Ely Gold Royalties Inc. (ELY:TSX.V; ELYGF:OTCQB) announced in a news release it agreed to acquire all of the rights and interests of a per ton royalty on production from the Jerritt Canyon processing facilities in Nevada. Closing of the transaction is expected on or around June 15, 2019.
The Jerritt Canyon facilities include underground operations run by Jerritt Canyon Gold. The gold processing plant there is one of only three in Nevada that employ roasting in their processing of refractory ores, which are common in that state.
To acquire the per ton royalty, Ely Gold will pay a total of $650,000 in cash and issue 500,000 warrants. The payment schedule is that upon closing, the royalty company will pay $300,000 cash and issue all of the 500,000 warrants. It will pay another $150,000 on the first anniversary of the closing, $150,000 on the second anniversary and $50,000 on the third.
The per ton royalty payment that Ely will receive will be based on the average realized gold price (ARGP), determined by dividing total gold revenue during the previous month by gold ounces sold during the previous month. Accordingly, royalties would range from $0.15–0.40 per ton for an ARGP range of less than $1,300 to greater than $2,000 per gold ounce.
"The pricing structure of this per ton royalty offers excellent leverage to gold prices, similar to a traditional net smelter royalty," Ely's President and CEO Trey Wasser said in the release.
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