Skeena arranges $70.5 million bought deal financing
Skeena Resources Ltd.’s [SKE-TSX, SKE-NYSE] has arranged to raise $70.5 million from a bought deal financing, with proceeds earmarked for the company’s Eskay Creek gold-silver project in British Columbia and for general corporate purposes.
The company said an underwriting syndicate has agreed to purchase, on a bought deal basis, 4.8 million common shares priced at $14.70 per share. The underwriters have been granted the option to increase the number of common shares purchased in the offering by 15%. That option remains open at any time up to 48 hours prior to closing.
The underwriters may elect, at any time up to 48 hours prior to closing, to have up to 2.23 million common shares issuable under the offering (including any common shares issuable upon exercise of the underwriters’ option) to be issued as flow-through shares at a price of $17.93 per flow-through common share. If the underwriters were to make the flow-through share election in full (excluding any shares issuable upon exercise of the underwriters’ option), this would increase the gross proceeds to $78 million.
On Wednesday, Skeena shares eased 4.8% or $0.755 to $14.72 and currently trade in a 52-week range of $16.79 and $4.48.
Skeena is a leading precious metals developer that is focused on advancing the Eskay Creek gold-silver project, a past-producing mine located in British Columbia’s Golden Triangle region.
Eskay represents one of the highest-grade, lowest cost, open-pit precious metal mines in the world. The feasibility study outlines an average production profile of 455,000 gold equivalent ounces (AuEq) ounces annually in the first five years of operation at an all-in-sustaining cost (AISC) of US$538 an ounce.
Aside from the gold, Eskay will be a very significant silver producer, yielding 9.5 million ounces of silver in the first five years of production, material that is expected the make the asset a cash machine, generating annual cash flow of $726 million.
It is a key reason why Skeena is poised to change its name to Skeena Gold & Silver.
By redeveloping the mine, Skeena is continuing the legacy set by Barrick Gold Corp. [ABX-TSX, GOLD-NYSE], which produced 3.3 million ounces of gold and 160 million ounces of silver from 1994 to 2008. At that time, Eskay ranked as the highest-grade gold mine in the world with a mined grade of 45 g/t gold and 2,224 g/t silver.
Skeena’s 2023 feasibility study is based on proven and probable mineral reserves for open-pit mining of 39.8 million tonnes containing 3.3 million ounces of gold and 88 million ounces of silver. That amounts to 4.6 million ounces of gold equivalent (AuEq).