The financing package from Orion Resource Partners includes four parts:
$100 million equity investment priced at a premium to Skeena’s five-day volume weighted average share price.
$200 million gold stream with option to buy back up to two-thirds for a 12-month period after commercial production begins.
$350 million capital committed and available from a senior secured loan with 1% standby fee and no break fee.
$100 million cost over-run facility in the form of an additional gold stream subject to the same standby terms as the loan.
“This complete financing package is a result of a competitive and comprehensive process undertaken to find the best financing solution for the company,” Skeena executive chair Walter Coles said in a news release.
“The result is certainty of funding to advance Eskay into production while balancing attractive cost of capital, flexibility, and optionality,” Coles said. “We welcome Orion alongside existing shareholders as an aligned and committed stakeholder, further validating the merits of the project.”
The Eskay Creek project is now fully funded to production, thanks to Orion’s $750 million commitment and Skeena’s $44 million cash-on-hand position.
Skeena completed the definitive feasibility study for Eskay Creek in November 2023. It demonstrated a high-grade open pit with an after-tax net present value (5% discount) of C$2 billion and an after-tax internal rate of return of 43%.
Using a gold price of $1,800/oz. and a silver price of $23/oz., the project will reach payback in 1.2 year. Life of mine all-in sustaining costs will be $687/oz.
The Eskay Creek proven and probable reserves total 39.8 million tonnes grading 2.5 g/t gold and 68.7 g/t silver (3.6 g/t gold equivalent). The reserves contain an estimated 33 million oz. of gold and 88.0 million oz. of silver. Reserves are included in resource numbers.
The measured and indicated resource for an open pit is 50.1 million tonnes grading 2.6 g/t gold and 63 g/t silver (3.4 g/t gold equivalent). This portion contains an estimated in-situ 4.1 million oz. of gold and 101.4 million oz. of silver. The inferred resource is 652,000 tonnes grading 1.5 g/t gold and 32.4 g/t silver.
Eskay Creek was the highest-grade gold mine in the world when in production. The mine produced 3.3 million oz. of gold and 160 million oz. of silver at average grades of 45 g/t gold and 2,224 g/t silver from 1994 to 2008.
