Kaiser Bottom Fish OnlineFree trialNew StuffHow It WorksContact UsTerms of UseHome
Specializing in Canadian Stocks
SearchAdvanced Search
Welcome Guest User   (more...)
Home / Works Archive / Trackers
 Wed Jun 5, 2024
KW Excerpt: Kaiser Watch June 5, 2024: Eskay Mining Corp (ESK-V)
    Publisher: Kaiser Research Online
    Author: Copyright 2023 John A. Kaiser

Eskay Mining Corp (ESK-V: $0.385)

Kaiser Watch June 5, 2024: What is a world class mirage worth?
See Entire KW Episode Blog

Direct YouTube Link for Entire Episode
(0:06:13): What do you make of the proposed merger between P2 Gold and Eskay Mining?

On June 4, 2024 P2 Gold Inc and Eskay Mining Corp, both former Favorites, were halted for an announcement that the two companies will merge on the basis of 0.2778 ESK for 1 PGLD share, roughly a 3.6:1 rollback for P2 Gold shareholders. Waterton has agreed to convert loans into stock and as the biggest shareholder must obviously approve of the plan. It certainly surprised me because in KW Episode May 24, 2024 I pointed out that at current spot prices for gold and copper the updated PEA for P2 Gold's Gabbs project clears development hurdles. And while I have long been a fan of the Eskay project's potential to deliver another VMS style world class Eskay Creek discovery, over $100 million of expenditures has delivered just a lot of smoke and occasional high grade pockets that do not hang together. Furthermore, Eskay Mining has a modest treasury of $2.5 million so this is not a cash bailout for P2 Gold whose Gabbs feasibility study will need a lot more than that.

The merger proposal is a capitulation event. After Ken McNaughton and Joe Osvenek published the updated PEA in May they contacted their entire financial network to seek additional funding. Most did not call them back and those they did contact were not interested. The Canadian financial sector is not interested in the resource sector. Meanwhile Crescat which owns 32.3 million Eskay Mining shares was stuck. CEO Mac Balkam and Gord McMehen own another 29 million shares. The merger solves Eskay Mining's problem of trying to fund a story that looks exhausted despite exploration VP John Dedecker's best efforts by bringing into the company an advanced copper-gold project that itself has expansion potential and currently has optionality value for stronger copper and gold prices. It also brings a new set of eyes to rethink the Eskay story. Ken has extensive experience with the nearby Brucejack Mine bought out by Newcrest and now owned by Newmont. Based on all the work done he thinks the VMS model must be set aside. The merger solves P2 Gold's funding problem by shifting that responsibility into the hands of Eskay Mining management. I think this will turn out to be a win-win merger for all parties.


You can return to the Top of this page

Copyright © 2024 Kaiser Research Online, All Rights Reserved