Riley Gold (RLYG.V) has confirmed it has entered into an exploration and venture agreement with Kinross Gold (K.TO, KGC) whereby the latter can earn an interest of up to 75% in Riley’s Pipeline West/Clipper Gold project in Nevada.
Kinross Gold can earn an initial 60% stake in the PWC property by spending at least US$10M on exploration within the first five years after signing the agreement with a firm guarantee to spend US$1.5M within 18 months which must include at least 2,200 meters of drilling at three separate targets. And before any work gets done, Kinross must reimburse Riley Gold for the 2023/2024 landholding costs, which means Riley Gold can expect just over US$100,000 in cash.
Once Kinross Gold has completed the requirements to obtain its initial 60% stake, it can elect to spend an additional US$10M to acquire an additional 15% stake in the property which would bring its ownership to 75%. Kinross could elect to just remain at 60% after which Kinross and Riley will form a 60/40 joint venture on the property whereby Riley Gold will have to start to contribute on a pro rata basis. Should Riley Gold’s stake drop below 10%, it will get converted in a 2% Net Smelter Royalty.
Kinross Gold is also taking a 9.9% stake in Riley Gold by acquiring units priced at C$0.15 which will consist of one share and one full warrant valid for five years. Meanwhile, the warrants that are included in the ‘normal’ placement will expire after 24 months. Both warrant classes have the same exercise price; C$0.25.
Disclosure: The author has no position in Riley Gold or Kinross Gold. Please read the disclaimer.
