Canamex Gold Corp (CSE:CSQ, OTC:CNMXF) is set to be boosted by the early buy-back of a 1.5% NSR (net smelter royalty) on its wholly owned Bruner Gold project in Nevada, USA in a deal, which will improve mine cashflow and validates the Canamex model.
The company revealed Tuesday it had struck a sale and purchase agreement with American International Ventures Inc (OTC: AIVN) over the royalty, which will be bought back using GOLDUSA tokens.
The early buyout for US$450,000 using 112,500 GOLDUSA security tokens will realize a significant discount to the estimated US$6.8mln value of the 1.5% NSR, over the life of mine, chief executive David Vincent explained.
"The transaction is, therefore, value accreditive to the shareholders of the company.
"Furthermore, the early buyback has been achieved without any shareholder equity dilution, without drawing down on the existing treasury cash position, and most importantly, the transaction validates the GOLDUSA token to transact business with third parties, on normal commercial terms”.
The 112,500 GOLDUSA tokens will have a deemed price of US$4 per GOLDUSA token, cANAMEX NOTED.
The tokens will be subject to a four month and one day escrow period, in accordance with National Instrument 45-102.
New and improved PEA
An updated PEA (preliminary economic assessment) this year following additional drilling increased the resources and improved the economics of the project.
Canamex is now moving the site into permitting and development on the strength of this positive updated PEA.
The PEA estimates production and sale of 349,300 ounces of gold and 363,400 ounces of silver from the Bruner property, all of which would be subject to the 1.5% royalty and assumes a gold price of US$1,280 per ounce gold and US$17 per ounce silver.
The 1.5% NSR royalty on these PEA production assumptions and assumed metals prices would be worth an estimated US$6.8mln over the life of mine.
Today's deal will realise a significant discount to this sum and therefore improve the life of mine cashflows.
Canamex Gold shares were unchanged at C$0.095.