Mr. Walter Coles Jr. reports

SKEENA COMPLETES ROBUST FEASIBILITY STUDY FOR ESKAY CREEK: AFTER-TAX NPV (5%) OF C$1.4B, 50% IRR AND 1 YEAR PAYBACK

Skeena Resources Ltd. has released the results of the feasibility study (FS) for the Eskay Creek gold-silver project located in the Golden Triangle of British Columbia.

Eskay Creek 2022 FS highlights:

• After-tax net present value (NPV) (with a 5-per-cent discount rate) of $1.41-billion at a base case of $1,700 (U.S.) gold and $19 (U.S.) silver;
• Robust economics with an after-tax internal rate of return (IRR) of 50.2 per cent and an industry-leading after-tax payback on preproduction capital expenditures of one year;
• High-grade open-pit averaging 3.87 grams per tonne (g/t) gold equivalent (AuEq) (2.99 g/t gold, 79 g/t silver) (diluted) with a strip ratio of 7.5:1;
• Years one to five average annual production of 431,000 AuEq ounces, places Eskay Creek as a Tier one operation;
• Life of mine (LOM) production of 3.2 million AuEq ounces from 2.4 million ounces of gold and 66.7 million ounces of silver;
• Estimated preproduction capital expenditures (capex) of $592-million, yielding a compelling after-tax NPV:capex ratio of 2.4:1;
• LOM all-in sustaining cost (AISC) of $652 (U.S.)/ounce AuEq recovered in concentrate;
• Proven and probable open-pit mineral reserves of 29.9 million tonnes containing 2.87 million ounces gold and 75.5 million ounces silver (combined 3.85 million AuEq ounces);
• A carbon intensity of 0.2 tonne CO2e (carbon dioxide equivalent)/ounce AuEq produced, positioning Eskay Creek to be one of the lowest-carbon-intensity mines worldwide.

The company will be hosting a conference call to present the FS results for Eskay Creek on Thursday, Sept. 8 at 8 a.m. PT/11 a.m. ET. A presentation by management will be followed by Q&A (question and answer).

Conference call webcast and dial-in details:

Participant telephone numbers -- Canada/United States 800-319-4610, international toll 604-638-5340

If you'd like to ask a question, please dial in. All callers should dial in five to 10 minutes prior to the scheduled start time and simply ask to join the call.

Skeena's president, Randy Reichert, commented: "The feasibility study confirms the robust economics of the world-class Eskay Creek project originally shown in the prefeasibility study, but with improved definition. The open-pit Minable, high-grade ore, combined with the existing infrastructure at the Eskay Creek site and nearby hydro power, provides for an extraordinary project that can be developed by Skeena. While the team continues to work on optimization of the project, my primary focus will now shift to advancement of the permitting process as we move Eskay Creek toward construction."

Walter Coles, the company's chief executive officer, added: "Eskay Creek is a truly unique deposit that provides excellent profit margins due to its existing infrastructure and very high open-pit grade. Even at $1,400 (U.S.) gold and $13 (U.S.) silver prices, the project still generates an average annual after-tax cash flow of $209-million with an after-tax IRR of 36 per cent and a 1.5-year payback on initial capital."

Eskay Creek feasibility study

The FS for Eskay Creek was completed by Ausenco Engineering Canada Inc., supported by SRK Consulting (Canada), and AGP Mining Consultants. The study confirms robust economics for a conventional open-pit mining and milling operation, with low initial capital cost intensity and a high rate of return. The FS presents a mine plan based on the same strategy first presented in the July, 2021, prefeasibility study (PFS), with an updated mineral resource and reserve estimate, refined mine and mill designs supported by additional geotechnical and metallurgical data, and updated capital and operating cost estimates. The mineral resource and reserve updates do not include any new drilling completed since September, 2021.

Summary of key results and assumptions in the FS

Eskay Creek mineral resource estimate

The company's current mineral resource estimate (MRE), completed by SRK, has an effective date of Jan. 18, 2022, and forms the basis for the FS. The MRE does not include drilling results received since September, 2021. Mineral resources are reported inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability at this time.

Mining overview

The Eskay Creek project is planned to be an open-pit operation using conventional mining equipment. The potential for an underground mining component to the project is still being evaluated. Pit designs were developed for the north and south pit areas. The initial phases were designed for the purpose of obtaining a technical sample and necessary non-acid generating waste material (NAG) to create supporting infrastructure. Open-pit mining follows down slope of the ridge where the deposit is located and there are no major push backs required. The north pit will consist of three main phases, while the south pit will only contain a single small phase.

Note: This mineral reserve estimate has an effective date of June 30, 2022, and is based on the mineral resource estimate dated Jan. 18, 2022, for Skeena Resources by SRK (which has been updated since the PFS). The mineral reserve estimate was completed under the supervision of Willie Hamilton, PEng, of AGP, who is a qualified person, as defined under National Instrument (NI) 43-101. Mineral reserves are stated within the final design pit based on a $1,550 (U.S.)/ounce gold price and $20 (U.S.)/ounce silver price. An NSR (net smelter royalty) cut-off of $24.45/tonne was used to define reserves based on preliminary processing costs of $18.22/tonne ore and G&A (general and administrative) costs of $6.23/tonne ore. The metallurgical recoveries varied according to gold head grade and concentrate grades. Gold and silver recoveries were approximately 83 per cent overall during the LOM scheduling. Final operating costs within the pit design were $3.72/tonne mined, with associated process costs of $16.91/tonne ore and G&A costs of $4.20/tonne ore.

The FS outlines an average production profile of 431,000 AuEq ounces in the first five years of operation. It is anticipated that Skeena will have a stockpile developed ahead of mill start-up of approximately 600,000 tonnes of ore.

Mine planning indicates that the northern end of the north pit will intersect Tom MacKay Creek, requiring the construction of a water diversion tunnel by year 5 to route the creek flow around the open-pit before rejoining the existing creek downstream. Minimum tunnel dimensions have been selected as 4.7 metres wide by 4.7 metres high to accommodate the expected water flows. The full length of the tunnel is 1.2 kilometres.

The mine schedule plans to deliver 29.9 million tonnes (Mt) of mill feed grading 2.99 g/t gold and 78.5 g/t silver over a nine-year period. Waste tonnage from the pits totalling 225 Mt will be placed into either NAG or potentially acid generating waste (PAG) destinations. The overall strip ratio is 7.5:1.

Metallurgy and processing

Several metallurgical tests were conducted to further optimize the flow sheet for the FS. The goal of testing for the FS was to improve recoveries of different ore types, primarily Mudstone and Rhyolite, and to optimize the overall flow sheet.

Metallurgical optimization

As part of the FS, metallurgical testing was conducted on many samples from all ore zones. A total of 57 variability samples were tested on the FS plant flow sheet to confirm its suitability and to measure the variation in Eskay Creek mineralogy and grade on plant performance. In addition, comminution (hardness), dewatering and specialized fine grinding tests were conducted by equipment suppliers to provide additional data for process design.

Testing was conducted on composite samples to determine if grind size targets from the PFS could be coarsened to reduce overall grinding power requirements. Results in FS testing found that it is possible for primary and secondary grind targets to be coarsened without impacting gold recovery, allowing plant grinding equipment to be optimized.

The mill-float-mill-float (MF2) flow sheet, commonly used in platinum group metals processing, produced anticipated gold and silver recoveries for the samples tested across a wide range of head grades and mineral compositions as well as several composite LOM samples.

Test work conducted also included variability testing of the main lithologies of Rhyolite and Mudstone. Test results indicated that reduced metallurgical performance was more often related to Mudstone material, which represents approximately 24 per cent of the mill feed. The metallurgical performance of Mudstone samples was found to improve with changes in regrinding and flotation reagent dosages. As a result of this test program, a more robust model for gold recovery related to feed characteristics of these rock types was developed, as compared with the global recovery model developed in the PFS. Test work on blends of Rhyolite and Mudstone showed that combined recoveries could be estimated by rock type and weighting against blend fractions.

Rhyolite and Mudstone material blends demonstrated gold recovery ranges from 86 per cent to 75 per cent across the LOM as the head grade drops from 4.5 g/t gold to 1.1 g/t gold at the end of the mine life. The weighted average gold recovery was 84.2 per cent over LOM. The targeted final concentrate grade was 35 g/t gold.

At 88.3 per cent, average silver recovery was higher than gold recovery, which could be due to an association with galena and its favourable liberation and flotation kinetics. Individual rock type models were developed that relate silver recovery to silver feed grades. The resulting LOM silver recoveries were somewhat improved over the PFS.

Processing overview

The process flow sheet in the FS is substantively the same as the PFS flow sheet. In years 1 through 5, three million tonnes per annum (Mtpa) will be processed. A pebble crusher will be added in year 3 to maintain production when harder ore is processed in year 4. An expansion will be completed in year 5 to increase processing capacity to 3.7 Mtpa, when harder and lower grade ore is processed starting in year 6. The expansion will include a secondary crushing circuit, an additional ball mill, additional flotation capacity and an addition of a fine grinding mill in the secondary grinding circuit.

Run-of-mine (ROM) material is trucked from the open-pits and either stockpiled or directly fed into the primary crusher. Primary crushed feed material is in turn conveyed to the mill facility and stacked onto a coarse ore stockpile.

The ROM material is considered relatively competent with bond rod and ball mill work indices of between 14.1 kWh (kilowatthours)/tonne in the early years of the mine life through to 24 kWh/tonne later in the mine life as the 22 zone material is more competent. To achieve the target primary particle P80 (80 per cent passing) size of between 100 micrometres and 212 micrometres, the comminution circuit comprised a 4.4-megawatt (MW) semi-autogenous grinding (SAG) mill with a 7.6-metre-diameter-by-4.3-metre-effective-grinding-length (EGL), and a 5.8-megawatt ball mill with a 6.1-metre-diameter-by-8.5-metre-EGL.

Ground material is processed through a split flotation circuit consisting of roughers, scavengers, fines roughers, cleaners and fines cleaner flotation, along with regrinding of rougher concentrate, slimes classification of rougher tailings and secondary grinding prior to scavenger flotation. Rougher concentrate is re-ground to a target P80 size of 15 micrometres and slimes classification underflow undergoes secondary grinding to a target P80 size of 35 micrometres, prior to flotation and multiple stages of cleaning to produce a combined gold-silver concentrate with the slimes circuit concentrate.

Flotation concentrate is thickened, filtered and, if necessary, dried, to a transportable moisture limit of less than 13 per cent; it is trucked to a nearby port for loading onto ships for transportation to third party smelters worldwide.

Tailings and PAG waste rock will be stored in the existing permitted Tom MacKay storage facility. Over the life of the project, four small embankments will be constructed in phases to store 26.4 Mt of tailings and 81 Mt of PAG waste rock subaqueously to prevent generation of acid and metal leaching. The facility is designed in accordance with Canadian Dam Association guidelines (2019) and Part 10 of the Health, Safety and Reclamation Code for Mines in British Columbia (2016).

Concentrate marketing studies

Multiple marketing assessments have been completed by Open Mineral AG to support the FS, which indicate that the Eskay Creek concentrate is readily saleable at a target grade of 35 g/t Au. Preliminary contract terms for the concentrate have been provided by Asian smelters, with multiple offtake alternatives available. Smelters and traders within Europe have also provided draft term sheets, and these have been identified as potential markets. The company has been offered several preliminary term sheets for all concentrate production. These have been used as the basis for the financial model which includes gold and silver payables, industry standard treatment and refining charges, and penalties for impurities. Blending opportunities for the Eskay Creek concentrate have also been assessed as part of the FS and support improved payability. For the purposes of the FS, smelter payables average 86 per cent for gold and 80 per cent for silver, not including penalties of $53-million.

Capital costs

The initial capital cost of $592-million ($451-million (U.S.)) represents a 21-per-cent increase compared with the July, 2021, PFS estimate. In order to expand the process plant in year 5 to accommodate additional throughput, C$39.7M will be invested in expansion capital costs. The increases in initial capital cost reflect inflationary trends in labour and materials costs experienced in the past year. The two main areas of capital cost increase on the project were in the process plant and related to infrastructure. The capital cost increase associated with the process plant (plus 53 per cent) was due to inflationary effects in material, labour and contractors' costs, and some increase in the sizing of the grinding circuit area, coupled with the heightened level of engineering definition. The capital cost for infrastructure also increased (plus 30 per cent) due to higher costs for the Tom MacKay storage facility and power supply, and costs associated with the previous year's geotechnical drilling on site. Again, the unique nature of Eskay Creek was demonstrated by modest capital cost increases in the current inflationary environment mitigated by existing infrastructure and site works.

Operating costs

As compared with the PFS, mining costs rose by 3.9 per cent to $3.72/tonne mined, due to an increase in diesel price and an increase in tonnes of PAG hauled to the Tom McKay storage facility, partially offset by reductions in required mining staffing.

Mining costs per tonne of ore milled decreased by 1 per cent to $30.12/tonne milled due to a decrease in strip ratio and an increase in milled tonnes over LOM.

LOM process-related costs decreased by 7 per cent to $16.91/tonne milled due to higher mill throughput and a reduction in reagent requirements. G&A costs per tonne milled decreased by 32 per cent to $4.20/tonne milled due to optimization of staffing requirements and an increase in milled tonnes. Total site costs per tonne decreased from $55.01/tonne milled in the PFS to $51.24/tonne milled.

The LOM total cash cost is $572 (U.S.)/ounce AuEq while the LOM AISC is $652 (U.S.)/ounce AuEq.

Financial analysis

At a $1,700 (U.S.) gold price and a Canadian dollar:U.S. dollar exchange of 76 cents, the project generates an after-tax NPV (with a 5-per-cent discount rate) of $1.4-billion and IRR of 50.2 per cent, based on an effective cash tax rate of 32 per cent. Payback on initial capital is one year.

Environmental and permitting considerations

The Eskay Creek revitalization project will require regulatory authorizations including a consent decision from the Tahltan Central government (TCG), a provincial environmental assessment certificate (EAC) under the BC Environmental Assessment Act and federal decision statement under the Impact Assessment Act. The federal decision statement can be granted through a process of substitution, whereby federal agencies participate in the British Columbia process. Construction and operating permits can be granted in accordance with provincial and federal legislation and regulations once the environmental assessment process is complete.

The Eskay Creek revitalization project has entered the B.C. environmental assessment process and will be applying to follow the substitution process referenced above.

Eskay Creek is projected to be one of lowest greenhouse gas (GHG) emission open-pit gold mines worldwide, emitting an average of 0.2 tonne CO2e/ounce AuEq produced. Several factors contribute to this low number, such as the high-grade nature of the deposit and access to clean, green hydro power near the site.

Skeena is committed to a further reduction in GHG emissions and is actively working on several initiatives to further reduce emissions, which include:

• Electrification of mine mobile equipment, including shovels, drills, excavators, personnel carriers and snow removal equipment or hydrogen alternatives;
• Electrification of all stationary mine equipment, including mine dewatering pumps and pit lighting;
• Conversion of the heating of the main facilities such as buildings, camps, administrative, mine offices, plant and lab buildings from propane to electric;
• Electrification of the transportation of waste with diesel haul trucks to electric/battery alternatives.

Community relations

The project is within the unceded territory of the Tahltan Nation and the asserted traditional territory of the Tsetsaut/Skii Km Lax Ha Nation.

Eskay Creek has maintained a long-standing relationship with the Tahltan Nation. Previous operators maintained agreements with the Tahltan, which included provisions for training, employment and contracting opportunities. The company has been working in Tahltan Territory since 2016 and has developed a strong working relationship with the TCG. Skeena maintains formal agreements with the TCG which guide communications with Nation members and operational permitting.

Skeena has continuing engagement with Tsetsaut/Skii Km Lax Ha, which have expressed interest in business and contracting opportunities associated with the project.

The proposed gold-silver concentrate from Eskay Creek will be transported to a nearby port by highway. It will pass-through Nass and Nass wildlife areas (as defined in the Nisga'a final agreement) of the Nisga'a Nation and through the territory of the Gitanyow Nation. Skeena has carried out initial engagement with the Gitanyow Hereditary Chiefs office and the Nisga'a Lisims government regarding planned future use of these facilities.

Project opportunities and value enhancements

The 2022 FS clearly demonstrates that Eskay Creek is an economically viable project and potential Tier one operation.

Additional opportunities and next steps include:

• Further optimization of resource modelling and mine planning, which is expected to improve mining selectivity, potentially enhancing both grade and production profile of the project;
• Incorporation of continuing exploration successes, including the recently discovered 23 and 21A West zones, into the mine plan which is expected to extend mine life;
• Additional vendor metallurgical test work to optimize the Eskay Creek process flow sheet with a focus on grinding, which is expected to reduce both grinding power requirement (opex (operational expenditures)) and the size of grinding mills (capex (capital expenditures));
• Further analyses of requirements for the diversion tunnel for possible cost reduction;
• An update of the resource model to include the additional drilling (since September, 2021), which is expected to enhance the mine plan of the project;
• Optimization of the mine plan through geometallurgical modelling based on enhanced knowledge of the orebody at Eskay Creek, which is expected to improve ore blending opportunities, enhancing project economics;
• Developing alternative execution approaches to further reduce project capex and enhance project economics.

Qualified person

In accordance with National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, Paul Geddes, PGeo, senior-vice-president of exploration and resource development, is the qualified person for the company; he has reviewed and approved the technical and scientific content of this news release. The company strictly adheres to CIM Best Practices Guidelines in conducting, documenting, and reporting the exploration activities on its projects.

Ms. Ulansky, PGeo, senior resource geologist for SRK Consulting (Canada), is an independent qualified person, as defined by NI 43-101; she has reviewed and approved the contents of this news release. Ms. Ulansky is responsible for the 2022 mineral resource estimate for the Eskay Creek project.

Kevin Murray, PEng, process engineering manager for Ausenco Engineering Canada Inc., is an independent qualified person, as defined by NI 43-101; he has reviewed and approved the contents of this news release. Mr. Murray is responsible for processing, process and infrastructure capital and operating cost estimation, financial analysis and marketing.

Ali Hooshiar, PEng, geotechnical engineer, Ausenco Engineering Canada, is an independent qualified person, as defined by NI43-101; he has reviewed and approved the contents of this news release. Mr. Hooshiar is responsible for site wide geotechnical program, tailings and PAG waste rock storage facility and water management of the tailings and waste rock storage facilities.

Willie Hamilton, PEng, mining engineer for AGP Mining Consultants, is an independent qualified person, as defined by NI 43-101; he has reviewed and approved the contents of this news release. Mr. Hamilton is responsible for the mineral reserve calculation, mine capital and operating cost estimation and supervision of the mine design.

Peter Mehrfert, PEng, principal process engineer for Ausenco, is an independent qualified person as defined by NI 43-101; he has reviewed and approved the contents of this news release. Mr. Mehrfert is responsible for mineral processing and metallurgical testing.

About Skeena Resources Ltd.

Skeena Resources is a Canadian mining exploration and development company focused on revitalizing the past-producing Eskay Creek gold-silver mine located in Tahltan territory in the Golden Triangle of northwest British Columbia, Canada.

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