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Wednesday, November 02, 2016 Derek Macpherson

SKE’s Drill Results from Snip Continue to Impress


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Skeena Resources Ltd. (TSXV:SKE) announced final drill results from the recently completed 7,180m, 28 hole, drill program at its Snip property in British Columbia. The results confirmed the existence of the 200m Footwall zone and identified two other high-grade zones. All three zones are located outside of historic mining areas, suggesting a new resource is likely to be defined at this historic project. This further supports our view that Snip’s potential is not included in the market’s valuation of Skeena which currently trades at a significant discount to peers.


This year’s drill program identifies three new zones. The drill program confirmed the existence of three zones around the historic Twin zone workings. The Lamp zone is located to the east and drilling suggests two veins in this zone that are open along strike. The 200 Footwall zone, as the name suggests, is located 200m below the footwall of the Twin zone and appears to consist of a single vein that is open down-dip and along strike. Finally, the Twin West Structural zone is west of the historic Twin zone workings and has been defined over 300m of strike and remains open down-dip and along strike. Today’s results were 24.44 g/t Au over 3.2 metres (S-16-16). In our view, this year’s results continue to suggest the potential for a new high-grade resource but it is early days for these new zones and more work is needed.

With work-commitment portion of earn-in completed, 2017 drilling likely to be from underground. Skeena announced it has completed the work commitment portion required to take over full ownership of the Snip property from Barrick Gold (TSX:ABX). The company hopes to complete the process of transferring ownership in early 2017. Once complete, Skeena would be able to move exploration underground and is likely to allow drilling to continue year-around.

Skeena remains undervalued despite strong 2016 drill results. Skeena currently trades at $10/oz versus peers at $67/oz. We reiterate our view that the market appears to exclude Snip’s potential, as well as applying a discounted valuation to Skeena’s lower-grade Spectrum-GJ project. Considering the exploration potential at Snip and the planned PEA (early 2017) for Spectrum-GJ, the potential exists for Skeena to close the valuation gap to peers.

Company Description: Skeena Resources Limited is a junior Canadian mining exploration company focused on developing prospective base and precious metal properties in the Golden Triangle region of northwest British Columbia, Canada. The Company’s primary activities are the evaluation and development of the Spectrum-GJ gold-copper project as well as exploration on the recently optioned past-producing Snip gold mine, acquired from Barrick Gold, and the past-producing Porter Idaho silver mine.
 
Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
 
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Skeena Resources Ltd. - (TSXV:SKE) - None  
Barrick Gold Corp. - (TSX:ABX) - None 

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