Walt Coles Jr., President & CEO, reports Skeena Resources Limited [SKE-TSXV] and Mount Rainey Silver Inc., a private British Columbia corporation based in Calgary, Alberta, have entered into a definitive agreement dated August 9, 2016 whereby Skeena agreed to issue up to 25,089,576 common shares in exchange for all of the issued and outstanding common shares of Mount Rainey by way of a Plan of Arrangement.
Mount Rainey’s primary asset is a 100%-owned portfolio of 46 Crown-granted mineral claims covering the past-producing, underground Prosperity-Porter-Idaho-Silverado silver property (the Porter Idaho Project) located in the Golden Triangle region of northwest British Columbia in the Skeena Mining Division. Supporting presentation slides will be available on Skeena’s website at www.skeenaresources.com.
The Porter Idaho Project has two known silver-bearing vein systems approximately 2,000 metres apart on opposite sides of Mt. Rainey with a surface portion of the intervening terrain masked by the icefield capping Mt. Rainey. All veins have the same strike, are intimately associated as splays off the well-delineated Silverado Fault and remain open at depth. As the icefield has been rapidly receding during the most recent few decades, it has exposed surface mineralization that may further indicate the apparent structural continuity between the two vein systems.
The Porter Idaho Project contains an historical Indicated Resource of 394,700 tonnes grading 868 g/t silver, 3.37% lead and 1.41% zinc (435,000 tons @ 25.2 oz/ton silver or a contained 11 million ounces) and an Inferred Resource of 88,900 tonnes grading 595 g/t silver (97,900 tons @ 17.3 oz/ton silver or a contained 1.7 million ounces).
Estimates of mineral resources are dated March 10, 2008 and were prepared by independent consulting geologist N.C. Carter, Ph.D., P.Eng. for Raimount Energy Inc. and re-stated for Mount Rainey Silver Inc. on May 15, 2012. The above estimates made use of an extensive database detailing results of both underground sampling programs as well as surface and underground diamond drilling and were prepared pursuant to CIM Standards on Mineral Resources and Reserves.
Skeena is treating this mineral resource as an historical estimate, as defined in NI 43-101 standards. Skeena has not yet determined what work needs to be completed in order to upgrade or verify the historical estimate to NI 43-101 standards.
Since the initial discovery of silver mineralization on Mount Rainey in the early 1900s, various portions of the property have been investigated by more than 6,000 metres of underground workings, including nine adits, several internal shafts and raises, as well as numerous exploration drifts. The majority of the exploration and development work to date, including surface and underground drill programs in the 1980s, was directed at the Prosperity-Porter Idaho silver-bearing, shear zone-hosted epithermal vein structures.
Limited production of direct shipping high-grade material, mainly from the Prosperity vein, between 1929 and 1931 amounted to 27,123 tonnes with recovered grades of 2,542 g/t silver (73.8 oz/ton), 0.96 g/t gold, and 4.08% lead (yielding approximately 2.2 million ounces silver).
Walter Coles Jr. stated, “The acquisition of this silver project fits well into Skeena’s growing portfolio of high-grade, post-discovery, precious metal projects in the Golden Triangle region of British Columbia. The Porter Idaho Project is a significant high-grade occurrence to which we aim to add considerable tonnage by diamond drilling the underexplored area between the two mineralized vein systems. Furthermore, the location of the project, immediately southeast of Stewart at the head of the Portland Canal, a port with year-round access, contributes significantly to the intrinsic value of this exciting asset.”
Greg Vavra, President & CEO of Mount Rainey, commented, “We’ve held the Porter Idaho Project since 1978 and would only part with it to a group such as Skeena that has the reputation and experience to carry this project forward to its full potential. The business combination provides our shareholders with an outstanding path forward for value creation through access to Skeena’s technical capabilities and financial resources. Furthermore, the Arrangement gives our shareholders potential up-side exposure to Skeena’s high-profile Snip gold exploration project and the ongoing development of the Spectrum-GJ gold-copper project, both of which are also located in the Golden Triangle.”
Upon completion of the arrangement, Mount Rainey will become a wholly-owned subsidiary of Skeena and, assuming no exercise of dissent rights under the arrangement, former holders of common shares of Mount Rainey will hold approximately 5.15% of the outstanding common shares of Skeena on an undiluted basis.
The Boards of Directors of both companies have approved the arrangement which also must be approved by a two-thirds majority of votes cast by shareholders at the Special Meeting of Mount Rainey Silver which will be called to consider the arrangement. The arrangement is also subject to the approval of the Supreme Court of BBC and regulatory authorities, including the TSX Venture Exchange plus some other conditions.
Under the terms of the agreement, Mount Rainey shareholders will receive 5.65 common shares of Skeena for each common share of Mount Rainey held. Based on the August 9, 2016 closing price of $0.18 for Skeena common shares, this represents an aggregate value to Mount Rainey shareholders of $4,516,124.
Skeena Resources is an exploration company focused on developing prospective base and precious metal properties in the Golden Triangle region. The company’s primary activities are the evaluation and development of the Spectrum gold project and adjacent GJ copper-gold project as well as exploration on the recently optioned past-producing Snip gold mine. Skeena’s management includes a highly experienced team of mine-finders, including Ron Netolitzky, Chairman of the Board.