NR Ely Gold Royalties (TSXV: ELY) (OTCQB: ELYGF) Purchases Net Profit Royalty from Liberty Gold
Regent Hill Production Ramping up at the Denton-Rawhide Mine, Nevada
Vancouver, British Columbia--(Newsfile Corp. - December 18, 2019) - Ely Gold Royalties Inc. (TSXV: ELY) (OTCQB: ELYGF) ("Ely Gold") or the ("Company") and its wholly owned subsidiary, Nevada Select Royalty, Inc ("Nevada Select") are pleased to announce that they have signed a binding term sheet (the "Agreement") for the purchase and assignment of a net profit interest ("NPI") from Pilot Gold USA Inc., a Delaware corporation and wholly-owned subsidiary of Liberty Gold Corp. (TSX: LGD) (OTCQB: LGDTF), a British Columbia corporation (collectively "Liberty"). (All amounts in US dollars).
The NPI was created through a sale agreement dated January 8, 2013 between Liberty and Rawhide Mining LLC ("Rawhide LLC") for the Regent Hill Property ("Regent Hill") located in Mineral County, Nevada (the Pilot-Rawhide Agreement"). Rawhide was granted a mining permit for Regent Hill in early 2019 and began mining operations at the property in the second fiscal quarter of 2019. Regent Hill's mineralized material is currently being processed at The Rawhide Mine, located 2.5 kilometres southeast of Regent Hill. Under the Agreement, Ely Gold will pay Liberty $800,000 cash and issue 2,000,000 warrants priced at C$0.43 for Ely Gold common shares, at closing. The Agreement is subject to TSX-Venture Exchange approval.
The Pilot-Rawhide Agreement
Rawhide paid Pilot $3 million in cash for Regent Hill and retained a 15% NPI. The NPI was calculated allowing Rawhide certain cost deductions for development, operations and exploration, including the purchase price, but not including depreciation and depletion. Mining at Regent Hill, by Rawhide, is recovering development costs and the purchase price. NPI payments are expected to begin in late 2020. The Pilot-Rawhide Agreement also included a "Gold Bonus Payment" after 115,000 ounces of gold have been placed onto the leach pad. The Gold Bonus Payment is paid on every gold equivalent ounce placed on the leach pad as follows:
| Gold Price (per oz.) | Bonus (per oz.) |
| Over $1800 gold | $29.050 |
| $1700 to $1800 gold | $27.275 |
| $1600 to $1700 gold | $17.500 |
| $1500 to $1600 gold | $11.550 |
| $1400 to $1500 gold | $5.775 |
| Less than $1400 gold | $0 |
Jerry Baughman, President of Nevada Select commented, "We have a first-hand working knowledge of the deposit and the excellent exploration potential of the Regent Hill property. Furthermore, we are very familiar with the operators, Rawhide LLC and we were impressed with the overall quality of their operations on our recent site visit."
Trey Wasser, President and CEO commented, "We want to thank Liberty for the opportunity to purchase this near-term producing royalty. We expect this asset to generate a significant return for our shareholders while offering excellent leverage to the gold price due to the Gold Bonus Payment. The Regent Hill Property also offers some excellent exploration upside."
The Regent Hill Property and Rawhide
Regent Hill is made up of 196 unpatented mining claims covering 3,006 acres. The Regent Hill area is now part of the Rawhide Mine which has reported historical production of 80,000 ounces of gold and 600,000 ounces of silver between 1906 and 1966. Between 1990 and 2010, Kennecott Rawhide Mining Corp. produced an additional 1.56 million oz gold and 11.5 million oz silver from the Denton-Rawhide. The mine was purchased by Rawhide LLC in 2010 and has continued to produce gold and silver.
The Regent Hill area was previously explored for near-surface, disseminated gold and silver resources by Newmont Mining Corporation and Kennecott Mining Company. These programs resulted in over 580 shallow drill holes, the vast majority of which were vertical reverse circulation holes drilled on a grid within a limited area. (Summary Technical Report Regent Gold Project Mineral County, Nevada January 4, 2011, filed on SEDAR, April 6, 2011).
In 2011, Pilot Gold explored Regent Hill by means of a thorough campaign of surface geological mapping, prospecting, grid soil sampling, ground magnetics and gravity surveys, reconnaissance CSAMT lines, and a drilling program consisting of approximately 9,841.5 metres of drilling in 20 diamond core and 22 reverse circulation holes. Drill hole data was compiled into a database and a three-dimensional geologic model was constructed for use in a resource estimation in a 43-101 report. However, due to the sale to Rawhide LLC, the report was never filed on SEDAR. (Pilot Gold press releases dated April 21 and September 16, 2011). Rawhide LLC's Amended Plan of Operations and Reclamation Plan (dated September 28, 2016, revised June 2017, October 2017 and February 2018 approved by the Bureau of Land Management in October 2018) called for mining 5,300,000 tons of mineralized material and 5,500,000 tons of waste from two Regent Hill pits.