Eskay Creek Gold-Silver Project
The Eskay Creek gold-silver project is a high-grade, precious metal-rich volcanogenic massive sulphide (VMS) deposit. Previously operated as an underground mine, it has been proposed for restart as an open-pit gold-silver mine.
The project, which completed a Definitive Feasibility Study in November 2023 and is undergoing environmental assessment, is located within the traditional territory of the Tahltan Nation and the asserted traditional territory of the Skii Km Lax Ha Nation in the heart of the Golden Triangle region in northwest British Columbia.
The project is 100%-owned by Skeena Resources Limited (“Skeena”).
Further information on the project can be found at skeenaresources.ca.
On June 25, 2024, Skeena announced that it secured a financing package totaling US$750 million (equivalent to over C$1 billion) with Orion Resource Partners ("Orion") for the development, construction, and general working capital required to advance Eskay.
Highlights of the complete funding package—which significantly de-risks the project and provides Skeena with optionality, flexibility and stakeholder alignment as it progresses Eskay towards production in the first half of 2027—includes
- a US$100 million equity investment in the common shares of Skeena;
- a US$200 million gold stream with a 12-month option to buy back up to 66.7% after start of commercial production;
- US$350 million of committed capital available from a senior secured loan with 1% standby fee and no break fee; and
- a US$100 million cost over-run facility in the form of an additional gold stream.
Equity Investment
Orion committed to purchase US$100 million of Skeena's common shares with a portion of the equity commitment priced and closing immediately and the balance (US$25 million) to close at a later date.
- Orion was the back-end buyer of a portion of a C$100 million development flow-through private placement transaction in which Skeena issued 12,021,977 shares at a price of C$8.32 per share, which closed on June 24, 2024.
- Orion also purchased 3,418,702 common shares priced at C$6.6545 per share (C$22.75 million / US$16.6 million) which closed on June 24, 2024.
- The balance of Orion's equity investment is expected to close later in 2024 with pricing to be set at the time of the investment.
Upon closing of the equity investment, Orion now owns 15,440,679 common shares of Skeena, representing approximately 14.51% of Skeena's issued and outstanding common shares (based on a total of 106,404,660 common shares being issued and outstanding). Upon completion of the full US$100 million equity investment, Orion will own less than 20% of the issued and outstanding shares of Skeena.
Prior to closing, Orion did not own any securities of Skeena.
Gold Stream
Under the terms of the agreement, the gold stream will be drawn in five tranches.
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- The initial tranche of US$5 million closed on June 26, 2024.
- The second tranche of US$45 million will be available after receipt of the Technical Sample permit.
- The next three tranches of US$50 million are available as needed to support the project construction schedule.
The silver production is not subject to the stream agreement.
Once fully drawn, Orion will be entitled to receive 10.55% of payable gold produced from the mine ("Stream Percentage") at a price equal to 10% of the LBMA AM gold fixing price three days prior to the delivery day for the life of the project.
For a period of 12 months following the project completion date, Skeena may, at any time, reduce the Stream Percentage by 66.67% by repaying Orion the proportional deposit plus an imputed 18% IRR.
Senior Secured Loan
The senior secured loan will have a term of 5.75 years from the first drawdown, which will be available in four equal tranches of US$87,500,000 and carry an 1.0% per year availability fee on the undrawn portion.
Cost Over-run Facility
Skeena has the option to request an additional US$100,000,000 deposit with the same pro-rata terms as the Gold Stream other than being subject to a 2% original issue discount and a 1% availability fee.
With project financing committed, Skeena is working to finalize the 2024 early works programs and detailed engineering plans.
Further information can be found on Accesswire’s website and at newswire.ca.
Skeena is a Canadian mining exploration and development company focused on revitalizing Eskay Creek.
Orion Mine Finance is one of the world's leading mining-focused private equity businesses.
The Torys team was led by Mike Pickersgill and Tom Zverina and included Mile Kurta, Brett Saulnier, Christopher Tworzyanski, Tia Eisner and Hannah Atkinson (corporate/securities), Rebecca Jennings (lending), Ryan Lax (indigenous involvement), Tyson Dyck and Claire Seaborn (environmental) and Craig Maurice (tax).
Torys also acted on the following in connection with this project:
- Franco-Nevada in the C$81 million financing package made available to Skeena Resources Limited to further develop the Eskay Creek Gold-Silver project in northwest British Columbia, including its C$56 million acquisition of a further 1.0% net smelter return royalty on production from Eskay Creek and a C$25 million private placement of 7% unsecured convertible debentures
Franco-Nevada in its C$27 million acquisition of a 0.5% NSR royalty on Skeena Resources Limited’s Eskay Creek gold-silver project in northwest British Columbia
Franco-Nevada in its strategic investment in Skeena Resources Limited and the negotiation of a right of first refusal over the sale of a 0.5% net smelter return royalty on the Eskay Creek gold-silver project located in northwest British Columbia
| Jurisdiction | Tahltan territory |
| Province/State | British Columbia |
| Country | Canada |
| Nature of Engagement | Stream Financing, Project Finance |
| Client | Orion Mine Finance |
| Client Role | Equity Provider, Lender |
| Value | $750,000,000 USD |
| Key Features | Indigenous involvement |