03:15 PM EDT, 06/04/2024 (MT Newswires) -- Eskay Mining Corp. ( ESKYF ) and P2 Gold Inc. ( PGLDF ) entered Tuesday into non-binding letter of intent dated June 4, 2024 pursuant to which Eskay has agreed to acquire P2 in a business combination transaction.

At last look, PGLD was down $0.015 or 12.5% at $0.1050. ESK was up $0.005 at $0.345.

Under terms of the letter agreement, each outstanding common share in the capital of P2 on a diluted basis, as described, will be exchanged for 0.2778 of a common share in the capital of Eskay, subject to customary adjustment. Upon completion of the proposed transaction, existing Eskay shareholders are expected to own approximately 80% of the combined company and P2 shareholders are expected to own approximately 20%.

The letter agreement provides for the parties to enter into a definitive arrangement agreement setting out the final terms and conditions of the proposed transaction, at which time additional information will be provided subsequently.

Mac Balkam, President and CEO of Eskay said in a statement: "With this transaction, Eskay has taken a significant step toward finding the next major resource in the Golden Triangle. The P2 Team, led by Joe Ovsenek, is second to none in producing results in the area. The addition of the Gabbs property in Nevada puts Eskay on a totally different level as resource explorer."

For his part, Ovsenek, President and CEO of P2, in the statement added: "The Eskay-Corey Property is the most prospective ground in the Golden Triangle without a major discovery to date.

"We look forward to getting on the ground this summer and bringing our exploration and development experience in the Golden Triangle over the last 20 years to bear on Eskay-Corey. In Nevada, we plan to move forward with additional metallurgy as the first step in advancing Gabbs to production."

Among transaction highlights, the combined company will be managed by the team that discovered and developed the Brucejack Mine in the Golden Triangle. Ovsenek will become President and CEO and Balkam will become Chair.

Of other highlights: The Eskay-Corey Property in the Golden Triangle of British Columbia will be the initial exploration focus. Also, concurrently with the execution of the letter agreement, Eskay and P2 signed an exploration services agreement under which P2 has agreed to plan and execute an exploration program on the Eskay-Corey Property for the 2024 exploration season; And P2's PEA-stage, gold-copper Gabbs Project in Nevada complements Eskay's Eskay-Corey Property, with year-round access for exploration and development.

Tuesday's statement noted the combined company will "benefit from increased scale with improved access to capital markets and a solid portfolio of exploration and development projects to anchor the growth of the company."