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Eskay reaches new terms on cost-sharing agreement with Seabridge, shares up

Credit: Eskay Mining Corp.

Eskay Mining (TSXV: ESK) and Seabridge Gold (TSX: SEA) have amended the terms of their previous arrangement to finance the construction of the first segment of the Coulter Creek Access Road (CCAR), now agreeing to equally share the costs, estimated at C$12.5 million ($9.8m).

The CCAR is one of two main access roads planned and permitted for Seabridge’s 100% owned KSM project situated within the Golden Triangle of British Columbia. The road is designed to connect the KSM project with the existing Eskay mine road to the northwest.

Substantially all of the first segment, covering a distance of 9 km (5.5 miles), 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, the start of construction was delayed. A portion of the first segment of the CCAR was completed between August 20 and October 22, 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.

Once complete, Eskay Mining 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 its pro rata share of maintenance costs.

“This will provide Eskay Mining with a tremendous benefit as it continues exploration on its 100% owned consolidated Eskay precious metal-rich volcanogenic massive sulphide (VMS) project in the Golden Triangle, British Columbia,” CEO Mac Balkam said in a news release.

This summer, Eskay Mining completed approximately 23,500m of diamond drilling at multiple targets across its 526 square kilometres of land holdings, beginning with focused drilling at its Jeff and TV targets. Initial assay results were published earlier this week.

“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,” Balkam added.

Shares of Eskay Mining rose 8.3% by 12:10 p.m. in Toronto following new cost-sharing agreement, giving the BC-focused gold explorer a market capitalization of C$529.1 million ($421m).