Barrick, Skeena reach final deal on Eskay Creek 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.

As part of the definite agreement announced Tuesday, Skeena will gain 100% ownership of Eskay Creek and will be the mine operator. Barrick will become a significant shareholder in Skeena and will waive its back-in right on the project.

Once the deal closes, in the fourth quarter of the year, Barrick would hold more than 24 million Skeena common shares on a pro-forma basis. That amounts to about 12.4% of the junior’s issued and outstanding common shares.

Skeena will also grant a 1% net smelter return 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.

A contingent payment of C$15 million is also agreed upon, which will become active if Skeena sells more than a 50% interest in Eskay Creek during the 24-month period after closing.

“We were encouraged by the positive market reaction to the announcement of the binding term sheet in respect to the Eskay Creek transaction with Barrick (…) Skeena is honoured to have Barrick as an important shareholder in the company going forward,” chief executive, Walter Coles, said in a separate statement.

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.

The Vancouver-based company is currently focused on infill and exploration drilling to advance the project towards the pre-feasibility stage.