06:04:14 EST Mon 25 Jan 2021
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Ely Gold Royalties Inc
Symbol ELY
Shares Issued 160,651,798
Close 2021-01-08 C$ 1.10
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Ely Gold closes buy of Railroad-Pinion royalty

2021-01-11 07:17 ET - News Release

Mr. Trey Wasser reports


On Dec. 30, 2020, Ely Gold Royalties Inc. closed the purchase of private mineral interests on over 8,000 acres of private fee ground in Elko county, Nevada.

All the fee ground and the mineral interests are currently leased to Gold Standard Ventures Corp. (GSV) and cover certain portions of GSV's Railroad-Pinion project currently being developed as a heap-leach mining operation. The lease provides for a combined 0.436-per-cent net smelter returns royalty (NSR) and annual lease payments of $79,800 (U.S.) (the OR transaction). The mineral interests and leases cover large portions of the Pinion, Dark Star and Jasperoid Wash deposits in the South Railroad complex as well as portions of the POD and Bald Mountain zones in the North Railroad. The company first announced the OR transaction in a press release dated Nov. 2, 2020.

The OR transaction

Ely Gold paid total consideration of $1.3-million (U.S.) cash and issued 300,000 common stock warrants for the OR transaction. The Ely warrants have a five-year term and will have an exercise price of $1.14 (Canadian). Securities issued under the Ely warrants will be subject to a four-month hold period. In connection with its assistance with both transactions, Ely Gold has paid a cash finder's fee to R&R Land, Mineral & Oil LLC totalling $65,000 (U.S.).

The ORTT transaction

The Nov. 2, 2020, press release also included the acquisition of additional mineral interests and leases (the ORTT transaction) for total payment of $2,509,543 (U.S.) cash. The ORTT transaction included leases that provided for a 0.71-per-cent NSR as well as annual advance royalty payments. After further due diligence and last-minute negotiations by certain owners, Ely Gold has opted to terminate the ORTT transaction. Ely Gold has paid R&R a break fee of $134,000 (U.S.) in connection with this termination.

Railroad-Pinion project

The Railroad-Pinion project is an advanced-stage gold project with a favourable structural, geological and stratigraphic setting situated at the southeast end of the Carlin trend of north-central Nevada, adjacent to and south of Nevada Gold Mines' Rain mining district.

On Feb. 18, 2019, Gold Standard announced an updated prefeasibility study for the South Railroad portion of the Railroad-Pinion project consisting of the Dark Star deposit and the Pinion deposit. Key highlights of the updated base case South Railroad PFS include (all currencies are shown in U.S. dollars):

  • Pretax net present value (NPV) of $331.4-million at a 5-per-cent discount rate and an after-tax NPV of $265.0-million at a $1,400 gold price and a $17.11 silver price, with a mineral reserve pit designs based on a gold price $1,250 per ounce and a silver price of $15.30 per ounce.
  • Proven and probable mineral reserves of 1,246,000 ounces of gold and 2,705,000 ounces of silver.
  • Average annual gold placement of 156,000 ounces of gold per year over an initial eight-year mine life.
  • Average life of mine cash cost of $582 per ounce after byproduct credit and all-in sustaining costs (AISC) of $707 per ounce.
  • Initial capital expenditures of $132.9-million.

Details of the prefeasibility study can be found in Form 43-101F1 technical report updated preliminary feasibility study Elko county, Nevada, available at GSV's website.

On July 16, 2020, GSV announced the entering into a binding letter of intent with Orion Mine Finance relating to a series of transactions, totalling approximately $22.5-million (U.S.), including a term sheet to provide up to $200-million (U.S.) of financing support to GSV, to help finance the construction of the South Railroad project.

On Dec. 2, 2020, and Jan. 5, 2021, GSV announced the appointment of new senior management with strong experience in capital markets and mine development and construction.

On Nov. 12, 2020, GSV announced encouraging drill results from 24 of 75 holes in the 2020 Pinion deposit development program. Oxide results include: 42.7 metres of 0.92 gram per tonne gold, including 7.6 m of 2.69 g/t Au in hole PR20-14; 38.1 m of 0.97 g/t Au in PR20-15; 64.0 m of 0.81 g/t Au, including 22.9 m of 1.20 g/t Au in hole PR20-19; and 29.0 m of 0.77 g/t Au, including 12.2 m of 1.28 g/t Au in PR20-23.

Objectives of the 2020 Pinion development program include: 1) decreasing drill spacing on the Pinion phase 4 ($1,400 pit) inferred oxide resource for potential conversion to measured and indicated; 2) provide material for metallurgical testing; and 3) tighten the drill spacings near historic Cameco holes SB-136, a reverse circulation hole that intersected 102.1 m of 1.38 g/t Au, and SB-162-99, a core hole that twinned and verified the SB-136 results with an intercept of 112.0 m of 1.24 g/t Au.

On Nov. 18, 2020, GSV released results from six holes targeting and intersecting up-dip, near-surface oxide mineralization to the east of GSV's drilling at Main Dark Star deposit. The results from step-out holes DR20-01 through DR20-06 intersected thick intervals of oxide mineralization to the east of the existing GSV drilling at Main Dark Star including hole DR20-02 that intersected 61.0 m of 0.66 g/t Au including 24.4 m of 1.03 g/t Au. This mineralization begins at the current topographic surface and remains open to the east along a strike length of approximately 330 m. These results indicate the possibility to expand the Main Dark Star deposit to the east with low strip upfront ounces during early production.

All drill holes in the 2020 Pinion and Dark Star Main development programs are located on the mineral interests being purchased by Ely Gold.

Qualified person

Stephen Kenwood, PGeo, is 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.

About Ely Gold Royalties Inc.

Ely Gold Royalties is a Nevada-focused gold royalty company. Its current portfolio includes royalties at Jerritt Canyon, Goldstrike and Marigold, three of Nevada's largest gold mines, as well as the Fenelon mine in Quebec, operated by Wallbridge Mining. The company continues to actively seek opportunities to purchase producing or near-term producing royalties. Ely Gold also generates development royalties through property sales on projects that are located at or near producing mines. Management believes that due to the company's ability to locate and purchase third party royalties, its strategy of organically creating royalties and its gold focus, Ely Gold offers shareholders a favourable leverage to gold prices and low-cost access to long-term gold royalties in safe mining jurisdictions.

We seek Safe Harbor.

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