North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Skeena Resources Ltd. March 23 reported the signing of an agreement with Barrick Gold to acquire the historic high-grade Snip gold mine in northwestern British Columbia, an operation that produced roughly 1 million ounces of gold from ore averaging 25 grams per metric ton gold.

Under terms of the agreement, Skeena may acquire a 100 percent interest in the Snip property by: issuing up to 3.25 million Skeena shares to Barrick; investing C$2 million on Snip within the first 30 months of the agreement, including C$500,000 within the first 12 months.

Barrick will retain a 1 percent net smelter return royalty on the Snip property.

If Skeena exercises the option, upon delineating 2 million ounces of gold, Barrick may exercise a back-in right to purchase a 51 percent interest in the property in return for a payment of three times Skeena's cumulative expenditures, following which the parties will form a joint venture.

"The Snip option agreement is an important step forward in our strategy to consolidate and develop high-quality assets in British Columbia," said Skeena President and CEO Walter Coles.

"The Snip property strongly complements Skeena's Spectrum and GJ projects, which are also located in the Golden Triangle.

We appreciate Barrick's confidence in our team and their willingness to allow us to go back and explore on one of our chairman, Ron Netolitzky's, earliest successes in the region.

We intend to be very aggressive about advancing this asset." Snip, which operated from 1991 to 1999, was burdened by the high cost of being a standalone operation restricted to fly-in servicing, augmented with support by a hovercraft from Wrangell, Alaska, requiring high grades to ensure economic viability.

Compounding this, mining costs nearly doubled over the mine life while the gold price fell to US$300 per ounce by 1999.

The prospects for re-developing the Snip property have improved dramatically, given today's substantially higher gold prices, subsequent improvements to the infrastructure and access in the Golden Triangle region of northwestern B.C. "This acquisition gives us an opportunity to re-examine historic drill intercepts on the Snip property that may indicate mineralization that would be economic with the recent construction of nearby infrastructure and at today's higher gold prices," said Netolitzky.

"We are excited to renew exploration for additional mineralized shoots in a large shear structure which already demonstrated the presence of a million-ounce, high-grade deposit." Netolitzky is a 2015 Canadian Mining Hall of Fame inductee, an honor largely due to his contributions to the discoveries of the Snip and Eskay Creek gold mines in the Golden Triangle.