News out Orogen Royalties Inc. has optioned the Baby Doe gold property in Esmeralda county, Nevada, to Au-Reka Gold Corp., a subsidiary of Premier Gold Mines USA. Premier can earn up to a 100% interest in the Baby Doe gold project by making cash payments totaling US$1.0 million and spending US$10 million in exploration expenditures over an eight-year period. Once Premier has obtained a 100% interest, Orogen will retain a 3% net smelter return royalty ("NSR") on the Baby Doe claims and a 1% NSR on the Mustang claims.
"Orogen holds a portfolio of precious and base metal exploration projects generated from it's exploration pipeline that allows for organic royalty creation. It is the backbone of our business and provides our shareholders multiple opportunities for wealth creation," commented Orogen CEO Paddy Nicol. "We are very pleased to have Premier Gold as a partner to advance exploration on our Baby Doe project."
Premier can earn an initial 55% interest (the "Initial Interest") from Orogen over a four-year period by making cash payments of US$200,000 to Orogen and completing US$5.0 million in exploration expenditures. Premier will also assume cash payment obligations of US$200,000 to underlying vendors on the Mustang claims. Once Premier has earned its Initial Interest, Premier has a one-time, 60-day option to earn an additional 45% interest (the "Bump-Up Option") in the Baby Doe project by making a cash payment of US$300,000 to Orogen and spending an additional US$5.0 million on exploration expenses. Upon completing the Bump-up option, Premier will make a cash payment of US$500,000 to Orogen and grant a 3% NSR on the Baby Doe claims and a 1% NSR on the Mustang claims. Half of the NSR on the Baby Doe claims can be purchased for US$3.0 million.
If the project receives a decision to proceed with commercial production, Premier will pay US$1.0 million to Orogen and have 90-days to make an additional cash payment equal to US$7.50 per gold-equivalent ounce in resources and reserves up to a maximum US$10.0 million.