Liberty Gold Corp. (LGD:TSX; LGDTF:OTCQB) and Ely Gold Royalties Inc. (ELY:TSX.V; ELYGF:OTCQB) signed a binding term sheet, agreeing to a respective sale and purchase of Liberty's net profit interest (NPI) in the Regent Hill property in Nevada.
Ely Gold announced in a news release that for the Regent Hill rights, its subsidiary, Nevada Select Royalty, will pay Liberty Gold's subsidiary, Pilot Gold, US$800,000 and, at closing, issue 2 million warrants priced at CA$0.43 for common shares of Ely Gold.
The NPI was created through a 2013 sale agreement between Liberty Gold and Rawhide Mining. Rawhide began mining Regent Hill in 2019.
Regent Hill is composed of 196 unpatented mining claims covering 3,006 acres and is part of the past-producing Rawhide mine.
"We expect this asset to generate a significant return for our shareholders while offering excellent leverage to the gold price due to the Gold Bonus Payment," Ely Gold President and CEO Trey Wasser said in the release. With the Gold Bonus, once 115,000 gold ounces have been placed on the leach pad, additional predetermined amounts will be paid for specific quantities of additional gold equivalent ounces put on the leach pad. "The Regent Hill property also offers some excellent exploration upside," Wasser added.
According to a Liberty Gold news release, the company also agreed to sell the Griffon project in Nevada to Fremont Gold via a purchase option agreement. Fremont Gold already paid Liberty US$25,000 when the option agreement was executed. It will pay another US$25,000 plus 2.5 million Fremont common shares when the TSX Venture Exchange approves said agreement.
On the first anniversary of the agreement's execution date, Fremont will pay US$50,000 and the amount of Fremont common shares needed to take Liberty's total ownership of Fremont to 9.9%. Also, Fremont will pay US$50,000, US$75,000 and US$100,000 on the second, third and fourth anniversaries, respectively.
Finally, Fremont will afford Liberty Gold a 1% net smelter return royalty on Griffin, which Fremont may buy back for US$1 million.
"With the sale of Liberty Gold's 40% interest in the Halilağa copper gold Project in Turkey, and the monetization of the Regent project NPI and the Griffon project, the company can focus its exploration efforts on its core projects, the Black Pine oxide gold discovery in Idaho and the Goldstrike oxide gold deposit in Utah," Liberty Gold stated.
These sales of non-core assets are in accordance with Liberty Gold's efforts to divest of non-core project obligations without diluting shareholders' equity and use the proceeds for exploration, the company stated.
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