Ely Gold Royalties Inc. (ELY:TSX.V; ELYGF:OTCQX; I4U:FSE), in a news release, announced that it has entered into an agreement to purchase a 0.3% net smelter returns (NSR) royalty, the Trenton Canyon Royalty, from a private unnamed individual. The firm advised that the NSR royalty purchase will be completed through its wholly owned subsidiary, Nevada Select Royalty Inc.
Ely Gold Royalties explained that the Trenton Canyon Royalty includes 52 unpatented mining claims located along the Battle Mountain-Eureka Trend in Nevada. The company indicated that the area is currently being drilled by SSR Mining Inc. (SSRM:TSX; SSRM:NASDAQ; SSR:ASX).
The company stated that the Trenton Canyon property covers about 7,350 hectares and is situated immediately to the south of SSR Mining's Marigold Mine where Ely Gold owns a 0.75% NSR royalty. The firm reported that the Trenton Canyon property was previously operated by Newmont Corp. (NEM:NYSE; NGT:TSX), which then sold it to SSR Mining in June 2019.
The company pointed out that recent drilling conducted by SSR Mining on the royalty claims returned 7.27 grams per tonne gold over 30.5 meters, which included 12.2 meters of 17.23 g/t Au. In addition, two other intercepts in drill hole MRA7092 reportedly returned 19.8 meters of 2.03 g/t Au and 6.1 meters of 3.65 g/t Au.
Under the terms of the transaction, Ely Gold Royalties will pay total consideration of US$300,000 in cash over two equal US$150,000 payments. The first payment is payable now and the second is due on January 15, 2021. The second "deferred" payment will accrue simple interest at a rate of 5% as outlined in the agreement.
In addition to the cash consideration discussed above, Ely Gold will also issue 1,000,000 common stock warrants. The warrants are valid for a period of two years and come with an exercise price of CA$1.36. The firm noted that any securities issued under these warrants will be subject to a mandated four-month holding period.
The firm said that it expects the transaction to close on December 1, 2020, but added that it still must be approved by the Toronto Venture Exchange.
The company's President and CEO Trey Wasser remarked, "Once again our relationships in Nevada have provided us with an excellent royalty opportunity. SSR is generating exploration excitement at Trenton Canyon and this royalty purchase places us right in the middle of that action. It also fits our strategy of adding to our portfolio of existing royalty positions in Nevada."
Jerry Baughman, president of Nevada Select Royalty, added, "The Trenton Canyon Royalty is located on the Battle Mountain-Eureka trend and with its close proximity to infrastructure and a strong operating partner in SSR Mining, provides an excellent royalty value to Ely Gold. This asset is yet another example of our strategy of acquiring or generating royalties that are at or near producing mines."
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