Tuesday, 12 June 2012

Solitario Exploration says Sandstorm Gold purchases 2.4% NSR on Mt. Hamilton for $10 mln

Exploration-stage company Solitario Exploration and Royalty (TSE:SLR) announced late Monday that Sandstorm Gold (CVE:SSL) has purchased a 2.4 percent net smelter returns royalty on the Mt. Hamilton gold project for $10.0 million.
The Mt. Hamilton gold project is located in Nevada, United States, and is held by Mt. Hamilton LLC, which is 80 per cent owned by Solitario, and 20 per cent owned by Ely Gold & Minerals (CVE:ELY).
The Mt. Hamilton company received an upfront payment of $6.0 million upon signing the agreement with Sandstorm, and will receive a future cash payment of $4.0 million on January 15, 2013.
The joint venture will have the option for a 30 month period to repurchase up to 100 percent of the net smelter return for $12 million, provided that Solitario enters into a gold stream agreement with Sandstorm that has an upfront deposit of no less than $30 million.
The parties have also provided Sandstorm with a right of first refusal on any future royalty or gold stream financing for the Mt. Hamilton project.
"Annually, Sandstorm evaluates a significant number of projects for funding participation, we are very pleased that they have elected to participate in the funding of Mt. Hamilton's development,” said Solitario’s president and CEO, Chris Herald.
"Sandstorm's purchase of this royalty confirms our belief that the Mt. Hamilton gold project displays robust economics and outstanding resource growth potential.
"We are currently focused on permitting and engineering activities, with drilling on the horizon."
Solitario released a feasibility study of the Mt. Hamilton gold project's Centennial gold-silver deposit in February, showing favourable economics for an open pit operation with heap leach extraction.
Once in operation, the mine is anticipated to produce 48,000 ounces of gold and 330,000 ounces of silver for an average gold-equivalent production (at a 55:1 silver to gold ratio) of 54,000 ounces per year over an eight-year period, with potential to add additional resources and extend the mine life.
Ely's president and CEO, Trey Wasser, added: "This funding enables the joint venture to drill test the historic Seligman deposit where we hope to add significant economic ounces to the current mine plan."
Solitario holds mineral properties in Peru, Brazil and Mexico, with advanced projects in Platinum, palladium, zinc and lead.
The company purchases and holds a portfolio of exploration properties for future sale, joint venture, or creates a royalty prior to the establishment of proven and probable reserves.
In early January, Solitario reported what it called "outstanding" zinc and lead drill results from its 2011 drill program on the Bongara joint venture in Peru.
Significant drill results included underground drill hole V-240, recovering zinc plus lead grading 13.45 percent over 26.85 metres, and 11.4 percent zinc plus lead over 32.1 metres in hole V-244.
The company has a partnership with Votorantim Metais on its Bongara zinc project in Peru, and Anglo Platinum on its Pedra Branca Platinum-palladium project in Brazil.
Ely Gold is focused on the acquisition and development of gold resources in North America.  Along with its interest in the Mt. Hamilton project, the company has entered into a series of transactions to acquire a portfolio of assets in the Abitibi Gold Camp in Quebec.
Shares of Solitario traded at $1.12 Tuesday afternoon.

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