Skeena Gold + Silver

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So ladies and gentlemen, please welcome me and Joining with our last presentation for this half session in the afternoon, Mr. Walter Coles, executive Chairman, Skinner Gold and Silver. Yeah, please, thank you. How many, how many minutes do I have? 20 minutes. 20. OK, 20. It's, it's tough here, isn't it? OK. Talk quickly. All right, I'll try to get through this presentation pretty fast. so, Skeena Gold and Silver has a, a project in British Columbia. It's called the Sky Creek Project. It's a, large scale, gold and silver mine that we're building. It's got very high grade, which translates into low operating cost. Which, would, confer us with, really, really strong cash flows and profitability. As I mentioned, we're under construction right now. We're about halfway through the, the build on the, on the project. This Sky Creek mine previously was an underground mine, and it was a legendary, legendary mine operated from 1994 until 2008. What made it legendary was the grade. You can see there 45 g per ton on the gold, and then mixed in with that was 2200 g of silver. So on a gold equivalent basis is about 2.5 ounces per ton. So I, I've never heard of a mine that that had scale with this kind of grade. It was doing. 350, 375,000 ounces of production a year with a mining rate of 650 tons a day, like incredible. Just to give you a little history, I, I took over Skeena when it was a shell company in 2014 and embarked on a strategy of trying to buy, or better said option assets of major mining companies during the downturn in the in the cycle, and we were successful in optioning. You know, like 66 projects, 3 of 3 of which worked out reasonably well, we still have 2 of those today, we optioned. an asset called SNP or a past producing underground mine from Barrack that was in the Golden Triangle of British Columbia and then after we optioned SNP we optioned Esky Creek in 2017 and we ended up acquiring this asset from Barrack in 2020. So in that time period we've, you know, done the exploration, we did a PEA, we did a pre-feasibility study, feasibility study, and then another feasibility study to to improve on the first one. So it's been it's been a long, long journey and we're we're very close to the finish line. Probably one of the most significant de-risking events with this project is, no surprise, an agreement with the indigenous tribe Toltan First Nation, which we did in January and, and following right after that we got our, our, our environmental assessment certification and permits and in BC that is no minor. Undertaking BC is a difficult place for permitting. Probably took us 3 years and, and we probably spent $100 million in the environmental assessment process. So if you're gonna go through all that trouble, you gotta have a big prize on the other side to make it worthwhile. We're in an area called the Golden Triangle. It's, it's got that nickname because it's been prolific over the last 100 years for copper discoveries, gold discoveries, silver discoveries. We're very fortunate to have a past producing mine because that means somebody else built a lot of the infrastructure that we're able to use. We've got roads. We had an existing camp. We have an existing tailings facility with ample capacity. Probably the biggest advantage we got was after. Barrack shut down the mine. Another an energy company drove down the M access road, which was down a river valley, and decided to build a $2 billion hydroelectric facility 17 kilometers from the old mine site. So whereas historically Barrack had powered this asset with diesel and propane, now we've got incredibly cheap hydro power. We have a contract with BC Hydro to give us electricity at 4.5 cents per kilowatt hour. It's a big competitive advantage to have power at that at that price. I jokingly refer to this as the money slide. In our first five years of production, we're going to average $1.1 billion a year of after-tax profit. I'm going to show you how we're going to extend that sort of cash flow profile out through year 10 before the end of this year. The payback on capbacks is 8 months. The IRR over 100%. It's it's a very, very robust mine that throws off a monster amount of cash. I will mention that we, just on Friday closed a high yield, debt, debt deal. our, our lead banks were KKR and BFA, but we had Goldman Sachs and JPMorgan and, Jeffries and BEMO on the, on the syndicate with us. we went out to raise $750 million. we had orders of $4.2 billion. We were able to tighten the, the interest rate. We initially went out with 9. 9 and 18 coupon and we were able on the back of that very strong demand tighten the interest rate up to 8.5%. This is the first high yield notes issuance that I'm aware of by a pre-revenue mining company, so I think we've broken the ground here and hopefully it provides a pathway for other development companies to access capital rather than the kneecapping rates of Blackstone and the Orions of the world. we did use these proceeds to, refinance out of our debt facility with Blackstone and, and Orion, and, and I'd also add it's a very covenant light, package. This is the production profile. It's front end loaded. You know, when we did our pre-feasibility study, we had a 9 year mine life. Then when we did our feasibility study, we have the current 12 year mine life and we'll be coming out with a mine plan update in November that'll take the mine life out to 15 years and it will also backfill years 7 through 10. So we'll get that grade up and so we'll maintain an average open pit grade of about 5 g for years 1 through 10. But again, I mean. When's the last time you saw a big open pit with grades of 6 g, you know, 4.6 g 5 5.5 g? I mean, that's what sets this project, apart is, you know, unicorn-like, grams per ton on the, on the grade. I, I guess I will add that the, all unsustainable costs in years 1 through 5, you know, came out in the feasibility study at at under $550 but the caveat is that feasibility study was done in 2023, so we all know we've had some inflation since then. when we come out with our, mine plan update and, it's probably gonna be around November, we'll update those numbers. I suspect we'll end up around 750 or 800, but still, I mean, again, when's the last time you saw a big open pit mine? With all unsustainable costs at, at, you know, you know, less than 1000. I mentioned what really separates this deposit from other large open pit deposits around the world is the grade, 2nd highest grade of a large open pit in the years 1 through 5, or if you take our Life of Mine, you still would rank number 6 in the world. I talked a lot about the gold, but this is going to be Canada's largest silver mine. The silver represents one third of our economic value in the in the precious metals. We're going to average in years 1 through 10 almost 8 million ounces of silver a year. So if we didn't have any gold at all, this would be a major silver mine, but you know we're lucky the gold represents 2/3 of the economic value. This is our timeline of production, so we're sort of done on the left 1/3 of this slide. We're in the middle of the middle 1/3. We're started mining the ore now. We're finishing the engineering. The procurement's basically all done, so all the equipment we need we basically bought. It's either at site or down in the valley below. Really what we're doing right now is installing the equipment in the mill and we're targeting to start the mill up in April of next year, so 12 months from the beginning of production here and looking to achieve 90% throughput on the mill before the end of summer next year. Yeah, as I mentioned, you know, we're about halfway through on construction. The capital CEC spent to date is just over $300 million and we have about 354 left to go. We're adequately funded with that $750 million high yield deal that we just completed. You know, I mentioned that we're halfway through construction. Our CEO Randy, who's a mining engineer, likes to say to me that we may be halfway through construction, but, but we're more than halfway through the, the most difficult parts of the construction. He he often says to me it's the earthworks and getting up out of the ground, doing the foundations is where a lot of projects trip up. We're through all that. All that stuff is, is behind us. So as I mentioned, we're really in the. In the installation part of this, this project we've already mined 3 million tons in pre-stripping. we're really fortunate in that the, the Red Cris copper mine, which is owned by Newmont very close to us about 200 kilometers away is winding down and so they have a workforce of about 1200 people who are looking for, for new jobs and it's, it's a, it's a wonderful thing for the communities up there, and, and. Newmont's quite happy about that their employees who are working at the open pit can transfer over to our project as it's ramping up, so it's meant that we have really good access to skilled open pit miners and in fact we hired the general manager from the Red Crisp mine and we hired the mill superintendent from that project over to SK. These are just some pictures from the fall just to give you a sense of the activity that's been happening up there. I mean even today we have 700 people up at site as we increase the construction activities in the summer months we'll ramp up to 1500 people up there. this is a look at the, you know, where we're gonna be putting the, the ore stock stockpile. So we're doing the foundation for that right next to the mills in the, in the background. So look at the the mill building you can see it in September and what it looks like today, and I will give you a little background. We, we took a bit of a risk because we started building this project before we got our final permits, so I had, I had some really anxious months in, in, you know, sort of October, November, December where it looked like, you know, there was the potential for our permits to get dragged out and when you have. You know 700 people on the payroll, like delays become very, very expensive. Fortunately we got all our permits and that risk is paid off. It's allowed us to get to cash flow probably 2 years quicker than if we'd waited to start construction to after we got our final permits. You know why do we take that risk? It's it's because I spent 10 years up there getting to know the local communities and the First Nations and and and building very strong community support for this project, which gave us the confidence to go for it. I mentioned the, you know, mill buildings built. This is what these are some recent pictures from the interior of, of the, the mill as we're, you know, getting ready to install the ball mills and, and, you know, move that along. In terms of the investment opportunity here, I don't think it's very complicated. We have a company that has no revenue today and in 12 months turns on the mill and starts to generate massive amounts of cash flow, so the investment opportunity is buying a stock. When it's still a startup, quote unquote, and then 12 months from now the mill turns on, the cash flow turns on, and there's a re-rating in the valuation. That's that's the investment opportunity. This graph that we have up here is often referred to as the Lassan curve, named after Pierre Lassan. It just shows the genetic evolution of a generic evolution of a single asset junior mining company that makes a discovery. You go through that euphoric early phase when you know you're growing the size of the deposit, a lot of enthusiasm around the exploration. Then once you've delineated it and you go into engineering and permitting, you're in this sort of death valley, and, and I will, you know, readily admit it's a painful, painful part of of of the process of bringing a new project online, you know, investors call it dead money anyway, we're through that, you know, we're fully funded. We're fully permitted. We've got line of sight on production 12 months from now, so I would expect that our stock price gradually grinds higher every month as we get closer and closer to the day that we start generating cash flow. we still have lots of upside. I'll tell you a story. Franco Nevada owns, 2.5% royalty on this project. 1% was back from the old underground, underground mine, and their CEO, Paul Brink said to me they, they love to get. royalties on trophy trophy deposits, which this obviously is, and he said the reason is because trophy deposits are created by massive mineral systems and they always end up being bigger than what people expect, and, and I'll tell you I saw an interview. from 1990 of the original promoter of prime Resources which discovered this deposit and the promoter sounded like he was exaggerating things when he said, I swear this is gonna be 2 million ounces. Well, actually from 1994 until 2008 it produced 5.5 million ounces gold equivalent. And then they shut it down because it was quote unquote done it was mined out. Well here we have, you know, today 4.6 million ounces of reserves. So you know, you know, you add that to the 5.5, already 10 million ounces, of, of production and reserves that this asset. And I will tell you it's going to continue to grow. I mean you saw it in our pre-fees 9 years, our feasibility 12 years. We're going to have a mine plan update that comes out in November that's going to drive reserves from 4.6% up to 6% and our mine life out to 15, and this is how we're going to do it. We've got another. Past producing underground mine we acquired from barrack 40 kilometers away. It's the snip deposit, and there's 800,000 ounces there at 9 g. So we'll be bringing that in. That very high grade material will mix in with lower grade at Esca to raise the average grade profile. We're going to steepen the pit, reduce the strip rate, and get more ounces that are currently underneath the pit from the 2023 feasibility study. And then wait till you hear this one. The old tailings facility has 2.2 million tons of waste rock and tailings with an average grade of 6 to 7 g. So we're going to be reprocessing that material as well. We still haven't gotten to the other metals. This is a multi-metallic deposit, so it's got zinc, it's got lead, it's got a very large amount of antimony. We haven't had time to bring that into the economics. you know, we're gonna try to bring that into the M plan update that we come out with in November, but there's, there's more to come beyond all of this, so this is, and I call SK the gift that keeps giving because everywhere we look around we find another way to add profitability here. One minute left. OK. All right, I'll, I'll skip through, you know, these things. we've got a very, we've been very well supported by the Canadian investment banks, though I do expect that over the next 6 to 12 months we'll get more research coverage from the, the bulge bracket banks, for instance, those banks that were on our syndicate for the high yield deal, Goldman, JP Morgan, UBS launched coverage on us back in December, Jeffries. And I see the opportunity here is to transition our shareholder base from the dedicated super smart natural resource investors like you all to the more generalist investors as we start generating cash flow, and those US banks are going to help us help us do that. That's it. Thank you. That's a presentation that creates a lot of questions I'd love to ask, but any very quick questions from the floor please. gentleman over here, please. I had a question on the metallurgy. Do you see any potential problems, ah, when you have arsenic and antimony and ah difficult ah materials like that, ah, or have you done some testing, or do you foresee any problems in, in that part of it? The short answer is no. I don't, I don't foresee any problems there. There is some arsenic in years 1 through 2.5. The first year is the worst. It's about 3% arsenic, but there are lots of other projects out there that are creating concentrate with higher levels of arsenic than that. There's some penalties, and those are incorporated in our. 2023, feasibility study, I think over the first three years those penalties amounted to $77 million US dollars, so it's like a rounding error when you're generating, You know, 1.8 billion a year of of EBITDA. The other thing I would add is I think there's an upside to the estimates we used for payabilities back in 2023. I'm talking about smelter payabilities because the smelter market, there's too much capacity, smelter capacity globally, and so smelters are what used to be treatment and refining charges where you had to pay the smelter. Now smelters are paying to try to get a hold of feed. So if anything, I see upside in. In that aspect of the of the project and and of course we've done. metallurgy testing ad nauseam, on this project. Thank you, Walter. Sorry, we're out of time. I apologies, sir. Otherwise the next, umpire here will throw me off stage. very interesting presentation. Please join me in, in thanking. Thank you.