Eskay Signs LOI to Option up to a 60% Interest IN Part of Sib Property
1
82 Richmond Street East
Toronto, ON M5C 1P1
T: 416 907 4020
W: eskaymining.com
NEWS RELEASE
FOR IMMEDIATE RELEASE: JANUARY 26, 2017
ESKAY SIGNS LOI TO OPTION UP TO A 60% INTEREST IN
PART OF SIB PROPERTY
Toronto, January 26, 201 7 – Eskay Mining Corp. (“Eskay” or the “Company”) (TSX -V:ESK) is
pleased to announce that it has signed a letter of intent (the “LOI”) with a senior mining company (the
“Optionee”) to option (the “Option”) up to a 60% undivided interest in part of the SIB Property. The part
of the SIB Property subject to the Option consists of 30 mining claims representing approximately 4823 ha
or approximately 10% of the SIB Property land package (the “Optioned Property”). Eskay holds an 80%
undivided interest in the SIB Property pursuant to a joint venture agreement (the “JVAgr”) with St Andrew
Goldfields Limited (“ St Andrew”), a wholly -owned subsidiary of Kirkland Lake Gold Ltd., which holds a
20% undivided interest. The remainder of the SIB Property will remain subject t o the terms of the JVAgr
between Eskay and St Andrew. Pursuant to the terms of the JVAgr, St Andrew has a right of first refusal
for twenty-one (21) calendar days to O ption the Optioned Property on the same terms as the LOI, failin g
which, Eskay will proceed to Option the Optioned Property to the Optionee.
The Optionee can earn a 51% undivided interest in the Optioned Property by completing a $300,000
private placement into Eskay at $0.2 0 per share, subject to the rules of the TSX Venture Exchange
(“TSXV”), and expending $11.7 million on the Optioned Property over three years ($3.7 million in the first
year and $4 million in each of the second and third years of the Option). In the event that the price of gold
does not meet certain thresholds in any op tion year , the Optionee has the right to reduce minimum
expenditures to $2 million in such option year and the term of the Option will be extended for a further
year, subject to the requirement by the Optionee to spend at least $10 million in the first three years of the
Option (in accordance with the terms of the JVAgr) . Once a 51% undivided interest is earned, the
Optionee can either proceed to form a joint venture (with the Optionee holding 51%, Eskay holding 29%
and St Andrew holding 20% (assuming they contribute their pro rata share of expenditures on the
Optioned Property)) or exercise a second option to earn a further 9% undivided interest in the Optioned
Property for an aggregate 60% undivided interest (with the Optionee holding 60%, Eskay holding 20%
and St Andrew holding 20% (assuming they contribute their pro rata share of expenditures on the
Optioned Property)) by either delivering a Preliminary Economic Ass essment or completing 23,000 m of
diamond drilling on the Option ed Property. Eskay has a carried interest during the Option term but St
Andrew must either contribute its pro rata share of expenditures or be diluted. If St Andrew is diluted to a
10% or less interest in the Optioned Property, it will be converted to a holder of a 2% net smelter returns
royalty in the Option ed Property. Once a joint venture is formed, Eskay will be carried (the “ Eskay
Financing”) for any joint venture expenditures in respect of the Optioned Property it would otherwise be
required to make until the earlier of a production decision by the Technical Committee or an aggregate of
$10 million in expenditures has been made on its behalf (for example, if Eskay held a 20% undivided
interest in the Optioned Property on the formation of the joint venture, it would not be required to fund its
20% undivided interest until an aggregate of a further $50 million had been spent on the Optioned
2
82 Richmond Street East
Toronto, ON M5C 1P1
T: 416 907 4020
W: eskaymining.com
Property). The Eskay Financing, with interest, is re payable by Eskay out of 100% of Eskay’s free cash
flow from production of the Optioned Property.
The Option is subject to a number of conditions including St Andrew waiving its right of first refusal, certain
technical amendments being made to the JVAgr, the grant of certain rights of first refusal to the Optionee,
the execution of a formal Option Agreement, TSXV approval and such other conditions as are usual for a
transaction of this nature.
For further information regarding the SIB Property, see the companies press releases of October 17,
2016, August 8, 2016, May 9, 2016 and January 23, 2013.
About Eskay Mining Corp:
Eskay Mining Corp (TSX -V:ESK) is a TSX Venture Exchange listed company, headquartered in Toronto,
Ontario. Eskay is an exploration company focused on the exploration and development of precious and
base metals in British Columbia in a highly prolific, pol y metallic area known as the Eskay Rift Belt
located in the “Golden Triangle”, 70km northwest of Stewart, BC. The Company currently holds mineral
tenures in this area comprised of 177 claims (130,000 acres).
All material information on the Company may be found on its website at www.eskaymining.com and on
SEDAR at www.sedar.com.
For further information, please contact:
Mac Balkam T: 416 907 4020
President & Chief Executive Officer E: [email protected]
Neither the TSX Venture Exchange nor its R egulation Services Provider (as that term is
defined in the policies of the TSX Venture Ex change) accepts responsibility for the adequacy
or accuracy of this release.