Pursuant to the Agreement, Ely Gold can earn a 100% interest in the Project by paying EMX a total of $100,000 as follows; US$25,000 upon execution of the Agreement and US$75,000 over the next three years. EMX will retain a 2.5% net smelter return (NSR) royalty, inclusive of an underlying 0.5% NSR royalty.
In addition, after earning the 100% interest in the Project, Ely Gold will pay EMX annual advance royalties equal to 20 ounces of gold each year beginning year four of the Agreement. After completion of a feasibility study, prepared in accordance with the requirements of NI 43-101 and CIM definitions and guidelines covering either, or both, of the Project and the adjacent Ely Gold properties, the annual payment will increase to 35 ounces of gold each year thereafter until commencement of commercial production from either, or both, of the Project and the adjacent Ely Gold properties. Ely Gold may purchase 0.5% of the EMX NSR royalty by paying Eurasian 500 ounces of gold within 60 days after commencement of commercial production from either, or both, of the Project and the adjacent Ely Gold properties. However, EMX will not retain any royalty on Ely Gold’s existing Green Springs project.
Cathedral Well is located approximately 10 kilometers south of the Mount Hamilton gold project, and surrounds the historic Green Springs mining district. USMX produced 1.1 million tonnes at an average grade of 2.1 g/t from four open pit mines in the district from 1988-1990 (Russell, 2005). Ely Gold has consolidated the Green Springs district and assembled much of the historic data into a property wide database of geochemistry, geophysics, and drilling in order to re-evaluate the district’s exploration potential. The Green Springs district contains numerous outcropping jasperoids and de-calcified zones developed along the Joanna-Chainman sedimentary rock contact, as well as widespread alteration in sedimentary units above and below the Chainman Formation. Three of the historic open pit mines exploited oxide gold mineralization developed in the upper Chainman and along the Joanna-Chainman contact which are important host units in the region (i.e., Midway Gold’s Gold Rock deposit and Pilot Gold’s Griffon project). Several northern historic exploration holes, drilled by USMX, revealed mineralization associated with the underlying Pilot Shale, which is another important host unit in the region (i.e., Midway Gold’s Pan deposit and Alligator Ridge). The Pilot Shale remains largely untested across the property, and lies at relatively shallow levels within the eastern portion of the Project area.
EMX acquired Cathedral Well through staking in 2008, and immediately optioned the property to a wholly-owned subsidiary of Eldorado Gold Corp. (“Eldorado”). EMX and Eldorado completed 30.5 line kilometers of NSAMT and CSAMT geophysical surveys, soil and stream sediment surveys totaling 1,597 samples, and identified seven targets that were permitted for drill testing. Six reverse circulation drill holes totaling 1,426 meters were completed over the western target area. The Agreement allows for Ely Gold to retain all the EMX data.
Ely Gold has submitted a Plan of Operations and an Environmental Assessment to the US Forest Service which will permit a drill program to test multiple targets within the consolidated land package. Targets will include the Chainman, Joanna and Pilot Shale formations. Ely Gold will be the operator of the program, with technical assistance from EMX through a defined Management Committee arrangement during the option period.
Trey Wasser, Ely Gold’s President & CEO, commented on the transaction, “We are very pleased to have executed this transaction with EMX. This will consolidate the land package at our 100% owned Green Springs property with claims that appear to have extensions of historic mineralization and are the site of the historic USMX mining infrastructure. The Agreement will allow us to own Cathedral Well claims 100% with no work commitments and will add to our extensive data base while we benefit from the technical expertise of the Bronco Creek team.”
“With the submission of the Environmental Assessment and the acquisition of the additional data, Ely Gold is on track to start a district wide exploration program this fall in one of the world’s premier mining jurisdictions,” said John Brownlie, Ely Gold’s Executive Chairman.
This press release has been read and approved by Stephen Kenwood, P. Geo, a director of the Company and the Company’s Qualified Person.
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.