Eskay Mining had a difficult first half of 2023 amid uncertainty about its balance sheet and how it was going to fund a summer drill program. The stock traded as low as $0.50 on May 17 when CEO Mac Balkam put out a depressing news release about the need to conserve cash and plans to further develop targets at the 100% owned Eskay project in British Columbia's Golden Triangle. These plans included "potential drilling" which sent a signal to the market that this summer not much might change. This contrasted sharply with the big plans outlined in the January 2023 corporate presentation which, in addition to following up 2022 work in the Scarlet Ridge-Tarn Lake area with further drilling, would include "extensive drilling at SIB-Lulu" and "exploratory drilling at poorly-explored VMS targets property-wide". Oddly this presentation has not been updated on the company's web site.
The stock, however, began to perk up in June when Eskay Mining announced on June 7 that Seabridge had agreed to terminate the Coulter Creek Access Road agreement under which Eskay Mining was to contribute $6.25 million of the estimated $12.5 million cost. This deal in July 2021 seemed a bad idea at the time because Seabridge needed this road for its KSM copper-gold project which has been taken through feasibility while Eskay Mining was still a long way from a maiden resource estimate. It was as if the adjacent Hubris Peak had cast its shadow on Eskay management. Drilling during the past couple years on the TV and Jeff zones delivered lots of short high grade intervals but suffered from "structural complexities" which the company planned to think about in 2023 while trying to make a real Eskay Creek 2 discovery. By the start of 2023 Seabridge had loaned $2.7 million to Eskay Mining which was classified as a current liability. Since Seabridge was not going to focus in 2023 on the segment relevant to Eskay if and when a discovery with mining potential is ever made, Seabridge agreed to cancel the agreement which removed this amount from the current liabilities section of the balance sheet.
That was not good enough to help Eskay Mining raise any money to fund a serious drill program, but on July 10, 2023 Eskay Mining achieved a non-dilutive financing when it announced that Skeena Resources Ltd agreed to purchase 5 claims for $4 million of which $2 million was due immediately, $1 million on Oct 31, 2023 and the final $1 million on Dec 31, 2023. Skeena did not even put out a news release and Eskay Mining did not include a map with its press release, but disclosed that the claims were to the northwest of the main claim block. By comparing the map in the January 2023 presentation with the one included in the July 27 news release we can see that at least 4 claims were a floater block west of Skeena's property which was unlikely to yield a standalone discovery for Eskay Mining.
With the extra cash Eskay Mining announced on July 27 plans for 6,500 m of drilling 5 target areas missing from the January map. The immediate focus will be the Scarlet Knob-Tarn Lake area in the middle of which sits the Bruce Glacier target, and the new Storie Creek target to the west where the Eskay Creek Contact Mudstone has been found outcropping. The only older target to be drilled is TV South where one hole will be drilled in August south of where a gabbro dyke cuts off the TV zone. Two entirely new targets are Hexagon-Mercury northwest of the Jeff Zone and the Maroon Cliffs target in the northeastern corner of the property. These appear to be mainly geophysical targets. A surprise is the Cumberland target 6 km south of TV which was drilled a couple decades ago and which will receive two holes. My bet will be on the Storie Creek-Tarn-Lake-Bruce-Glacier-Scarlet-Knobb target group for which Eskay Mining provided a geological long section. I like Quinton Hennigh's declaration that "sharp-shooting multiple high-quality targets is the best approach to make one or more new discoveries in 2023". It gives me much greater hope for an Eskay Creek 2 score than a couple years spent swiss-cheesing the TV and Jeff Zones that emerged in 2020 when the company drilled areas that had previously delivered "smoke but no cigar" and ultimately only delivered ashes. |
