Skeena raises $30.4 million from Barrick warrants

Skeena Resources Ltd. [SKE-TSX, SKE-NASDAQ, RXFB-FRA] said it has received approximately $30.4 million from the exercise of 2.8 million warrants held by Barrick Gold Corp. [ABX-TSX, GOLD-NYSE].

The warrants were originally issued to Barrick with an exercise price of $10.80 in October, 2020, in connection with Skeena’s acquisition of a 100% interest of the Eskay Creek gold-silver project in British Columbia.

Proceeds from the exercise of the warrants will be used by the company to fund 60,000 metres of exploration drilling planned for Eskay Creek in 2022. The program will continue to focus on supplementing the existing mine plan with additional near surface mineralization that is amenable to open-pit mining methods.

The program will be paralleled by exploratory drill testing of the deep Mudstone extensions north of the former Eskay Creek mine. Allocation of meterage will remain results driven, the company has said.

Expansion and delineation drilling will also occur in the new 21A West Zone as well as the recently discovered 23 Zone.

Skeena shares were virtually unchanged on the news, rising 0.13% or $0.02 to $15.80 in light trading volume. The shares currently trade in a 52-week range of $17.11 and $11.24.

Skeena is engaged in a bid to revive two of Canada’s most successful high-grade precious metal mines – Snip and Eskay Creek. Both are located in the Golden Triangle area of B.C.

The company’s primary activities are the exploration and development of the past-producing Eskay Creek mine, which contains open-pit reserves of 3.88 million ounces at 4.57 g/t gold equivalent (AuEq) in the proven and probable category

The goal is to create a mine producing 500,000 gold equivalent ounces annually for 10 years. It is worth noting that the pre-feasibility study is based on current open pit resources. The company has yet to focus on the considerable underground exploration potential.

The company completed a prefeasibility study (PFS) in July, 2021, on Eskay Creek, which highlights life of mine average annual production of 249,000 ounces of gold, 7.2 million ounces of silver (352,000 ounces AuEq) over a 9.8-year mine-life.

On March 9, 2022, Skeena announced final drilling results from the 2021 regional and near mine exploration program at Eskay Creek. Following up on resource category conversion drilling performed in early 2021, exploratory drill hole SK-21-997 intersected high-grade gold mineralization averaging 8.78 g/t gold, 13 g/t silver (8.95 g/t gold equivalent AuEq) over 34 metres in an area 60 metres west of Skeena’s current 21A Zone pit-constrained resources, and 30 metres below surface.

This discovery remains open for expansion 120 metres to the north and already occurs within the limits of the contemplated open-pit from Skeena’s 2021 prefeasibility study.

Prior to Thursday’s warrant exercise, Barrick held over 24 million shares of Skeena or 12.4%. But assuming that the warrants are exercised, Barrick’s interest was expected to rise to 35.3 million common shares or 17.2%.