Skeena To Acquire 100% Interest In Eskay Creek Project, Barrick Gold To Become Major Shareholder

Skeena Resources (TSXV: SKE) announced this morning that it will be exercising its option to acquire 100% of the Eskay Creek gold-silver project in BC’s golden triangle from that of Barrick Gold (TSX: ABX) via a binding term sheet. As a result of the transaction, Barrick will become one of the largest shareholders in Skeena,

The Eskay Creek mine is the former highest grade, past producing gold mine the world. Skeena is currently looking to potentially reopen the mine as a result of recently infrastructure upgrades in the area. Skeena currently intends to conduct the grade and size of the project via further exploration drilling.

The binding agreement between Skeena and Barrick involves the amendment of an original option agreement that was in place for the project. Under the new terms, Skeena will acquire a 100% ownership in the Eskay Creek project in exchange for the issuance of 22.5 million units of the company. Each unit consists of one common share and one half warrant of the company that is not transferable.

Warrants issued under the transaction will have an exercise price of $2.70 per share, with an undisclosed expiry.

The transaction will also involve the granting of a 1% NSR royalty on the Eskay Creek land package, half of which may be repurchased for $17.5 million within 24 months of closing. A contingent payment of $15 million is also in place, which will become active if Skeena sells a 50% interest or more in the project within 24 months of closing.

Upon closing of the transaction, Barrick will hold a 12.4% interest in Skeena on a non-diluted basis. On a partially diluted basis, that figure increases to 17.2%, with Barrick having certain top-up rights being included if Barrick maintains ownership. Finally, Barrick is subject to a 18 month standstill and have the right to appoint a director to the board of Skeena.

Closing of the transaction is expected to occur in the fourth quarter of 2020, with the binding term sheet subject to a definitive agreement being entered into within 30 days.

Skeena Resources last traded at $1.99 on the TSX Venture.

Information for this briefing was found via Sedar and Sunniva Inc. 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.