Nevada focused gold royalty company Ely Gold Royalties Inc. (ELY:TSX.V; ELYGF:OTCQX; I4U:FSE) in a news release announced that "it has entered into a binding letter agreement with a private individual seller whereby Ely Gold, through its wholly-owned subsidiary Nevada Select Royalty Inc., a Nevada corporation, will acquire 100% of all rights and interests to an additional one percent (1%) net smelter returns royalty (NSR) on the Lincoln Hill Property, located in Pershing County, Nevada, operated by Coeur Mining Inc. (CDE:NYSE)." The firm indicated that the transaction is expected to close on or around September 1, 2020, and is subject to certain conditions including TSX-Venture Exchange approval.
Ely Gold stated that it considers the Lincoln Hill property to be one of its most important assets and that after the transaction is completed it will raise Ely's NSR royalty on that property to 2%.
Ely President and CEO Trey Wasser remarked, "We are very pleased to add another 1% NSR on the Lincoln Hill Royalty to our royalty portfolio. Purchasing additional royalties on our Key Assets is a critical part of our near-term growth strategy at Ely Gold. With permitting completed on the leach pad expansion, the higher gold grade Lincoln Hill ore will be in very close proximity to the operations and should extend the life of mine at Rochester. We look forward to delivering more news as Coeur is now undertaking confirmation drilling at Lincoln Hill."
The firm explained that Lincoln Hill sits adjacent to Coeur Mining's Rochester open-pit, heap-leach mine, and thus offers Coeur significant operational synergies. The company indicated that the Lincoln Hill royalty covers 97 unpatented claims along with one patented lode claim. The firm pointed out that the property package also includes 23 other unpatented claims known as the Rosal claims, where Ely Gold currently holds a 1.5% NSR and is included with 22 other properties that comprise Ely Gold's development assets.
The company reported that Coeur Mining stated in a press release that Lincoln Hill's average gold resource grade is greater than four times higher than Rochester's current grade and is expected to become a source of higher-grade, low-cost production capable of bolstering future cash flow and further extending Rochester's mine life.
Under the terms of the agreement Ely Gold will be required to pay the seller a total of $1 million with $500,000 due at closing and the remaining $500,000 payable on January 10, 2021. The company advised that the 2021 payment will accrue simple interest at 5% and be secured by the Lincoln Hill Royalty. The transaction details additionally stipulate that that Ely Gold will issue the seller 1 million common stock purchase warrants with each full warrant giving the seller the option to purchase one share of Ely Gold common stock at CA$1.69 for a period of two years from the closing date.
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