Explorer Eskay Mining has entered into an amended agreement with Seabridge Gold, agreeing to share equally the costs of constructing the first 9 km of the Coulter Creek access road (CCAR), in the Golden Triangle in British Columbia.
The first 9 km of the CCAR, one of two main access roads planned and permitted for Seabridge's KSM project, is estimated to cost $12.5-million. The amended terms include a limit on Eskay’s contribution to a maximum of $6.25-million and eliminate the sale by Eskay of a convertible debenture.
Substantially all of the first segment of the CCAR 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 because of surface access issues, commencement 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. Construction of the first segment of the CCAR will continue in 2022.
"Once complete, the first segment of the CCAR is complete, we 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 our 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 project in the Golden Triangle,” said Eskay Mining CEO Mac Balkam.
This summer, Eskay Mining completed 23 500 m of diamond drilling at multiple targets across its 526 km2 of land holdings commencing with focused drilling at its Jeff and TV targets.
For Seabridge, the 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.
Pursuant to the amended cost sharing agreement, Seabridge will provide Eskay with a $3-million revolving loan facility at an interest rate of 3% a year to provide Eskay flexibility with funding its share of the costs of construction.
The loan will be payable by no later than the later of December 31, 2022 and 30 days after Eskay has incurred an aggregate of $6.25-million for its share of the costs of construction and delivery of the final accounting of construction costs by Seabridge.
The costs incurred to date for the construction of the first segment of the CCAR are anticipated to be about $5.5-million, Eskay's share of which will be funded through the drawdown of $2.7-million of the loan facility.