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

In a deal that is expected to lower costs and improve safety for two companies with exciting projects at the heart of British Columbia's Golden Triangle, Seabridge Gold Inc. and Eskay Mining Corp. have agreed to share the C$12-million cost of building nine kilometers (5.6 miles) of road that will extend onto Eskay Mining's exploration property.

Branching off the road that provides access to Skeena Resources Ltd.'s Eskay Creek gold-silver mine project, this will be the first section of the already planned and permitted Coulter Creek Access Road to Seabridge's world-class KSM gold-copper mine project.

"This initial segment will provide Seabridge with a lower elevation staging site closer to the KSM camp, thereby reducing Seabridge's helicopter costs and improving both safety and certainty of access to KSM, while at the same time providing cost-saving logistical benefits for Eskay Mining's planned exploration activities," said Seabridge Gold Chairman and CEO Rudi Fronk. "More important for Seabridge, constructing this segment now will shorten the time needed to establish early site access to the KSM deposits, enabling more rapid development of the project once we have consummated our anticipated joint venture."

With Eskay carrying out an aggressive 30,000-meter drill program, the largest in the company's history, having a road closer to where the company has discovered Eskay Creek-style gold-silver mineralization could not come at a better time.

"This will provide Eskay Mining with a tremendous benefit as it continues exploration on its 100% owned Consolidated Eskay precious metal-rich volcanogenic massive sulfide project in the Golden Triangle, British Columbia," said Eskay Mining President and CEO Mac Balkam.

Eskay Creek-like discovery

Eskay Mining's aggressive 2021 drill program is primarily focused on following up on two gold- and silver-enriched VMS discoveries – TV and Jeff – made last year.

Out of the 20 holes drilled at these targets last year, 18 cut impressive precious metal intercepts.

Highlights from the 2020 drilling at TV include:

• 10.1 meters averaging 4.17 grams per metric ton gold and 40.2 g/t silver in hole TV20-36.

• 17.5 meters averaging 2.58 g/t gold and 58.7 g/t silver in TV20-37.

• 40.7 meters averaging 1.39 g/t gold and 28.4 g/t silver in TV20-39.

• 29.9 meters averaging 3.18 g/t gold and 25.7 g/t silver in TV20-40.

Highlights from the 2020 drilling at Jeff includes:

• 24.6 meters averaging 1.54 g/t gold and 31.3 g/t silver in J20-31

• 35.5 meters averaging 9.5 g/t gold and 70 g/t silver in J20-33.

• 7.7 meters averaging 2.53 g/t gold and 151.4 g/t silver in J20-37.

• 50.4 meters averaging 1.13 g/t gold and 43.5 g/t silver in J20-38.

Located about 1,800 meters apart, TV and Jeff are currently being considered as separate systems, but geophysical data indicates that they may be geologically connected and part of a larger system.

Much of the at least 30,000 meters of drilling Eskay has planned for this year will expand on the mineralization encountered at TV and Jeff, as well as test several VMS targets along a 6,000-meter prospective corridor that runs north-south through these discoveries.

"While we have solid plans to drill at least 30,000 meters with four drills this season, we will be prepared to ramp up this program if necessary," said Quinton Hennigh, director and technical advisor to Eskay Mining. "By the end of 2021, we would like to have a good handle on the size and magnitude of the Jeff and TV zones, but we also aim to make further, similar discoveries in this target-rich environment. This will be a very exciting season of discovery for Eskay Mining."

The Coulter Creek Road extension will make it easier and less expensive to build potentially Eskay Creek-like gold-silver deposits at these exciting discoveries.

"The construction of the first segment of the CCAR will provide cost-saving logistical benefits for Eskay Mining's planned exploration activities," said Balkam.

Closer to a KSM Mine

For Seabridge, this deal extends road access nine kilometers closer to its KSM and recently acquired Snowfield projects.

The four deposits identified at KSM – Kerr, Sulphurets, Mitchell and Iron Cap – host 2.98 billion metric tons of measured and indicated resources averaging 0.52 g/t (49.7 million oz) gold, 0.21% (13.9 billion lb) copper, 2.8 g/t (265 million oz) silver and 54 ppm (312 million lb) molybdenum.

A prefeasibility study completed in 2016 detailed a mine for KSM that would produce an average of 540,000 oz gold, 156 million lb copper, 2.2 million oz silver, and 1.2 million lb molybdenum annually over a 53-year mine life.

Lying immediately east of Mitchell, one of four deposits that host the resource at KSM, Snowfield hosts another 1.37 billion metric tons of measured and indicated resources averaging 0.59 g/t (25.92 million oz) gold, 1.72 g/t (75.8 million oz) silver, 0.1% (2.98 billion pounds) copper, 85.5 parts per million (258.3 million lb) molybdenum, and 0.51 ppm (22.5 million oz) rhenium.

Seabridge is having an updated PFS completed that will consider the integration of Snowfield into the KSM mine plan.

"Our current environmental approvals include haul roads through the Snowfield property, which may allow us to expedite its development and access some of its best grade material early in the mining process. The next step is to generate additional data that is necessary to complete a new preliminary feasibility study for the KSM project, which includes the Snowfield property," Fronk said in December. "We believe this new PFS will increase project reserves and improve capital efficiency by extending the life of open pit mining, thereby allowing us to delay the capital-intensive development of underground mining later in the project life."

Neighbors helping neighbors

To help Eskay Mining fund its half of the first segment of the Coulter Creek, Seabridge has agreed to purchase a C$6 million convertible debenture and 1.35 million warrants from Eskay.

Seabridge Gold Inc. and Eskay Mining Corp.

The first segment of the Coulter Creek Access Road (in the circle) will extend about 2.9 kilometers (1.8 miles) onto Eskay Mining's VMS gold-silver project in BC's Golden Triangle.

Over the next year, Eskay has the right to buy back any portion of the CD, plus any interest, for cash. After that, Seabridge has the right to convert any portion of the outstanding principal amount into Eskay Mining common shares at C$2.81 per share. The CD, which bears an annual interest rate of 3%, will mature on the third anniversary of closing.

The warrants issued to Seabridge are exercisable into Eskay Mining common shares for three years at a price of C$2.82 per share in the first year, C$2.92 during the second, and C$3.02 during year three. This offers Seabridge the opportunity to benefit from any stock elevating success from its neighbor's exploration.

As of July 5, Eskay Mining shares were trading for around C$2.80 on the TSX Venture Exchange.

This deal is expected to benefit both companies' efforts to advance exploration and development in this extremely metals-rich area at the heart of BC's Golden Triangle.

"Cooperation between neighboring companies will help facilitate the emergence of B.C.'s Golden Triangle as one of Canada's most important new mining camps," said Fronk.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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