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Skeena Resources (TSX: SKE) is now the full owner of the Eskay Creek gold/silver project, in the Golden Triangle of north-west British Columbia.
The company announced on Monday that has closed the previously announced transaction with Barrick Gold to acquire the project.
Discovered in 1988, the Eskay Creek mine in British Columbia’s Golden Triangle was, according to Skeena, once the highest-grade gold mine and the world’s fifth-largest silver operation by volume. It produced approximately 3.3 million ounces of gold and 160 million silver ounces at average grades of 45 g/t gold and 2,224 g/t silver during its mine life.
Once reopened, mine will produce 236,000 ounces of gold and 5.81 million ounces of silver a year
Consideration for the transaction consists of the issuance to Barrick of 22.5 million units, with each unit comprised of one common share of Skeena and a non-transferrable half warrant. The exercise price of the non-transferrable 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, and the grant of 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.
Barrick holds 24 075 000 Skeena common shares, representing about 12.4% of Skeena’s issued and outstanding common shares, and assuming the exercise in full of all of the warrants issued pursuant to the transaction, Barrick will hold 35 325 000 common shares, representing about 17.2% of Skeena’s issued and outstanding common shares.
Based on the preliminary economic assessment released by Skeena in late 2019, once reopened, the Eskay Creek mine will produce 236,000 ounces of gold and 5.81 million ounces of silver a year.
