Solitario reduces royalty rate at joint venture Mt Hamilton, Shell property adds potential
Solitario Exploration & Royalty Corp. (AMEX:XPL) (TSE:SLR) and Ely Gold & Minerals said Wednesday that they have bought down an existing 2.0% net smelter return (NSR) royalty on gold and silver production from their Mt. Hamilton joint venture project in eastern Nevada.
The venture purchased the 2.0% NSR royalty for $2.52 million, consisting of $1.52 million in cash and $1.0 million worth of shares in Solitario.
Solitario said if funded the entire purchase price, and loaned Ely Gold its 20% proportionate share. The loan will be repaid from Ely's future production proceeds.
As a result of the purchase, the royalty rate on gold and silver production from Mt. Hamilton will be reduced to 1.0%, assuming the joint venture exercises an option agreeement to reduce royalties with other holders.
Closing of the deal is subject to regulatory approvals, Solitario said.
Separately, Solitario also announced today that it has completed an initial evaluation of the Shell gold-molybdenum property optioned in the first quarter of this year. The property comprises eight mining claims located on the south side of the Mt. Hamilton project area.
The company said that the royalty buy down, along with the new potential of Shell, is expected to significantly increase the economics of the project.
At Shell, drilling was conducted on the property between 2006 and 2007, prior to Solitario's involvement. Of the 40 holes drilled, 23 contained significant intercepts of gold and/or molybdenum, according to Solitario.
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