Orogen Royalties Inc (CVE:OGN) told investors Thursday it had optioned out its Baby Doe gold project in Nevada to Au-Reka Gold Corporation, which is a subsidiary of major Premier Gold Mines U.S.A.
The asset is a gold-silver epithermal vein prospect, which sits in the White Mountains of Esmeralda county and lies within a large alteration zone containing historic mercury mines.
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Premier Gold (TSE:PG) can earn an initial 55% interest in the project over four years by making cash payments of US$200,000 to Orogen and completing US$5 million in exploration.
On earning an initial 55%, Premier has 60 days in which it can decide to earn a further 45% by paying US$300,000 to Orogen and spending a further US$5 million on exploration.
Upon completing this 'Bump-up' option, Premier will make a cash payment of US$500,000 to Orogen and grant a 3% net smelter royalty (NSR) on the Baby Doe claims and a 1% NSR on the Mustang claims. Half of the NSR on the Baby Doe claims can be purchased for US$3 million.
If the project gets a 'proceed with commercial production' decision, Premier will pay US$1 million to Orogen and have 90 days to make an additional cash payment equal to US$7.50 per gold-equivalent ounce in resources and reserves up to a maximum US$10 million.
"Orogen holds a portfolio of precious and base metal exploration projects generated from its exploration pipeline that allows for organic royalty creation.
"It is the backbone of our business and provides our shareholders multiple opportunities for wealth creation," commented Orogen CEO Paddy Nicol. "We are very pleased to have Premier Gold as a partner to advance exploration on our Baby Doe project."
Baby Doe includes 27 unpatented mining claims, which are subject to an option deal with a subsidiary of Ely Gold Royalties Inc (CVE:ELY, OTCQX:ELYGF), whereby Orogen has an option to acquire 100% interest in the claims for cash payments totaling US$200,000, and the reservation of a 2% NSR.
Premier will also take on cash payment obligations of US$200,000 to underlying vendors on the Mustang claims, said Orogen today in a statement.
Orogen Royalties Inc is focused on precious and base metal discoveries in western North America with a focus on organic royalty creation and royalty acquisitions.
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