Skeena Resources secures 100% of fabled Eskay Creek Project

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Skeena Resources Ltd. [SKE-TSXV; SKREF-OTCQX; RXFB-FSE] said Monday October 5 that it now owns 100% of the Eskay Creek gold-silver project in the Golden Triangle region of northwest British Columbia after closing a previously announced transaction with Barrick Gold Corp. [ABX-TSX, GOLD-NYSE].

Under the transaction, Skeena has issued 22.5 million common shares to Barrick as well as warrants entitling the gold mining giant to acquire an additional 11.25 million shares of Skeena. Barrick currently holds over 24 million shares of the junior or 12.4%. But assuming that the warrants are exercised, Barrick’s interest would rise to 35.3 million common shares, or 17.2%.

Barrick is taking a 1% NSR royalty on the entire Eskay Creek land package. The major will also receive a contingent payment of $15 million, payable during a 24-month period after closing of the transaction.

In the Monday press release, Barrick said its decision to waive its back-in right at Eskay Creek is in line with a strategy to focus on Tier One assets.

Skeena shares advanced on the news, rising 1.1% or $0.03 to $2.67 in light trading. The shares are currently trading in a 52-week range of $3.34 and 41 cents.

“On closing, Skeena will gain 100% ownership and operatorship of Eskay Creek, which we hope to revitalize as an open pit gold-silver mine,” said Skeena CEO Walter Coles Jr.

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

Eskay Creek produced 3.3 million ounces of gold and 160 million ounces of silver from 2.2 million tonnes of ore from 1994 until closure in 2008.

Snip was also a high grade mine that produced approximately one million ounces of gold from 1991 to 1999, at an average gold grade of 25 grams per tonne at a 12 gram-per-tonne reserve cut off.

Eskay Creek ranked as highest-grade gold mine in the world at the time that it was in production.

It was also the world’s fifth highest grade silver producer.

The decision to stop mining at Eskay Creek was taken in 2005-2006 when the price of gold was around US$500/oz, the company has said.

In December, 2017, Skeena secured an option to acquire a 100% stake in the Eskay Creek property, which is endowed with excellent infrastructure, including all-weather road access and proximity to the new 287-kilovolt Northwest Transmission Line.

A PEA released in November, 2019, demonstrates that Eskay Creek still has a bright future, revitalized as an open-pit gold and silver mine, with additional possibility for underground mining, the company has said.

According to the PEA, the project has the potential to produce an average of 306,000 gold equivalent ounces annually with a diluted mill feed grade of 4.17 grams per tonne of gold equivalent.

The processing capacity of 6,850 tonnes/day will result in a production lifespan of 8.6 years. An additional 1.5 years of pre-stripping, stockpiling and mine access development is planned prior to the processing facility becoming fully operational in year one.

Other highlights of the PEA include pre-production capital expenditures of US$233 million and life of mine all-in-sustaining costs of US$757 per ounce of gold equivalent recovered.

The PEA is based on an updated resource estimate that was announced on February 28, 2019. According to the estimate, the pit constrained indicated resource includes 2.46 million gold equivalent ounces within 12.7 million tonnes at an average gold equivalent grade of 6.0 g/t. On top of that is a pit constrained inferred resource of 1.23 million gold equivalent ounces within 13.6 million tonnes at an average gold equivalent grade of 2.8 g/t.


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