Skeena and Barrick finalize option deal for Eskay Creek project

Barrick Gold (TSX: ABX) (NYSE: GOLD), the world's second largest gold miner, announced Tuesday that Canadian junior firm Skeena Resources (TSX-V: SKE) has decided to open an option to purchase a 100% stake on the former manufacturing property Eskay Creek. Discovered in 1988 in the Golden Triangle of British Columbia, Eskay Creek Mine was once the highest grade gold mine and the fifth largest silver operation in the world by volume, according to Skeena. During the life of the mine it produced approximately 3.3 million ounces of gold and 160 million ounces of silver averaging 45 g / t gold and 2,224 g / t silver. As part of the definitive agreement announced on Tuesday, Skeena will acquire 100% of the ownership of Eskay Creek and will be the mine operator. Barrick will become a significant shareholder in Skeena and waive his back-in right to the project. Upon completion of the transaction in the fourth quarter of the year, Barrick would hold more than 24 million common shares of Skeena on a pro forma basis. This corresponds to about 12.4% of the issued and outstanding ordinary shares of the junior. Skeena will also provide a 1 percent net royalty on the entire Eskay Creek land package. Half of this royalty is available to be repurchased by Barrick at a cost of C $ 17.5 million during the 24 month post-closing period. A contingent payment of C $ 15 million has also been agreed upon which will be effective if Skeena sells more than 50% of the shares in Eskay Creek within 24 months of closing. "The positive reaction from the market to the announcement of the binding term sheet regarding the Eskay Creek transaction with Barrick has encouraged us (...) Skeena is honored to have Barrick as a major shareholder in the company," said Chief Executive, Walter Coles, in a separate statement. Based on the preliminary economic assessment published by Skeena in late 2019, the Eskay Creek Mine will produce 236,000 ounces of gold and 5.81 million ounces of silver annually upon reopening. The Vancouver-based company is currently focused on infill and exploration drilling to bring the project to the pre-feasibility phase.