Eskay Mining Corp announced on January 18, 2023 the results for the first 15 holes in the Scarlet Ridge area which create hope that the Eastern Anticline at the northern end of the Eskay property just 7 km southeast of Eskay Creek 1 has potential to host a similar gold and silver enriched VMS system. This area has seen little historical exploration which was focused on the main Eskay Anticline, immediately south of what is now Skeena's Eskay project and is called the Sib-Lulu area where SSR spent $7.7 million between 2017-2018 before dropping out, and farther south in what is now the TV-Jeff area.
Unfortunately none of the results reported for the Scarlet Ridge area include anything resembling hole 109, or even the 22 Zone to the southwest where Murray Pezim's Calpine drilled first before the 1 km stepout got lucky. The holes in the Scarlet Valley area for which assays were reported were less than 5 m intervals with gold below 1 g/t though silver grades were impressive at 12-96 g/t (0.5-3.0 opt). The company now views this mineralization is distal to the Tarn Lake-Scarlet Knob area about 3 km to the southwest.
The Tarn Lake-Scarlet Knob area was drilled later in the season and only Tarn Lake got any holes of which assays have been received for 15 holes. Of these 3 were deemed significant enough to be worth reporting in Wednesday's press release. Hole 10 had the best interval of 5.43 m of 4.1 g/t gold and 98.3 g/t silver. Eskay Mining did not say how many holes are still pending. A drill plan showing labeled locations and traces for the Tarn Lake holes was not provided in the press release though one was for the Scarlet Valley holes to the north. Leapfrog 3D images were provided for some of the Tarn Lake holes but these do not create a sense that a significant zone is emerging.
The Tarn Lake and Scarlet Knob targets sit across an 850 m wide portion of the Bruce Glacier which peters out to the north towards the Scarlet Valley area. Both areas yielded good gold and silver values from surface grab samples, with the best gold values on the eastern side in the Scarlet Knob area. The Scarlet Ridge to Tarn Lake area is underlain by the Eskay Rhyolite which hosts Eskay Creek 1 and is cut by a series of east-west andesite dykes interpreted as feeder structures for the stockwork and replacement style mineralization present at surface. John Dedecker believes Tarn Lake and Scarlet Knob are part of the same system under the glacier.
The results for the Scarlet Ridge area qualify as "encouraging" which means Eskay Mining plans to return in the summer to delineate these zones. The company is currently investigating if it can drill through the glacier. I downgraded Eskay Mining from a Fair Spec Value rated 2022 Favorite to my 2023 Bottom-Fish Collection, a move that the latest results vindicate. The junior drilled 29,500 m in 2022, much of it the TV-Jeff area where it would also like to return in 2023. We will find out how much most of this work cost at the end of January when the 9 month November 30 financials are due.
While I have Eskay Mining in my 2023 Bottom-Fish Collection, the stock chart is not yet showing signs of a bottom. In terms of the rational speculation model, this project, which I now treat as still being at the target testing stage in search of a major discovery, has an implied value of $176 million which represents poor speculative value for even a $2 billion future outcome. I would consider bottom-fishing after we learn what the balance sheet looks like, see how the market reacts and how CEO Mac Balkam will fund whatever the 2023 summer program will be. After March 8 there will only be 2.2 million warrants left at $3.40 from last year's flow-thru financing, so in terms of a warrant overhang Eskay Mining will be very clean. By Q2 of this year we will know if 2023 is indeed shaping up as a better year for the resource juniors, especially if gold remains strong. But right now there are cheaper and more timely bottom-fish to chase. |
