Barrick Gold (TSX, NYSE:ABX), the world’s top bullion producer by volume, signed an agreement with fellow Canadian junior Skeena Resources (TSX.V:SKE) granting it the option to acquire a 100% interest in the past-producing Eskay Creek property, located in the Golden Triangle of northwest British Columbia.
Discovered in 1988, the former Eskay Creek mine produced approximately 3.3 million ounces of gold and 160 million ounces of silver at average grades of 45 g/t gold and 2,224 g/t silver and was once the world’s highest-grade gold mine and fifth-largest silver mine by volume.
“A precious and base metal-rich volcanogenic massive sulphide deposit, the Eskay mineralization has been the focus of considerable exploration activity dating back to 1932. Exploration drilling in 1988 led to the discovery of the 21A and 21B zones, followed by underground development of the 21B zone starting in 1990 with the official opening of the Eskay Creek mine in 1994. Over the 14-year life of the mine, approximately 2.2 million tonnes of ore were mined with cut-off grades ranging from 12 to 15 g/t gold equivalent for mill ore and 30 g/t gold equivalent for smelter ore,” Skeena explained in a press release.
Under the terms of the option agreement with Barrick, the junior may acquire Eskay after incurring C$3,500,000 in exploration expenditures on the property prior to December 18, 2020, of which C$1,500,000 must be incurred prior to December 18, 2019. Skeena also has to pay Barrick C$10,000,000 once the aforementioned exploration requirement has been met, all regulatory approvals have been received and all permit transfers have been obtained. It would also have to reimburse Barrick for reclamation expenditures incurred during the option period.
The Toronto-based giant, however, will keep an eye on Eskay Creek as the deal stipulates that Barrick will maintain a back-in right to purchase a 51% interest in the property which may be exercised for a 12-month period following notification by Skeena of an NI 43-101 resource of at least 1,500,000 ounces of contained gold (or equivalent).
But before any ground movement takes place, the buying party needs to go over more than 20 years of exploration and production information, which would allow it to develop an upgraded geological model.
“We are honoured that Barrick has given us an opportunity to investigate and potentially revitalize one of Canada’s highest-grade past-producing mines,” Skeena’s CEO, Walter Coles Jr., said in the media statement.
This is not the first past-producing mine that the Vancouver-based junior options from Barrick. Back in March 2016, both companies signed an agreement granting Skeena an option to acquire a 100% interest in the past-producing, high-grade Snip gold mine also located in northwest British Columbia and which produced approximately 1 million ounces of gold from 1991 until 1999.