Eskay Creek was the highest-grade gold mine in the world when in production, between 1994 and 2008. (Image courtesy of Skeena Resources.)
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 C$27 million cash ($20m).
The transaction, first announced in early December, also gives Skeena an additional cash consideration of C$1.5 million ($1.1m).
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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 feasibility study for Eskay Creek envisions an open pit operation with an annual production of 352,000 ounces of gold equivalent a year.
Average grades are pegged at 4.57 g/t gold-equivalent, while the after-tax net present value, at a 5% discount, is estimated at C$1.4 billion, with a 56% internal rate of return and a 1.4-year payback at $1,550/oz gold.
The past-producing Eskay Creek mine was the world’s highest-grade gold operation between 1994 and 2008.