Mr. Mac Balkam reports
ESKAY MINING ENTERS INTO AMENDED COST SHARING AGREEMENT WITH SEABRIDGE GOLD TO FINANCE COULTER CREEK ACCESS ROAD
Further to the joint news release of Eskay Mining Corp. and Seabridge Gold Inc. issued July 5, 2021, Seabridge and Eskay Mining have amended the terms of their original agreement to share equally the costs of construction of the first nine kilometres of the Coulter Creek access road (CCAR), estimated to cost $12.5-million, including to introduce a limit on Eskay's contribution to a maximum of $6.25-million and eliminate the sale by Eskay of a convertible debenture.
As background, the CCAR is one of two main access roads planned and permitted for Seabridge's 100-per-cent-owned KSM project situated within the Golden Triangle in British Columbia, Canada. The road is designed to connect the KSM project with the existing Eskay mine road to the northwest. Substantially all of the first segment of the CCAR is situated on mineral tenures held by Eskay Mining. As a result of delays in settling the principal construction contract and having to change the route of the road as a result of surface access issues, commencement of construction was delayed. A portion of the first segment of the CCAR was completed between Aug. 20 and Oct. 22, 2021, when winter shutdown was implemented. Certain materials required for the construction of the road were purchased in 2021 so that they will be available for construction when needed. Construction of the first segment of the CCAR will continue in 2022.
Eskay Mining's president and chief executive officer Mac Balkam stated: "Once the first segment of the CCAR is complete, we will have use of the first segment of the CCAR for a minimum of 15 years pursuant to a road access agreement subject to payment of our pro rata share of maintenance costs. This will provide Eskay Mining with a tremendous benefit as it continues exploration on its 100-per-cent-owned consolidated Eskay precious metal-rich volcanogenic massive sulphide (VMS) project in the Golden Triangle, British Columbia. This summer, Eskay Mining completed approximately 23,500 metres of diamond drilling at multiple targets across its 526 square kilometres of landholdings commencing with focused drilling at its Jeff and TV targets. Initial assay results have been published (see press release dated Nov. 8, 2021) with further results to follow once available."
Commenting on the amended cost sharing agreement, Seabridge's chairman and chief executive officer stated: "After the delays to the start of construction, we are pleased to have reached new terms with Eskay Mining on co-funding the first segment of the CCAR. This initial segment should reduce helicopter costs, improve both safety and certainty of access to KSM, and shorten the time needed to establish early site access to the KSM deposits. We appreciate Eskay Mining's spirit of co-operation with improving access through this remote area of B.C.'s Golden Triangle."
The amended cost sharing agreement supersedes and replaces the cost sharing agreement and the financing mechanism set out in the previous news release. Pursuant to the amended cost sharing agreement, Seabridge will provide Eskay with a $3-million revolving loan facility at an interest rate of 3 per cent per year to provide Eskay flexibility with financing its share of the costs of construction. The loan will be payable by no later than the later of Dec. 31, 2022, and 30 days after (i) Eskay has incurred an aggregate of $6.25-million for its share of the costs of construction and (ii) delivery of the final accounting of construction costs by Seabridge. The costs incurred to date for the construction of the first segment of the CCAR are anticipated to be approximately $5.5-million, Eskay's share of which will be financed through the drawdown of approximately $2.7-million of the loan facility. Construction will recommence in 2022 and Eskay will pay its additional share of the costs of the first segment of the CCAR based upon monthly cash calls which are anticipated to be evenly spread over the remainder of the construction to be completed in 2022. Eskay has agreed to issue 500,000 bonus warrants to Seabridge in consideration for making the loan facility available. The warrants will be priced at a 10-per-cent premium to the closing market price of Eskay shares on the day before the warrants are issued and will be exercisable until the later of Dec. 31, 2022, and 30 days after the date Eskay has fully repaid the loans and all accrued interest subject to early expiry pursuant to the rules of the TSX Venture Exchange. Eskay's obligations under the amended cost sharing agreement are subject to approval of the TSX-V.
About Eskay Mining Corp.
Eskay Mining is a TSX Venture Exchange-listed company headquartered in Toronto, Ont. Eskay is an exploration company focused on the exploration and development of precious and base metals along the Eskay rift in a highly prolific region of northwest British Columbia known as the Golden Triangle, approximately 70 kilometres northwest of Stewart, B.C. The company currently holds mineral tenures in this area comprising 177 claims (130,000 acres).
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