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Skeena Resources Secures $750 Million Financing, Funding Eskay Creek Project Into Production

Skeena Resources Limited (TSX: SKE) has announced a major milestone in the advancement of its Eskay Creek Gold-Silver Project, securing a comprehensive financing package totaling US$750 million (over C$1 billion) from Orion Resource Partners. This funding is crucial for the development, construction, and working capital required to push the 100%-owned Eskay Creek Project toward production by the first half of 2027.

The package includes several financial instruments designed to provide flexibility and minimize risk:

  1. Equity Investment: US$100 million equity investment, priced at a premium to the company’s five-day volume-weighted average share price.
  2. Gold Stream: US$200 million gold stream with an option for Skeena to buy back up to 66.7% within 12 months of commencing commercial production.
  3. Senior Secured Loan: US$350 million loan with a 1% standby fee and no break fee.
  4. Cost Over-Run Facility: US$100 million additional gold stream facility, under similar terms to the senior loan.

Walter Coles, Executive Chairman of Skeena, emphasized the significance of this financing package, stating, “This complete financing package is a result of a competitive and comprehensive process undertaken to find the best financing solution for the Company. The result is certainty of funding to advance Eskay into production while balancing attractive cost of capital, flexibility, and optionality.”

Orion Resource Partners has committed to purchasing US$100 million worth of Skeena’s common shares. This includes:

  • An immediate partial investment and a subsequent US$25 million investment later this year.
  • A recent C$100 million private placement where Orion bought shares at C$8.32 each.
  • An additional purchase of 3,418,702 shares at C$6.65 each, closing on June 24, 2024.

Upon completion, Orion will hold less than 20% of Skeena’s outstanding shares, retaining the right to participate in future equity offerings.

The gold stream agreement, drawn in five tranches, starts with an initial US$5 million anticipated to close on June 26, 2024. Subsequent tranches support the project construction schedule, with Orion entitled to 10.55% of payable gold at a price of 10% of the LBMA AM gold fixing price. Skeena has the option to reduce this percentage by repaying a proportional amount plus an 18% internal rate of return within 12 months post-completion.

The senior secured loan, with a term of 5.75 years from first drawdown, features a 3-month US$ SOFR plus a 7.75% margin. Skeena can prepay the loan without penalties, ensuring financial flexibility.

With the financing secured, Skeena is now focused on finalizing the 2024 early works programs and detailed engineering plans. Key upcoming milestones include:

  • Impact Benefit Agreement with the Tahltan Central Government: Expected in H1 2025.
  • Permitting: Full-scale construction permits anticipated by the end of 2025.
  • Construction and Production: Initiating construction in 2026, with production starting in H1 2027.

According to the company, the Eskay Creek Project is poised to significantly benefit the local and national economies, creating over 800 direct jobs and potentially 2,000 jobs in supporting industries. The project is expected to contribute approximately C$1.5 billion in direct tax revenue to British Columbia and Canada throughout its estimated 12-year mine life.

Skeena Resources last traded at $6.17 on the TSX.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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