Sakina Gold and Silver Resources Limited (It happened-TSX, It happened(NYSE) announced details of a $750 million secured bond offering to refinance the Eskay Creek project in British Columbia. A portion of the proceeds will also be used to fund a partial buyback of existing gold flow.
The company said the use of proceeds from the related refinancing is intended to improve future operating margins, increase its exposure to gold prices and future production, and enhance the overall project economics of the Eskay Creek project, which is fully permitted and currently under construction.
Once production begins, likely in the second quarter of 2027, it is expected to rank among the highest quality and lowest cost open-pit precious metal mines in the world, with significant silver by-product production.
The Notes will be fully and unconditionally guaranteed by certain of the Company’s subsidiaries in connection with the Eskay Creek Project, including equity interests, separate accounts and interests in the Eskay Creek Project.
Skeena said it intends to use approximately $184 million of the proceeds to fund the purchase of the stream; An estimated $100 million to fund the interest reserve account, which is expected to contain an amount equal to the first three semi-annual interest payments due under the Notes; The remaining proceeds to fund a disbursement account with funds that will be used to advance the Eskay Creek Project, to pay certain fees and expenses and to add cash to Skeena’s balance sheet for, among other things, general corporate purposes.
Pursuant to an agreement between Skeena and the Stream Purchaser under the Company’s existing $200 million gold stream, Skeena intends to purchase the Stream Agreement by paying a lump sum of approximately $184 million to the Stream Purchaser in exchange for a 66.67% reduction in the deliverable percentage of production at Eskay Creek to the Stream Purchaser.
In connection with the Offering and the purchase of streaming, the Company entered into an amended streaming agreement with Orion Resource Partners and certain of its affiliates to facilitate the Offering and related transactions. The amendments include, among other things, the termination of the availability of cost overflow facilities and modifications to certain liquidity and reporting covenants.
Additionally, the company said it intends to cancel its existing $350 million senior secured term loan and cost overrun facility under the Flow Agreement in conjunction with the completion of the offering and the Flow purchase. The term loan and cost overrun facilities have not been drawn currently, and the company does not expect to incur any charges in relation to the cancellations, it said.
The completion of the term loan, cancellation of the cost overrun facility and the flow repurchase are subject to the successful completion of the offering and each other.
On Tuesday, Skeena shares advanced on the news, rising 5.4%, or $2.08, to $40.21. Shares are trading in a 52-week range of $53 to $12.15.
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