VANCOUVER - Skeena Resources Limited (TSX:SKE)(NYSE:SKE), a gold mining company, has announced a comprehensive financing package worth US$750 million from Orion Resource Partners for its Eskay Creek Gold-Silver Project. The funding includes an equity investment, a gold stream, a senior secured loan, and a cost over-run facility, aimed at advancing the project toward production in the first half of 2027.
The package, which precedes the receipt of necessary permits for the Eskay project, is designed to de-risk the project and provide Skeena with financial flexibility. The US$100 million equity investment is priced above the company's recent average share price, with a portion closing immediately and the remainder expected to close later in the year.
Orion has also agreed to a US$200 million gold stream, with the initial tranche of US$5 million set to close on June 26, 2024. The stream entitles Orion to a percentage of payable gold from the mine, with an option for Skeena to reduce this percentage within 12 months of project completion.
The senior secured loan provides US$350 million in committed capital, available in four equal tranches, with a 1% standby fee and no break fee. Additionally, a US$100 million cost over-run facility is available under similar terms as the gold stream.
Walter Coles, Executive Chairman of Skeena, emphasized the strategic flexibility provided by the package and the company's commitment to advancing the project efficiently. The funding exceeds the estimated capital expenditures outlined in the definitive feasibility study released in November 2023.
The Eskay Creek Project is expected to create over 800 direct jobs and contribute approximately C$1.5 billion in tax revenue over its life, with a significant impact on local economies and communities in British Columbia. Skeena, in partnership with the Tahltan Nation, continues to focus on sustainable mining practices and community engagement.
This financing package positions Skeena to progress with its early works program and detailed engineering plans, targeting to secure an Impact Benefit Agreement with the Tahltan Central Government in H1 2025 and to receive all remaining permits by the end of 2025. The company aims to initiate full-scale construction in 2026, with production starting in the first half of 2027.
The information provided in this article is based on a press release statement from Skeena Resources Limited.
InvestingPro Insights
In the wake of Skeena Resources Limited's announcement of a substantial financing package for its Eskay Creek Gold-Silver Project, a closer look at the company's financial health and market performance can provide investors with a clearer picture.
According to the latest data from InvestingPro, Skeena Resources has a market capitalization of $410.64 million USD. The company's financials reflect the challenges of a firm in the development phase, with an adjusted P/E ratio over the last twelve months as of Q1 2024 at -4.75, indicating that the company is not currently generating profits relative to its share price.
InvestingPro Tips suggest that Skeena Resources is quickly burning through cash and suffers from weak gross profit margins, which are important considerations for investors as the company continues to invest heavily in bringing the Eskay Creek project to production.
The company's stock price has been quite volatile, a factor that could be attributed to the inherent risks associated with mining projects and the fluctuating prices of gold and silver. Furthermore, analysts do not anticipate the company will be profitable this year, which aligns with the negative earnings per share figures reported.
Still, it is not all challenging news. Skeena Resources operates with a moderate level of debt, and its liquid assets exceed short-term obligations, which is a positive sign for the company's liquidity and short-term financial stability. Moreover, the company has experienced a strong return over the last five years, which may be of interest to long-term investors.
Investors looking to delve deeper into the financial metrics and forecasts for Skeena Resources can find additional InvestingPro Tips by visiting https://www.investing.com/pro/SKE. As an incentive, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 9 additional tips listed in InvestingPro that can provide further insights into the company's performance and potential.
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