A new agreement outlines the obligation to
exercise the option.
Ely Gold
Royalties Inc. (ELY:TSX.V; ELYGF:OTCQB) agreed to the sale of its option
to acquire a 100% interest in the Gold Canyon claims in Nevada to McEwen
Mining, it announced in a news release.
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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