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Terraco Gold Wraps Up Third Royalty Deal On Spring Valley, Boosting Exposure To Barrick-Led JV

Terraco Gold Corp. (CVE:TEN) says it has closed its third royalty transaction on the Spring Valley project in Nevada that it agreed upon in April, which included a US$1.0 million cash infusion, increasing the junior company's royalty exposure on the Barrick(TSE:ABX)-led joint venture property to up to three per cent.

Together with the company's first two net smelter returns (NYSE:NSR) transactions on the project in 2011 and 2012, Terraco now has royalty coverage, either by direct ownership or option, of up to 3 per cent NSR on the developing project, which is expected to advance through scoping and into pre-feasibility status this year.

"We are pleased to complete this 3rd royalty transaction on the Spring Valley Project located in Pershing County, Nevada, which is a Barrick led joint venture with Midway Gold Corp," said president and CEO of Terraco, Todd Hilditch, in a company statement Monday.

"Terraco management believes that the valuation of this NSR will grow as the project moves towards production and we are pleased that Barrick has continued its accelerated rate of earn-in with Midway on the Spring Valley Project."

Indeed, in 2013, Barrick completed its US$30.0 million spending requirement for its 60 per cent interest in the project, and told Midway of its intention to spend an additional US$8.0 million to earn 70 per cent, showcasing the property's significant potential as miners work to cut back on costs and increase profits accross the industry.

"We are also excited, in these tough economic and market times that although we are issuing 800,000 shares of Terraco to the royalty vendor for the royalty assets, we received a USD$1,000,000 cash infusion without issuing additional shares or debt, thus no substantial shareholder dilution," said Terraco.

No other details of the other party involved in the royalty transaction were provided in the statement Monday.

Hilditch said in the release that in the last 19 months, the company has delivered to its shareholders a growing gold-focused asset base, and brought US$6.0 million in "creative funding" to Terraco, with its share structure left "relatively intact". The junior gold company continues to maintain a debt-free balance sheet, to be left with more than C$1.8 million of cash and marketable securities after the third royalty deal closes.

Earlier this year, Midway announced drill results from the Spring Valley project, highlighting an interval of 361 metres of 1.47 grams per tonne (g/t) gold starting at 35 metres depth, which includes 21 metres of 7.54 g/t gold and 23 metres of 3.02 g/t gold.

The property, which is a joint venture between Barrick Gold and Midway Gold Corp (CVE:MDW), also adjoins Terraco's 100 per cent owned Moonlight project that spreads over 35 square kilometres, providing blue-sky potential for the junior gold company.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.