Ely Gold to acquire 0.3% royalty on Trenton Canyon News
2020-12-23 07:27 ET - News Release
Mr. Trey Wasser reports
ELY GOLD ROYALTIES (TSXV: ELY, OTCQX: ELYGF) ANNOUNCES CLOSING OF TRENTON CANYON ROYALTY INTEREST
Ely Gold Royalties Inc., through its wholly owned subsidiary, Nevada Select Royalty Inc., has signed a definitive agreement to purchase from a private individual, a 0.3-per-cent gross royalty, representing the seller's 50-per-cent interest in a total 0.6-per-cent gross royalty. The terms provided in the definitive agreements have been amended from the terms the Company announced in a press release dated October 13, 2020 (the "Amended Transaction"). The Amended Transaction is subject to the final approval of the Toronto Venture Exchange ("TSXV") (the "Closing").
The Amended Transaction
Ely Gold will pay the Seller total consideration of US$325,000 (originally $US$300,000) to be comprised of US$175,000 in cash at signing and US$150,000 in cash to be paid on January 15, 2021 (the "Deferred Payment"). Ely Gold will also issue 1,000,000 common stock warrants (the "Ely Warrants"). The Ely Warrants have a two-year term and will have an exercise price of CDN$1.36. Securities issued under the Ely Warrants will be subject to a four-month hold period. The deferred payment will accrue simple interest at 5%.
While the original transaction called for only the purchase of the Seller's Interest in the Trenton Canyon Royalty, under the terms of the Amended Transaction, Ely Gold has been assigned the Stock Purchase Agreement, dated October 13, 2005 (the "2005 Agreement"), between the Seller and Nevada Mine Properties II, a Nevada corporation ("NMP II"). The 2005 Agreement provides for the Seller to receive 50% of all royalties generated on certain properties, including the Trenton Canyon Royalty. NMP II received the deeded Trenton Canyon Royalty in 2019 and has failed to deliver a deeded assignment of Seller's Interest. NMP II is contending that the Seller's Interest only provides for 50% of future royalty payments from the Trenton Canyon Royalty subject to expenses and other deductions by NMP II.
Rather than terminate the original agreement, the Seller has assigned, and Ely Gold has assumed 100% of the Seller's rights and title under the 2005 Agreement. Ely Gold can now aggressively pursue its rights to a fully deeded assignment to 50% of the Trenton Canyon Royalty from NMP II.
The 2005 Agreement also provides for a 0.5% net smelter returns royalty to the Seller on several other properties in Nevada. Ely Gold has agreed to pay an additional US$25,000 as added compensation to the Seller for these additional royalties.
Trey Wasser, President & CEO of Ely Gold commented, "We are pleased to announce the terms of the Amended Transaction. This assignment of the 2005 Agreement will allow us the time and avenues to receive a fully deeded interest in the Trenton Canyon Royalty rather than a payment interest subject to expenses and deductions by NMP II. The 2005 Agreement is a very clear and straightforward document. We are confident in our position as an assignee, and we believe NMP II will ultimately understand our position and provide the deeded 0.3% gross royalty."