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.
"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."
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.