Canadian explorer and developer Skeena Resources (TSX, NYSE: SKE) said on Tuesday it had closed the sale of a 0.5% net smelter returns royalty (NSR) on its Eskay Creek gold-silver project to Franco-Nevada (TSX, NYSE: FNV) in a deal worth $27 million (US$19.8 million).
The transaction, first announced in early December, also gives Skeena an additional cash consideration of $1.5 million.
Net proceeds of the sale will be used mainly to fund exploration and development activities at Eskay Creek, which the company acquired from Barrick Gold in 2020.
The British Columbia-focused company’s feasibility study for Eskay Creek envisions an open pit operation with an annual production of 352,000 oz. of gold equivalent a year.
Average grades are pegged at 4.57 grams gold-equivalent per tonne, while the after-tax net present value, at a 5% discount, is estimated at $1.4 billion, with a 56% internal rate of return and a 1.4-year payback at $1,550 per ounce of gold.
The past-producing Eskay Creek mine was the world’s highest-grade gold operation between 1994 and 2008.
Skeena shares rose 4% on Tuesday, reaching $7.50 apiece by mid-morning in Toronto. Its shares have traded in a 52-week window of $5.64 and $17.11, valuing the company at $580 million.
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