Skeena Resources Ltd. said Dec. 18 that Barrick Gold Corp. granted the company an option to acquire the past-producing Eskay Creek gold property in British Columbia's Golden Triangle.
Barrick will also complete a strategic investment with Skeena for gross proceeds of C$1 million.
Under the deal terms, Skeena is required to incur C$3.5 million in exploration expenditures on the property before Dec. 18, 2020, of which C$1.5 million must be spent before Dec. 18, 2019.
After meeting exploration requirements and securing all permit transfers and underlying agreement consents, Skeena will pay C$10 million to Barrick.
It will also reimburse Barrick for reclamation expenditures incurred during the option period and assuming the bond amount on the property, for up to a maximum of C$7.7 million. The purchase price will reduce if the these payments, in aggregate, exceed C$7.7 million.
Barrick will retain a 1.0% net smelter return royalty on all parts of the property which are not already subject to royalties.
Additionally, Barrick will maintain a right to buy back a 51% interest in the property, exercisable for a 12-month period following notification by Skeena of a resource on the property of at least 1.5 million ounces of contained gold or equivalent.
To exercise the back-in right, Barrick will pay Skeena up to three times its cumulative expense on the property, reimburse the purchase price and assume any bonding requirement for its proportionate interest, following which the parties will form a joint venture.
In connection with the strategic investment, Skeena will issue 1,250,000 flow-through shares at 80 cents apiece, with Barrick as the end purchaser.
Skeena is currently compiling and reviewing over 20 years of exploration and production data to develop an upgraded geological model. In an effort to expedite the first phase of confirmation drilling, the company is initiating surface drill permitting.