VANCOUVER, British Columbia,
Aug. 28, 2012 /PRNewswire/ -- Ely Gold & Minerals Inc.
("Ely Gold") (TSX:
ELY) is providing an update and clarification on recent
financing activities by the Mt. Hamilton LLC ("MH-LLC") and
its joint venture partner Solitario Exploration & Royalty Corp.
("Solitario"). MH-LLC was formed in December 2010 and holds 100% interest in the Mt.
Hamilton gold project in
White Pine County, NV. On
February 22, 2012 Solitario and
Ely Gold released a 43-101 compliant
bankable feasibility study showing robust economics for the
development of an open pit heap leach mine at Mt. Hamilton. The study and the press release can
be viewed on Ely Gold's website
www.elygoldandminerals.com. It has also been filed on SEDAR by
Ely Gold and Solitario. By funding
all expenditures to produce the study, Solitario earned an 80%
interest in MH-LLC. Ely Gold holds a
20% interest through its wholly owned subsidiary DHI Minerals (US)
Ltd ("DHIU"). Solitario's interest is subject to dilution if it
does not meet certain Continuing Payment Obligations to DHIU,
Ely Gold and MH-LLC.
2011 Royalty Purchase and the Sandstorm NSR Sale
In May 2011, MH-LLC purchased a 2%
NSR from the underlying Mt. Hamilton leaseholders for $2,500,000. The NSR purchase was fully funded by
Solitario and resulted in a loan from Solitario to Ely Gold for $504,000.
On June 11, 2012, MH-LLC announced
the sale of a 2.4% NSR to Sandstorm Gold Ltd. ("Sandstorm")
(TSX-V: SSL) for total proceeds of $10,000,000 of which $6,000,000 were received in cash on the sale of
the royalty and $4,000,000 will be
received cash in January 2013. MH-LLC
has the right to repurchase 100% of the NSR for $12 million, provided that MH-LLC enters into a
gold stream agreement with Sandstorm that has an upfront deposit of
not less than $30 million. In
addition, MH-LLC has provided Sandstorm with a right of first
refusal on any future royalty or gold stream financing for the Mt.
Hamilton project. The press
releases for both transactions can be viewed on Ely Gold's website and the agreements are
available for viewing under the Company's profile on SEDAR at
www.sedar.com.
MH-LLC Distribution and Amendments to the Operating
Agreement
On June 28, 2012, subsequent to
the sale of the Sandstorm NSR, Ely
Gold and Solitario entered into an agreement whereby MH-LLC
distributed $2,500,000 to its
partners. Solitario received $2,000,000 for reimbursement of its share of the
2011 royalty purchase. Ely Gold
received $500,000 which was paid to
Solitario in full satisfaction of the $504,000 loan from Solitario, inclusive of
accrued interest. In addition, Ely
Gold and Solitario amended the operating agreement for
MH-LLC to extend certain continuing payment obligations of
Solitario to better correspond with the underlying lease payments.
Both Agreements can be viewed under the Company's profile on
SEDAR.
RMB Loan and the MH-LLC Side Agreement
On August 13, 2012 Solitario
entered into a $5,000,000 secured
credit facility with RMB Australia Holdings Limited ("RMB").
The loan is a corporate obligation of Solitario and is secured by
its 80% interest in MH-LLC. Ely
Gold, Solitario and RMB also entered into a Side Agreement
to set out the terms on which Ely
Gold would consent to the creation of an encumbrance on
Solitario's Interest and permit Solitario to borrow the Funds from
RMB. It clarifies, in relation to the loan, the MH-LLC Operating
Agreement and Solitario's continuing payment obligations. The Side
Agreement stipulates that the loan does not encumber Ely Gold's 20% interest in any way, give RMB
control or liens over any assets of MH-LLC or restrict any of
Ely Gold's rights under the MH-LLC
operating agreement. The Side Agreement also amends the terms by
which Solitario will subscribe to Ely
Gold shares for future property payments on Mt. Hamilton. Both Agreements can be viewed under
the Company's profile on SEDAR.
Both Sandstorm and RMB completed full due diligence on the Mt.
Hamilton project, including site
visits, prior to the financings.
John Brownlie, Ely Gold's Executive Chairman, commented on the
recent financing activities. "The Sandstorm Royalty payments fund
the MH-LLC with $7,500,000 after the
distribution to the partners. These funds will not only help fast
track the permitting process, but allow us to further explore the
Seligman Pit area adjacent to the Centennial reserves. There are
inferred resources at Seligman that could expand the reserves which
would then significantly improve the mine plan with ore that won't
require pre-strip capital. During its drill campaign this summer,
Solitario had three drill rigs onsite, so shareholders can expect
some good news flow this fall."
"Mt. Hamilton is proving to be
a very solid project," stated Trey
Wasser, Ely Gold's President
& CEO. "Solitario is doing an excellent job securing strategic
financings with well known resource lenders and advancing the
property through the drill bit."
This press release has been read and approved by Stephen Kenwood, P. Geo, a director of the
Company and the Company's Qualified Person.
On Behalf of the Board of Directors
Signed "Trey Wasser"
Trey Wasser, President &
CEO
For further information, please contact Ely Gold & Minerals Inc. at
604-488-1104.
E-mail: trey@elygoldandminerals.com; Website:
www.elygoldandminerals.com
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. This news release may contain
forward-looking statements including but not limited to comments
regarding the timing and content of upcoming work programs,
geological interpretations, receipt of property titles, potential
mineral recovery processes, etc. Forward-looking statements address
future events and conditions and therefore, involve inherent risks
and uncertainties. Actual results may differ materially from those
currently anticipated in such statements.
SOURCE Ely Gold & Minerals
Inc.