Fremont sells Nevada gold project to McEwen
Fremont Gold Ltd. [FRE-TSXV; USTDF-OTC; FR2-FSE] said Friday August 16 that it is selling its rights and interest in the Gold Canyon Project in Nevada to McEwen Mining Inc. [MUX-TSX, NYSE].
Freemont said it is selling rights that were gained under a January 2018 option agreement with Nevada Select Royalty Inc., a unit of Ely Gold Royalties Inc. [ELY-TSXV; ELYGF-OTC], in exchange for 300,000 common shares of McEwen Mining.
The Gold Canyon property consists of 26 unpatented lode mining claims covering 460 acres in Eureka County. Gold Canyon is part of the original Gold Bar mining complex, which was operated by Atlas Precious Metals Inc. from 1986 to 1994, generating historic production of 41,000 ounces of gold from the Gold Canyon pit (out of a total of 588,000 ounces from the entire Gold Bar complex).
Gold Canyon is located in the Gold Bar District in the southern Roberts Mountains, a well-known precious metals mining area in the southern portion of the Battle Mountain-Eureka trend, which consists of a 200-km-long northwest trending structural zone.
The claims are on Bureau of Land Management (BLM) ground and include the original Gold Canyon pit as well as a stockpile west of the pit.
The Gold Canyon Project is completely surrounded by claims owned by McEwen Mining, including the Gold Bar Mine, which was previously expected to produce 65,000 ounces annually for eight years from four open pits.
The Gold Canyon pit is located only 900 metres northwest of McEwen’s Gold Ridge orebody and is part of the same mineralized system. The four McEwen pits, along with the Gold Canyon pit, were originally operated by Atlas and were in fact secondary satellite pits to Atlas’s original Gold Bar mine.
“Selling Gold Canyon appreciably increases Fremont’s financial flexibility,” said Fremont CEO Blaine Monaghan. “It gives us the ability to generate a significant non-dilutive capital infusion, through the sale of any McEwen shares, which will be helpful as we evaluate opportunities that can add immediate and long term shareholder value,” he said.
Fremont continues to evaluate opportunities to acquire an advanced-stage gold project that has the potential to host an economic deposit with a minimum of 1.0 million ounces of gold in the western U.S.
On Friday, Fremont share eased 22.22% or $0.02 to $0.07. The shares are trading in a 52-week range of $0.06 and 19 cents. McEwen Mining shares also eased 3.28% or $0.08 to $2.36. McEwen shares trade in a 52-week range of $1.67 and $3.20.
In its Q2 financial results statement on July 30, 2019, McEwen said gold production from Gold Bar is increasing and the company expects to see better performance in the second half of 2019. However, the production forecast for 2019 was recently reduced to 42,000 ounces from 50,000. This was due to the slower than expected ramp-up, the company said.
Under the terms of the option agreement with Ely Gold, Fremont gained the right to earn a 100% interest in the Gold Canyon property by making total payments of US$802,500 by December, 2011. It also had the right to accelerate the option by making all of the payments at any time.
The option was subject to a 2% net smelter return royalty on the property and a 1% net smelter return royalty on any acquired or staked additional claims located within the area of interest in favour of the optionor. However, Fremont also had the right to purchase 1% of the 2% NSR royalty by paying the optionor $3 million.