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Skeena a step closer to Eskay Creek ownership

Skeena Resources has signed definitive documentation for its option to acquire 100% of the Eskay Creek gold-silver project in British Columbia.
Skeena a step closer to Eskay Creek ownership Skeena a step closer to Eskay Creek ownership Skeena a step closer to Eskay Creek ownership Skeena a step closer to Eskay Creek ownership Skeena a step closer to Eskay Creek ownership

A portal at the past-producing Eskay Creek mine in British Columbia

Staff Reporter

While the deal is expected to close before year end, Skeena shares have gained about 50% since the companies announced they had agreed on a definitive term sheet in early July.

"We were encouraged by the positive market reaction to the announcement of the binding term sheet in respect to the Eskay Creek transaction with Barrick," said CEO Walter Coles Jr. "On closing, Skeena will gain 100% ownership and operatorship of Eskay Creek, which we hope to revitalise as an openpit gold-silver mine."

Skeena will issue Barrick 22.5 million units including a share and half a warrant exercisable at C$2.70. It is expected that Barrick will own about 12.4% of Skeena's shares after closing.

Barrick will also receive a 1% net smelter returns royalty on the entire Eskay Creek land package, half of which Skeena may repurchase within two years for C$17.5 million. Barrick waived its back-in right on Eskay Creek.

A preliminary economic assessment for Eskay Creek released in November 2019 outlined average annual production of 236,000oz of gold and 5.8Moz of silver over 8.6 years following an initial capex of US$233 million. Skeena has started a pre-feasibility study.

Eskay Creek hosts a February 2019 pit constrained mineral resource estimate of 12.7 million tonnes grading 4.3g/t gold and 1,110g/t silver for 1.7Moz gold and 44.7Moz silver. It also hosts an inferred resource of 14.4Mt grading 2.3g/t gold and 47g/t silver for 1.1Moz gold and 778,000oz silver.

Skeena signed the original option agreement for Eskay Creek with Barrick in December 2017. Discovered in 1988, Eskay produced about 3.3Moz gold and 160Moz of silver at average grades of 45g/t gold and 2,224g/t silver.

At C$2.38, shares in Skeena (TSXV:SKE) are trading near the recent 12-month high of $3.00, valuing the company at $469 million (US$351 million).