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ORIGINAL: Ely Gold Royalties Increases Royalty & Lease Interest in the Hog Ranch Property, Nevada
Royalty Increased from 1.5% to 2.25%
2021-02-10 06:31 ET - News Release
Vancouver, British Columbia--(Newsfile Corp. - February 10, 2021) - Ely Gold Royalties Inc. (TSXV: ELY) (OTCQX: ELYGF) (FSE: I4U) ("Ely Gold" or the "Company") is pleased to announce that through its wholly-owned subsidiary, Nevada Select Royalty Inc (collectively "Ely Gold"), it has entered into a binding term sheet (the "Term Sheet") to acquire an additional 25% interest in its Hog Ranch Property ("Hog Ranch") located in Washoe County, Nevada from Platoro West Incorporated, a Nevada Corporation ("Platoro West"). The additional interest in Hog Ranch will increase Ely's current net smelter returns royalty ("NSR") from 1.5% to 2.25% and its interest in the leased mining claims (the "Lease") to 75.1%.
Platoro West is wholly owned by William Sheriff, a director of the Company. Ely Gold purchased its current 50.1% Hog Ranch interest from Platoro West in 2017 (See press release dated June 23, 2017). The Term Sheet will be filed as a non-arms-length transaction and is subject to final approval of the TSX Venture Exchange (the "Closing").
Hog Ranch consists of 247 unpatented mining claims currently leased to Rex Minerals Limited ("Rex"). The Lease provides for a 3% NSR, a 42 square mile area of interest and a US$50,000 annual lease payment. Since acquiring the Lease, Rex released an updated JORC compliant inferred resource of 97.6 Mt at 0.45 g/t gold containing a total of 1.4MM ounces of gold (See Rex press release dated May 12, 2020) and announced an expansion of the claim block based on encouraging surface sampling and mapping (See Rex press release dated July 1, 2020). Within the original property boundaries, Rex has announced a new discovery of deeper and higher-grade mineralization with hole HR20-023 reporting 12.2m @ 6.45g/t gold, from a depth of 167.6m down hole. All the new results confirm and extend the scale of the oxide gold deposit and further define the internal higher-grade trends which exist between the historic Geib and Krista open pits (See Rex press release dated December 21, 2020).
The Term Sheet provides for cash consideration, paid by Ely Gold at Closing, of US$275,000 and the issuance of 1,000,000 warrants exercisable at CAN$0.90 (the "Warrants"). The Warrants allow the holder to purchase one share of Ely Gold common stock and will expire four years from the Effective Date. The Warrants or the shares issued because of the Warrant exercise will require an initial four-month hold.
Trey Wasser, President & CEO of Ely Gold, commented, "The additional Hog Ranch Property and royalty interest will be accretive to our current net asset value. This purchase represents an important part of our royalty strategy as we continue to add to existing Key Assets in the portfolio."
Stephen Kenwood, P. Geo, is a director of the Company and a Qualified Person as defined by NI 43-101. Mr. Kenwood has reviewed and approved the technical information in this press release.