Ely Gold Royalties (ELY.V) has entered into a binding agreement with a third party to acquire a 1% Net Smelter Royalty on the Lincoln Hill property for $750,000 in cash (we are assuming this is in US Dollars considering the warrant price has been fixed at ‘CAN’$0.17) of which $400,000 is payable at closing while the second tranche of $350,000 will be payable on January 10th, 2020 but could be accrued at an interest rate of 5% per year.
The Lincoln Hill project used to be part of the portfolio of Rye Patch Gold which subsequently merged with Alio Gold before selling the project to Coeur Mining (CDE, CDM.TO). Considering the average grade at Lincoln Hill is higher than the grade of its adjacent Rochester mine, we would expect Coeur to be very interested in bringing Lincoln Hill into production as fast as possible in which case Ely’s net smelter royalty could start to bring in cash.
Lincoln Hill contains approximately 600,000 ounces of gold as well as 18.5 million ounces of silver, and Coeur acquired the project (together with the other Rye Patch projects Wilco and Gold Ridge) for US$19M in stock. Coeur’s annual report didn’t contain any additional information on its plans for Lincoln Hill but perhaps we will see an update in its Q1 report.
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The author has a long position in Ely Gold Royalties, but no position in Coeur Mining. Please read the disclaimer
