In a news release, Ely Gold Royalties Inc. (ELY:TSX.V; ELYGF:OTCQB) announced that its subsidiary, Nevada Select, signed a purchase option agreement for Blackrock Gold Corp. to acquire its Tonopah West project in Nevada for $3 million with Nevada Select retaining a 3% net smelter returns (NSR) royalty. The transaction is expected to close on or before April 1, 2020.
Tonopah West consists of 97 patented and 17 unpatented lode mining claims covering mineral rights on about 1,100 acres in Esmeralda and Nye counties. With this option agreement, the historical West End, Victor, 76, Extension and a portion of the McNamara Mining Co. holdings in the region will be consolidated under single ownership. Blackrock plans to explore the high-quality targets at Tonopah West.
"Ely Gold's consolidation of four separate patented and unpatented claim groups in the Tonopah District represents the first time in history that this part of the district will be explored as a single project," Nevada Select President Jerry Baughman said in the release. "This is exactly the kind of high-quality property we continue to generate and option to exceptional exploration partners. Blackrock intends to explore the high-quality target ready zones that have been identified at Tonopah West."
Nevada Select will complete the purchase of Cliff ZZ's 75 patented claims, which will then be included in the agreement.
For Tonopah West, Blackrock will pay Nevada Select $325,000 on closing and subsequently make four more payments on each year anniversary of the closing, $325,000, $650,000, $700,000 and $1 million, respectively.
After the final payment, Nevada Select will retain a 3% NSR royalty. Once the option is exercised, Blackrock will pay Nevada Select an advance minimum royalty payment of $50,000 each year.
Trey Wasser, president and CEO of Ely Gold, stated, "Ely Gold continues to successfully execute its business plan with this key property consolidation and sale of an important and historic Nevada mining district. The Tonopah West Project will now constitute a cornerstone asset in our Royalty Sale Portfolio."
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