Skeena raises $30.9 million from Franco-Nevada placement
Skeena Resources Ltd. [SKE-TSXV, SKE- NYSE, RXFB-FRA] said Friday it has raised $30.9 million from a structured non-brokered private placement offering with Franco Nevada Mining Corp. [FNV-TSX, NYSE].
The private placement consisted of 1.47 million flow-through common shares priced at $21 per share. Franco-Nevada was the end purchaser of the common shares issued in the offering. It has also been granted an 0.5% net smelter return royalty over the Eskay Creek gold-silver project in British Columbia.
In addition, Skeena and Franco-Nevada have amended the terms of their existing royalty agreement such that it will cover the same tenures that are included in an existing royalty deal with Barrick Gold Corp. [ABX-TSX, GOLD-NYSE].
Skeena shares advanced on the news, rising 1.08% or 14 cents to $12.99 in light trading. The shares are currently trading in a 52-week range of $16.49 and $10.40.
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 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.
Life of mine all-in-sustaining costs are estimated at US$548 an ounce AuEq. Pre-production capital expenditures are forecast at US$381 million.
Skeena owns 100% of the Eskay Creek project, which has a rare combination of attributes, including scale, impressive grade and location in a tier one mining jurisdiction with strong First Nations support.
In the first five years of operation, it is anticipated that Eskay Creek will produce an average of 450,000 ounces of AuEq. The company expects to see further increases in the annual production profile as it moves to the feasibility study stage in the first quarter of 2022 and beyond.
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 Eskay Creek property is endowed with excellent infrastructure, including all-weather road access and proximity to the new 287-kilovolt Northwest Transmission Line.
Barrick currently holds over 24 million shares of Skeena or 12.4%. But assuming that warrants are exercised, Barrick’s interest would rise to 35.3 million common shares or 17.2%.
Barrick also holds a 1% NSR royalty on the entire Eskay Creek land package and is also receiving a contingent payment of $15 million, payable over 24-months.