For the acquisition, McEwen paid 300,000 of its common shares to Fremont Gold; Ely Gold did not receive any payment for consenting to the transaction.
"We are pleased to see our exciting Gold Canyon property in the hands of McEwen Mining," Ely Gold President and CEO Trey Wasser said in the release. "This adds to our portfolio of properties and royalties that are 'in and around' producing mines that are owned by the high-quality operators of those mines."
Ely Gold noted that the Gold Canyon claims are "located within McEwen's Gold Bar Mining Complex on the Battle Mountain-Eureka Trend"; McEwen declared commercial production at Gold Bar in May 2019.
To exercise the option to acquire 100% of the Gold Canyon claims, McEwen would have to pay Ely Gold a total of $637,500 in four tranches, $112,500 per year by Dec. 29 for the first three years and a final option payment of $300,000 by Dec. 29, 2022. On each anniversary of that final option payment, it also would pay an advance royalty payment of $25,000. Ely Gold would retain a 2% net smelter returns (NSR) royalty on the claims. McEwen could buy 1% of that NSR for $3 million.
McEwen may terminate the option agreement at any time without having to pay any further amount.
The exploration work done to date at Gold Canyon included sampling and metallurgical testing by Ely Gold in 2016 and five reverse circulation holes drilled by Fremont as well as geochemical sampling in 2018.
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