Hochschild exercises option to earn-in 60pc of Snip gold project

The FTSE 250 firm said Snip, which was acquired by Skeena from Barrick Gold in July 2017, consists of one mining lease and eight mineral claims totalling around 4,546 hectares in the Liard Mining Division.

It said the former Snip mine produced around one million ounces of gold from 1991 until 1999, at an average gold grade of 27.5 grams per tonne.

Since then, the project had been improved with the recent construction of nearby infrastructure including a paved highway, hydroelectric facilities and ocean port infrastructure, and substantially higher gold prices.

Underground drilling restarted in late 2017 to explore for additional mineralised shoots in a large shear structure.

A maiden mineral resource was announced in July last year, which included 244,000 ounces of gold in the indicated category at an average grade of 14 grams per tonne, and 402,000 ounces of gold in the inferred category at an average grade of 13.3 grams per tonne.

A technical report was issued in September of last year.

Subsequent drill campaigns, totalling about 32,000 metres, successfully upgraded areas of existing inferred resources from the mineral resource estimate to the measured and indicated categories.

That drilling also expanded the resource, and delineated additional mineralisation in previously unexplored areas of the near-mine environment.

Going forward, Hochschild said it planned to continue the drill campaigns, and initiate selected studies and testwork.

In September 2018, Skeena granted Hochschild an option to earn-in a 60% interest in Snip over three years by spending twice the amount Skeena had spent since it originally optioned the property from Barrick in March 2016.

To date, Skeena estimated that it had incurred around CAD 50m (£29.38m) of expenditure on the project.

The exercise of the option was also subject to a number of terms, including that Hochschild would be required to spend at least CAD 7.5m on exploration or development at Snip in each year of the option period.

On complying with that, Hochschild would need to provide 60% of the financial assurance required by government authorities for the Snip mining properties.

Hochschild would be able to terminate the option at any time, with no liability to complete the total spending requirement, but would need to make a cash payment for any shortfall in the minimum annual spend.

“We are pleased to exercise our option on the Snip project in Tahltan Territory, Canada,” said chief executive officer Ignacio Bustamante.

“This represents a first step in our strategy to add another high-grade project with strong upside potential into our pipeline.

“We look forward to working with Skeena and building on their strong relationship with the Tahltan Nation.”

At 1605 BST, shares in Hochschild Mining were down 1.58% at 142.9p.