Exciting Year AheadA few comments made from CEO Walter Coles Jr. during his latest company interview on the kereport.com
"At PDAC, we met 20 or more majors and mid-tiers, signing CA's from companies wanting to begin reviewing our data base."
"Everything we own is for sale at the right price, and are currently have ongoing discussions."
"Believes there be an opportunity to divest some of our assets in order to raise money for Eskay Creek."
With declining production for those majors's & mid-tiers, due to a lack of new discoveries from reduced exploration budgets, to the absents of low hanging fruit having already been picked, most all companies are looking to increase their resources/reserves/production with low cost, high margin assets. It appears that Skeena's "Eskay Creek" is becoming a prime candidate for those companies looking for such projects.
With Eskay working its way towards 5M AuEq ounces, Snip working towards 1M to 2M Au ounces, and GJ already out with a positive PEA that shows payable metals of 1.6M Au ounces, 7.5M Ag ounces, and 1B Lbs Copper, Skeena is grossly undervalued standing at a current market cap of only C$35M.
Skeena's market cap should increase when both the metallurgical tests & PEA for Eskay are released over the next few months, in today's market how much is anyone's guess, let's say there's a 60% increase overall, (30% with each release) resulting in a market cap of around C$56M, or C$0.56 per/share.
I would venture to say that if any offers were to be made by those companies signing CA's, they would be offers looking to buy-out Skeena Resources in whole, and not in parts. Being Skeena is so undervalued, the asking price for Skeena's 49% interest in Eskay, would not be much more than if buying out Skeena Resources outright, and with 20+ companies signing CA's at PDAC, the interest level seems to be very high, giving credence that multiple bids could come in. Any offers being made would likely be make after the PEA, or PFS/FS are released, where those parties interested could thoroughly complete their respective DD.
Eskay's the prize, particularly for Barrick. Any project growing into a 5M AuEq ounce, high-margin resource, located in a safe jurisdiction is needless to say a very rare occurrence that most any major would love the opportunity to acquire, especially Barrick where they can buy-back 51% of the project for a song. Barrick's first order of business is to obtain 100% ownership of Eskay Creek. There 1st option in acquiring that 100% control would be to have Skeena come to the table early, (not waiting for them to exercise their option in Q4 2020), and re-negotiate their old option agreement, enabling them to secure Skeena's 49% interest for themselves. I would assume Skeena would want anywhere between C$300M to C$350M, depending on how the economics of the project looks after the PEA is released.
If Barrick comes in with a low bid, and negotiations fail, they could then put in a hostile takeover bid for all of Skeena Resources, at a price right around to what Skeena was asking for their 49% interest, between C$300M to C$350M. With a hostile bid of between C$300M to C$350M for all of Skeena Resources, or around $3.00/$3.50 per/share, Barrick would not only have Eskay's 5M AuEq ounces, at a cost around $65 per/ounce, but also own two solid projects in Snip & GJ, where they could then turnaround and sell them both (Hochschild/Newcrest?), and end up having all of Eskay at a five finger discount.
Would shareholders vote in favor of such a hostile bid where Barrick offers Skeena shareholders between $3.00/$3.50 per/share, without a doubt.
For shareholders there could be some sweetener added if we ever got into the above scenario, being that several of those other companies signing CA's at PDAC, may also want to jump aboard the bidding train for Skeena, and its handful of project. For instance, Newcrest in wanting to own GJ with the synergies that come with Red Chris, and just as Barrick, afterwards selling Eskay & Snip to the highest bidder (Barrick/Hochschild?), ending up owning GJ for another song. That in turn could mark the beginning of a bidding war to the delight of Skeena shareholders.
There are of course other scenarios that will likely intertwine as this plays out, for instance GJ could be taken-out or JV'd on its own before the action begins, (which would be of Skeena's best interest) but what we do know is that most all high-quality projects are always taken-out, which makes this year to be one of excitement, and however this ends up, shareholders are in a win/win situation. GLTA