Skeena Resources to acquire 100% of Eskay Creek

Eskay Creek Drill Shack

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Skeena Resources Ltd. [SKE-TSXV; SKREF-OTCQX] signed a binding term sheet with Barrick Gold Corp.‘s [ABX-TSX; GOLD-NYSE] wholly owned subsidiary, Barrick Gold Inc., defining the terms under which Skeena will exercise its option to acquire 100% of the Eskay Creek gold-silver project located in the Golden Triangle of northwest British Columbia. In addition, Barrick has agreed to waive its back-in right on Eskay Creek. As a result of this transaction, Barrick will become a significant shareholder in Skeena.

Skeena’s CEO, Walter Coles Jr., said, “Skeena is honoured to have Barrick as a significant shareholder as we endeavour to revitalize Eskay Creek, the former highest-grade, past-producing gold mine in the world. Skeena has almost C$50 million cash and we continue to believe there are opportunities to increase the grade and size of this project with exploration drilling.”

Skeena will acquire a 100% ownership in Eskay Creek in consideration for issuing Barrick 22.5 million units, with each unit comprised of one Skeena share and a non-transferrable half warrant. Exercise price of the full warrant of C$2.70 is approximately a 60% premium to the 20-day VWAP and a 35% premium to the closing price of the shares on July 3, 2020.

Consideration includes granting Barrick a 1% NSR royalty on the entire Eskay Creek land package. Half of that royalty may be repurchased from Barrick during the 24-month period after closing, at a cost of C$17.5 million and a contingent payment, payable if Skeena sells more than a 50% interest in Eskay Creek during the 24-month period after closing, of C$15 million.

It is expected Barrick will own about 12.4% of Skeena’s shares after closing, including existing shares held. If Barrick were to exercise the warrants, its ownership of Skeena would increase to 17.2% on a partially diluted basis and Skeena would receive cash proceeds of C$30.4 million. Barrick will have a right to appoint a director to the Skeena board. Closing of the transaction is expected in Q4 2020, subject to approvals.

On July 6, Skeena shares gained $0.26 to $2.25 on a volume of 1,905,100 shares traded.


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