SKEing Uphill1) Definitive Feasibility Study:
SKE released the results of the DFS in a press release dated November 14, 2023 after market close. SKE's share price closed at 5.00 even that day.
Since then, its highest close was 6.81 on December 27 for a post DFS gain of 36%....which would've been great if you bought it at 5.00 or less and sold it at that time (or any time when it was over 6.00), but not earth-shattering. Thus my argument that, even if a DFS is the greatest you've ever seen, the near-term upside of the share price isn't likely to make you huge money unless you've investing six-figures in it and get out before the share price starts declining again as the financing and contracting phase of the project kicks in.
SKE closed today at 5.60 for a post-DFS gain to date of 12%.
2) LOM is estimated to be 12 years. Thus, unlikely to be bought out as I suspect buyers looking for such a project would like a mine with a longer life.
3) P&P is 3.3M oz Au and 88M oz Ag, so the cash flow going forward will also depend on the price of silver, not just gold.
4) Coles thinks SKE really benefits from the deal he cut with Franco Nevada vs. a plain vanilla equity raise or streaming agreement, but I don't consider it to be anything special. You've got to give up something to get funding, so you have to pick your poison, and I don't think Franco-Nevada (the original precious metals streaming company) gets the short end of the stick on too many deals, and not on this one either IMO as they get an additional 1% royalty on every ounce produced at Eskay Creek for the life of the mine plus a debenture at 7% interest with an option to convert it into common shares.
With this deal, FNV now ups its total NSR to 2.5% on all of SKE's Eskay Creek properties.