfide (VMS) deposits in the world.

READ: Eskay Mining’s consolidated Eskay VMS project is demonstrating district-scale potential, says Noble Capital analysts

Eskay Mining Corporation wants to build on that success with 177 claims encompassing 52,600 hectares surrounding the Eskay Creek deposit. Its focus is to find the next big deposit on the property, which it terms the “holy grail.”

Eskay Mining’s CEO, Hugh (Mac) Balkam, took the reins in 2009. 

CEO Hugh (Mac) Balkam with Eskay mine camp in the background

“It’s a great story today, with the vision we have and where we’re going,” Balkam told Proactive in a recent interview.

Eskay Mining's VMS project encompasses fertile yet unexploited ground. While the property itself has seen drilling, the area surrounding it is a hotbed of activity: In March 2022, Newcrest Mining completed the acquisition of Pretium Resources Inc (TSX:PVG), owners of the Brucejack mine, for C$2.8 billion, while Newmont Corporation acquired GT Gold for C$393 million in March 2021. 

As Balkam explains, VMS deposits are not big, low-grade deposits – they are smaller in terms of size. The historical Eskay Creek mine was about 700 to 800 metres long, 250 metres wide to 20-40 metres thick, dipping at 15 degrees northeast-southwest. Balkam estimates that the deposit, if found today, would be somewhere between C$4 billion to $6 billion in net present value.

These VMS targets occur in clusters. “Everywhere in the world where a VMS system has happened, it’s had a series of deposits, and they’ve never found Deposit #2 in this size. So our target focus is to locate Eskay 2, 3, 4, and 5, over our project,” Balkam said.

Finding the next Eskay

Clusters also occur in an oval shape about 32 kilometers in length. Eskay Creek was at the northern part of that oval, and Eskay Mining owns 85% of the ground that could hold new Eskay Creek deposits. One way to find them is to drill after extensive ground mapping, rock sampling and geophysics. 

Eskay started drilling two years ago and last year sank 24,000 metres at the TV-Jeff zone. This year, the firm upped its budget to $19 million and is drilling 30,000 metres. In addition to TV-Jeff, Eskay started work on a new area known as Scarlet, which has a series of VMS targets over an eight-kilometre area. Drill holes have been completed at Scarlet Ridge, Scarlet Valley and Tarn Lake to explore the exposed surface VMS showing throughout the eight kilometer package.

"The old miners used to say the best place to find a gold mine is in the shadow of a head frame," Balkam said, restating the old mining adage. With the Eskay Creek mine seven kilometres due west form Scarlet, there may not be a shadow, but with similar rock types to the old mine, the Eskay 2 and 3 targets could exist here. From this area one looks across the valley to the existing mine infrastructure camp buildings. 

Scientific team headed by internationally-recognized geologist

Mac notes that a lot of scientific work has to be done to prove up Eskay 2 and 3. One person on the technical team who has been invaluable in that aspect is Dr Quinton Hennigh, an internationally-renowned geologist.

The history of the project excites Hennigh. “The silver grades helped to offset the cost of gold production, so the mine was producing gold at negative cash costs, which is an absolutely exceptional outcome,” he told Proactive. 

Through Hennigh’s connections, Eskay recruited John De Decker in October 2019, who now serves as vice president exploration. De Decker lives and breathes Eskay – he has put together a team of geologists that boasts four PhDs between them. “Along with Hennigh and Dr Thomas Monecke, a professor at the Colorado School of Mines, we have six of the most knowledgeable VMS deposit geologists, probably in the world,” Balkam said. “This team has a lot of experience and a lot of knowledge, and you need that in this environment.”

District scale opportunity, says Noble analysts

Analysts at Noble agree, calling Eskay a “district scale opportunity” and labeling Eskay Mining as a promising candidate for acquisition by a senior gold producer interested in establishing a presence in the prolific Golden Triangle. 

“Eskay fields a superlative team to advance its Eskay VMS project,” Noble analysts wrote in a July 2022 note that initiated coverage with an 'Outperform' rating on the stock.

“In addition to a management team that brings significant industry and governance experience, the company benefits from an accomplished board of directors that offer a broad array of experiences. Another key differentiator is a geological advisory board with impressive credentials and expertise in structural geology, geological mapping, VMS systems, and logistics to advise on the company’s exploration and drilling programs.”

The group has its work cut out for itself with an ambitious drill program this year, but is buoyed by its past success. Soil samples collected recently that span nearly six kilometres in strike length indicate that the system could be much bigger than perceived. As a result, Eskay is going to drill the Jeff-TV area very aggressively and start testing some new targets at Scarlet area. 

“While the company is still in exploration mode, we believe resource definition and infill drilling, leading to an initial resource estimate at TV-Jeff and Scarlett Ridge, could coincide with the 2023 exploration program,” Noble noted.

Balkam and the team are excited about what’s to come.

“Eskay's goal is to locate deposits equal to that of the original Eskay Creek mine which we surround with our 526 square kilometre holdings,” Balkam said. “As that deposit was very limited in actual size, the potential for several more deposits in this cluster remains in our sights.”

Contact Angela at angela@proactiveinvestors.com

Follow her on Twitter @AHarmantas

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on 11/03/2023