Elk Gold
2% NSR royalty on Gold Mountain’s Elk Gold Mine – a producing gold mine in British Columbia
Operator
Gold Mountain Mining Corp.
Location
British Columbia, Canada
Stage
Production
Commodity
Gold, Silver
Terms
2% Net Smelter Return Royalty
The Royalty covers all 16,716 hectares of mining leases and mineral claims as outlined in Gold Mountain’s PEA, titled “Updated Preliminary Economic Assessment on the Elk Gold Project”, dated June 21, 2021.
Purchase Price
US$10.63 million
Highlights
- Producing, high-margin gold mine in Canada: Gold Mountain commenced operations at Elk Gold and delivered its first shipment of ore to New Gold Inc. in February 2022, marking its transition into revenue generation. Royalty revenue is expected to increase and average US$2 million per year post-year 3, based on prevailing gold prices.
- Third-party ore purchase: Long-term ore purchase agreement with New Afton secures production off-take.
- Expansion potential: Current PEA outlines production increasing from 19,000 ounces per year to 65,000 ounces per year (year 4) with a further expansion target to 100,000 ounces per year.
- Significant exploration results: Gold Mountain’s Phase 2 drill program has expanded its high-grade mineral resource to over 1 million ounces. This drilling has connected the Siwash North Zone with the Gold Creek Zone, which was historically viewed as a satellite deposit, demonstrating the multiple-zone potential of Elk Gold. In total, all 47 diamond drill holes, spanning 13,900 metres of drilling, have hit mineralization, leading to a 32% increase in gold-equivalent ounces across all mineral resource categories.
- Further exploration upside: Gold Mountain intends to use a second drill in its anticipated Phase 3 drill program to aggressively explore the Elk Gold deposit in 2022. The main objective of the 2022 drilling campaign is to demonstrate the scalability of the resource into a multimillion-ounce deposit.
Asset Description
Elk Gold is a past-producing gold mine and Gold Mountain’s flagship asset, located in British Columbia, Canada, approximately 325 km northeast of Vancouver and 55 km west of Okanagan Lake, midway between the cities of Merritt and West Kelowna. Given its proximity to skilled labour, no site camp is required.
Gold Mountain’s updated PEA (May 27, 2021) incorporates an increased mineral resource estimate, the ore purchase agreement with New Gold and the mining services contract with Nhwelmen-Lake. New Gold is an intermediate gold producer, and Nhwelmen-Lake is a construction and mining services contractor 51%-owned by Nlaka’pamux Nation Tribal Council and 49%-owned by Lake Excavating, operator of similar projects including at Teck Resources Limited’s Highland Valley Copper Mine and New Gold’s New Afton Mine.
The PEA outlines an 11-year combined open pit and underground operation, with production from Elk Gold expected at approximately 19,000 ounces in years 1-3 from an open pit-only operation and then expanding to 65,000 ounces in years 4-11 with the expansion of the open pits and the addition of an underground operation. Total life-of-mine production is estimated at 525,000 ounces at an all-in sustaining cost of US$554/oz. The underground component currently accounts for roughly 18% of the total measured and indicated contained gold equivalent ounces. Gold Mountain’s ore purchase agreement with New Gold allows Gold Mountain to both operate and scale mine operations without the need for an on-site mill. Under this agreement, Gold Mountain will deliver to New Gold 70,000 tonnes per year in years 1-3 and then up to 350,000 tonnes per year in years 4-11 with the ore being processed at the New Afton processing facility 133 km from Elk Gold. The metal payable split from the ore purchase agreement is 89% to Gold Mountain and 11% to New Gold. Elk Gold’s life-of-mine processed gold grade is estimated in the PEA to be 6.98 g/t with a 92% gold recovery.
On December 7, 2021, Gold Mountain released an updated Mineral Resource Estimate following the conclusion of its Phase 2 drill program at Elk Gold.
For more information about the project as well as the latest updates, please visit
gold-mountain.ca.