Skeena cuts deal for historic Eskay Creek

Skeena Resources Ltd. Dec. 18 cut a deal with Barrick Gold Corp. to acquire all of the major's interest in the Eskay Creek gold mine property in the Golden Triangle region of northwest British Columbia. Barrick has also agreed to make a C$1 million strategic investment in Skeena.

Discovered in 1988, the former Eskay Creek mine produced roughly 3.3 million ounces of gold and 160 million oz of silver at average grades of 45 grams per metric ton gold and 2,224 g/t, which at the time made it the world's highest-grade gold mine and fifth-largest silver mine by volume.

"Eskay Creek was a remarkable discovery that became an extraordinary mine," said Skeena CEO Walter Coles Jr. "It produced 3.3 million ounces of gold and 160 million oz of silver from 2.2 million tonnes (metric tons) of ore from 1994 until closure in 2008. We are honored that Barrick has given us an opportunity to investigate and potentially revitalize one of Canada's highest-grade past-producing mines."

To acquire Barrick's ownership of Eskay Creek, Skeena has agreed to: invest C$3.5 million in exploration on the property over the next three years; pay Barrick C$10 million once the exploration requirement has been met, all regulatory approvals have been received, and all permit transfers and underlying agreement consents have been obtained; and reimburse Barrick for reclamation expenditures incurred during the option period and assume the bond amount on the property, collectively up to a maximum amount of C$7.7 million. Anything over the C$7.7 million in reclamation and bond costs would be subtracted from the C$10 million purchase price.

Barrick will retain a 1 percent net smelter return royalty on all parts of the property not already subject to royalties. In addition, Barrick will maintain a back-in right to purchase a 51 percent interest in Eskay Creek for a 12-month period following Skeena's completion of an NI 43-101 resource of at least 1.5 million oz gold-equivalent. To exercise the back-in right, Barrick will pay Skeena up to three times its cumulative expense on the property. As part of the back-in Barrick would also reimburse to Skeena the purchase price and assume any bonding requirement for its proportionate interest, following which the parties will form a joint venture.

The C$1 million strategic investment will involve Skeena issuing 1.25 million flow-through shares at a price of C80 cents per share. The net proceeds of the financing will be used to incur Canadian exploration expenses.

Canarc Resource Corp. retains a 33.3 percent carried interest in certain mining claims adjacent to the past-producing Eskay Creek Mine. Canarc said it is pleased to see the renewed interest in this property and will benefit from any future exploration success and development that may occur on these claims.

In addition to Eskay Creek, Skeena owns the historic Snip gold mine property, another historic gold mine property acquired from Barrick; and Spectrum-GJ, a large gold-copper property the company is exploring. All three properties are located in British Columbia's Golden Triangle.

–SHANE LASLEY