Netolitzky’s Skeena raises expectations for Spectrum

VANCOUVER – Skeena Resources’ (TSXV: SKE; US-OTC: SKREF) first resource for its Spectrum gold project, 37 km west of Imperial Metals’ (TSX: III; US-OTC: IPMLF) Red Chris mine in northwest B.C., has transformed the high-grade gold target into a potential low-grade gold-copper, bulk-tonnage opportunity.

Skeena carried out a 17,600-metre drill program last year to upgrade and expand the Central zone’s historic resource of 614,000 tonnes grading 12.3 grams gold per tonne for 243,600 contained oz. gold, using a 5-gram gold cut-off.

But as drilling stepped out along the deposit, the gold-bearing structures narrowed into a broader halo of porphyry-style mineralization and became less consistent, Ronald Netolitzky, chairman of Skeena, tells The Northern Miner during a phone interview.

“We looked at it hard, but the mineralized intervals don’t appear to tie together at our drill spacing, and I’m not going to join numbers unless we feel confident that’s the orientation of the deposit,” he says. “It looks like the mineralization bled off a porphyry … it is more of an alteration package than it is a vein system.”

The new resource estimate stands at 8.95 million indicated tonnes grading 1.04 grams gold, 6.58 grams silver per tonne and 0.1% copper, for 290,000 oz. gold, 1.82 million oz. silver and 20.8 million lb. copper.

Another 22.6 million tonnes sits in the inferred category, with grades of 1.03 grams gold, 3.85 grams silver and 0.1% copper, for 750,000 oz. gold, 2.8 million oz. silver and 54.9 million lb. copper.

The calculations assume a conceptual open-pit design and a cut-off of 0.5 equivalent gram gold, with the resource drilled at 25- to 75-metre centres.

“If I went back and duplicated the historic resource at the property I’d probably still get those ounces, or probably even increase them, but we don’t have the drilling confidence to do that and it wouldn’t stand up to a modern modelling approach.” Netolitzky says. “It’s a big target and has the potential to become bigger. I feel the resource is a bit premature, but we promised last year that we’d deliver a resource, so we did.”

The stockwork-hosted deposit extends from surface to 600 metres deep, 1,100 metres north–south and 380 metres east–west, and is open to the west along its 1.1 km length, as well as north, south and at depth.

Netolitzky adds that Skeena is exploring possible synergies between Spectrum and the copper-gold porphyry deposits at its adjacent GJ property, 10 km east.

“The most ideal location for operations is halfway between the two properties,” he says. “Now the question is whether the two deposits’ metallurgy are compatible enough to be processed in the same plant, and that’s the work we’re pursuing right now.”

Skeena upgraded the resource on the Donnelly and North Donnelly deposits at GJ soon after acquiring the 383 sq. km property from joint-venture partners Teck Resources (TSX: TCK.B; NYSE: TCK) and NGEx Resources (TSX: NGQ; US-OTC: NGQRF) last October.

The GJ resource stands at 33.7 million measured and indicated tonnes at 0.3% copper and 0.36 gram gold for 940.2 million lb. copper and 1.56 million oz. gold, using a 0.2% copper cut-off.

Walter Coles Jr., president and CEO, says during a phone interview that although the company is still focused on high-grade gold, the rising tide in commodity prices has lifted the demand for lower-grade material.

“Victoria Gold just closed a $24-million financing, and their grades average 0.68 gram gold, so my point is that there’s an appetite out there now for the lower grade,” he says.

(Victoria Gold’s [TSXV: VIT] flagship asset is the heap-leachable Eagle Gold deposit, 85 km from Mayo, Yukon, where there are 222 million indicated and probable tonnes at 0.68 gram gold for 4.9 million oz. gold, and another 78 million inferred tonnes of 0.6 gram gold for 1.5 million oz. gold, assuming a 0.2 gram gold cut-off.)

“The potential for high grade at Spectrum does exist, and now that we have a better understanding on the controls of mineralization, we’ll be far more efficient with our drill dollars going forward, and we’ll continue to add ounces,” Coles says.

The company is planning an induced-polarization geophysical survey across the deposit this year to help zero in on the extent of mineralization, along with an 8,000- to 10,000-metre drill program to test the periphery of the deposit and several outboard high-grade gold targets.

The estimated $4-million work program at Spectrum this year combines with another $500,000 in work commitments at its high-grade gold Snip property, which the company acquired in March from Barrick Gold (TSX: ABX; NYSE: ABX).

The 19.3 sq. km Snip property sits 200 km southwest of Spectrum, near Seabridge Gold’s (TSX: SEA; NYSE: SA) KSM property and Pretium Resources’ (TSX: PVG; NYSE: PVG) Brucejack project, and borders on SnipGold’s (TSXV: SGG) 286 sq. km Iskut property.

Seabridge is in the midst of acquiring SnipGold and all of its outstanding shares to gain exposure to the geological potential at the property, along with potential synergies in both infrastructure and personnel between the companies.

Seabridge’s offer works out to 29.1¢ per share of SnipGold, or a 124% premium, based on the closing price for both companies on April 18, or a 115% premium, based on the trailing 30-day, volume-weighted average trading price.

“Any time your neighbour gets bought out for six times what they were trading six weeks ago, it’s positive news for everybody next to them,” Coles says.

Coles notes that Skeena’s treasury stands at $2.5 million. The company has traded within a 52-week range between 5¢ and 12¢ per share, and closed at 8¢ at press time. It has 327.4 million shares outstanding for a $26.2-million market capitalization.