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It’s difficult to overstate the importance of Skeena Resources’ (SKE.V) latest upsized, non-brokered capital raise. Instead of $4 million, the company raised $6.5 million and it could have raised more. The raise was done at the market. Best of all, no warrants were needed. I honestly can not think of a single capital raise in this forsaken sector that did not include a half or full warrant. Why am I excited about this? It’s yet another vote of confidence in the blue-sky potential of Skeena’s Spectrum Project in the Golden Triangle of northwest British Columbia. It’s one thing for management and the Chairman of the Board Mr. Ron Netolitzky to have strong conviction that Skeena may be onto something meaningful, but having a number of existing and new institutions step up is another thing entirely. All institutions from the prior round participated in this round, except for one. Importantly, Skeena picked up three new institutional supporters. The company now has ample funding for two drill seasons on Spectrum (2015 & 2016).
Most institutions do a tremendous amount of due diligence before investing in a junior gold company. Although there’s been a rash of Canadian gold M&A among larger companies, takeouts of juniors typically occur later in the cycle. Skeena, cashed up for the next 18-24 months even after targeted drilling in 2015-16, is setting up to become a prime takeout candidate. This could occur sooner rather than later. By sooner, I mean by mid next year. Having said that, two things come to mind. First, if Skeena drills a few more high grade holes in the right places, interest from suitors could come before the confirmation of a NI 43-101 report. That’s what can happen in a more, “normal” gold market. My second point, I don’t want Skeena to be taken out too soon! If Skeena is sitting on a viable high grade mine, (still an open question) it’s worth a multiple of its market cap, not merely a 50% premium above the current price.
