Skeena Resources (SKE)

Why Skeena Sits in the Construction Band

Skeena is mid-build at Eskay Creek in British Columbia's Golden Triangle. The site is a past producer, but the old mine was a high-grade underground operation and the one being built is an open pit over the same ground: a different mine on an old address. Development began in December 2024. Construction was 49% complete at 28 February 2026, with US$305M spent to the end of 2025 and US$354M left to first production. Production is guided for Q2 2027, commercial production for Q3.

That stage label decides which screen applies. Producing seniors screen on reserve-based NAV and P/NAV bands, and a developer halfway through a build does not. What the market is pricing here is whether the mine gets finished, on what budget, and behind what debt.

The DFS Anchor (November 2023, US$1,800/oz)

Skeena's NI 43-101 definitive feasibility study, published in November 2023, was run at US$1,800/oz gold and US$23/oz silver. On that deck it showed post-tax NPV5% of C$2.0B, a 43% IRR, a 1.2-year payback and life-of-mine AISC of US$684 per gold-equivalent ounce over a 12-year open pit. Proven and probable reserves are 39.8 Mt at 2.6 g/t gold and 68.7 g/t silver: 3.3 Moz of gold plus 88.0 Moz of silver, which the study reports together as 4.6 Moz gold-equivalent (AuEq), silver converted into gold ounces at the study's own price ratio. Reserves rather than resources, which is the distinction that matters: the tonnes carry a mine plan and a feasibility study, which is what a lender will underwrite.

Those numbers describe ore quality and project scale. They are the wrong endpoint for today's equity bridge. Planning gold in the Selborne deck is $3,500/oz against the study's $1,800, and planning silver is $48 against $23, so the equivalence ratio moves as well: the 4.6 Moz AuEq is itself an output of the price deck, not a fixed quantity of metal. Quoting the raw C$2.0B against a US$3.2B market cap also sets two currencies side by side. Restate at planning prices, take out the stream, and haircut for a build that is only half done before the comparison means anything.

EV vs Planning-Gold NAV: The Bridge

The bridge compares enterprise value to NAV restated at planning prices, with the debt in the EV numerator and the stream carved out of project cash flows in the NAV build.

EV basis. Start with market cap (~US$3.16B at 11 June 2026), add the US$750M senior secured notes, and subtract corporate cash. Netting the cash matters more here than for a producer, because a large slice of the note proceeds is still sitting on the balance sheet waiting to be spent on the build.

NAV basis. Rebuild Eskay Creek's after-tax cash flows at $3,500/oz gold and $48/oz silver, not the November 2023 deck. Silver is roughly a quarter of the equivalent ounces, so a gold-only model leaves out a quarter of the mine. Then take out the stream, and take it out correctly: it is 3.52% of payable gold, delivered against a payment of 10% of the market price, so it removes about 3.2% of gold revenue and nothing at all from silver. Discount at a Tier-1 development rate, 7-9% on the jurisdiction tier table, then risk the result for completion: permitting closed in February 2026 and half the capital is spent, but commissioning and ramp-up still sit ahead.

The gap between EV and that risked NAV is where the construction band lives. If EV exceeds risked NAV, the market is paying for execution certainty or optionality beyond the base build. If EV sits below risked NAV, either the street is sceptical on schedule and cost, or the restated NAV still embeds assumptions the market does not believe.

Financing Structure

The capital structure was rebuilt in April 2026. Skeena issued US$750M of 8.5% senior secured notes due 2031, spent about US$184M of the proceeds buying back two thirds of Orion's gold stream (cutting it from 10.55% of payable gold to 3.52%), set aside about US$100M as an interest reserve covering the first three coupons, and cancelled an undrawn US$350M loan and US$100M cost-overrun facility. The balance funds the build.

Two consequences for the equity. The notes rank ahead of it, so enterprise value is market cap plus US$750M less cash. And a company with no revenue now owes roughly US$64M a year in cash interest, pre-funded for about eighteen months; the reserve runs down around the time the mill is meant to be running. Schedule slip is not just a delayed re-rate here, it has a coupon attached.

The stream is life-of-mine and it applies to gold only. The stream margin framework shows how the delivery price does the work; at 10% of spot the streamer keeps almost the whole value of its 3.52%.

What to Watch Through First Pour

The budget, which has already moved once. The DFS costed the project at US$560M; the current estimate is US$659M, an 18% increase for cost escalation, water treatment built to new provincial discharge standards, camp and electrical changes, and community commitments. Two thirds of total project cost was contractually committed at 28 February 2026, which caps some of the remaining exposure. Note also that the US$354M remaining is struck net of US$94M of planned leasing, so it is not the whole bill.

Q2 2027 first pour. A slip past that window keeps the stock in construction longer, defers the re-rate, and eats into the pre-funded interest. On schedule, the stage label shifts toward ramp-up and a different valuation screen applies.

The capital structure, which also moves. This one has been restructured once already, in the April 2026 refinancing. Anything similar, or a liquidity draw if the build overruns, resets the EV side of the bridge. These are structural changes, not cosmetic ones.

Peer Context

Against the producing names in this vertical (Agnico Eagle at $1,339/oz AISC, Newmont at $1,358/oz), Skeena's US$684/oz looks exceptionally low, and the comparison is not like for like on three counts. Agnico's and Newmont's are by-product costs their mines actually incurred; Skeena's is a forecast. It is struck per gold-equivalent ounce, and silver supplies about a quarter of those ounces. And, like every study AISC, it excludes the capital that builds the mine, so the US$659M does not appear in it. Read it as a statement about ore grade, not about what the equity has to pay for. Snowline Gold, one stage earlier on the lifecycle ladder, screens on EV per resource ounce rather than NAV. Skeena is the hand-off point: reserves are booked, capital is in the ground, and the question is whether EV matches a planning-price NAV after stream and stage risk, not whether a 2023 NPV headline still fits the quote.

Key Risks

Construction execution is the primary risk. Roughly half the budget remains, covering open-pit pre-strip, a water treatment plant built to new provincial standards, and commissioning. The project has already absorbed a US$99M increase without a tonne moving in the reserve statement, which is the point: on a developer, cost overruns land in the equity, not in the geology.

The November 2023 price deck is the other half of the problem. Bulls who anchor on C$2.0B at US$1,800/oz without restating price, stream and stage risk will overstate the upside. Bears who dismiss the low study AISC and Tier-1 British Columbia address may understate the asset if the build lands on time.

The stream is permanent and it sits on gold. Any NAV or per-ounce screen that uses gross equivalent reserves, rather than gold net of the stream plus silver untouched by it, will mis-rank Skeena against peers with clean capital structures.