Seabridge Gold (TSX: SEA) and junior explorer Eskay Mining (TSXV: ESK) have agreed to share the C$12 million ($9.7m) construction bill of the first stage of an access road to the KSM gold-silver-copper project in British Columbia.
The nine-kilometre road, called the Coulter Creek Access Road (CCAR), is one of two main access roads to KSM. Building the first segment now will shorten the time Seabridge needs to establish early site access to the KSM deposits, enabling faster development of the project once it has closed a joint venture for the project. It will also provide Seabridge with a lower elevation staging site closer to the KSM camp, reducing Seabridge’s helicopter costs and improving both safety and certainty of access to KSM.
For Eskay Mining, the road means cost-saving logistical benefits for its planned exploration activities on properties around the KSM project boundaries. About 2.92 kilometres of the first segment of the CCAR is on mineral tenures held by Eskay.
For Eskay Mining, the road means cost-saving logistical benefits for its planned exploration activities on properties around the KSM project boundaries
Once the first segment of the CCAR is complete, Eskay will have usage rights for at least 15 years under a road access agreement, subject to pay its pro-rata share of maintenance costs.
Eskay will fund its share of the cost by signing up for a C$6 million convertible debenture from Seabridge and issuing 1.25 million warrants. Eskay can redeem any portion of the loan up to 12 months after closure, from which time Seabridge can convert any part of the principal amount at $2.81 per share.
The warrants are exercisable into Eskay Mining common shares for three years at a strike price of $2.82 per share in the first year, $2.92 in the second, and $3.02 in the third year.
“This will provide Eskay with a tremendous benefit as it continues exploration on its 100% owned Consolidated Eskay precious metal-rich volcanogenic massive sulphide project,” says CEO Mac Balkam.
In what amounts to its most aggressive campaign ever, Eskay plans to drill at least 30,000 meters of diamond core this summer at several targets across its 526 sq.km of land holdings, starting with focussed drilling at its Jeff and TV targets. The work will follow up on encouraging gold-silver intercepts, some high-grade, the company encountered in 18 of 20 holes completed in 2020.