Eskay Mining Corp. on Jan. 26 said it signed a letter of intent to option up to a 60% undivided interest in part of the early stage SIB gold property in British Columbia to an unnamed "senior" mining company.
The property to be optioned comprises 30 mining claims covering approximately 4,823 hectares, or about 10% of the overall SIB land package.
Eskay holds an 80% undivided interest in the property under a joint venture agreement with Kirkland Lake Gold Ltd. unit St Andrew Goldfields Ltd., which has a right of first refusal for 21 days to acquire the option on the same terms.
The terms outline the optionee earning an initial 51% stake by subscribing to a placement by Eskay of C$300,000 worth of shares priced at 20 cents each, as well as spending C$11.7 million on the property over three years.
Upon earning the 51% interest, the optionee can either form a joint venture with Eskay holding 29% and St Andrew holding 20%, or exercise a second option to earn a further 9% interest by either delivering a preliminary economic assessment or completing 23,000 meters of diamond drilling.
Eskay's stake in the optioned part of the property will be free carried through the option period, but St Andrew will have to contribute its pro rata share of expenditures or have its interest diluted. If St Andrew's interest is diluted to 10% or below, its stake will be converted to a 2% net smelter return royalty.