Mining royalties investment vehicle Maverix Metals has acquired a 1.5% net smelter return royalty on the McCoy-Cove project – one of the highest grade undeveloped gold deposits in Nevada.
The royalty was intended to be included in the royalty portfolio that Maverix recently acquired from Newmont Mining, but was subject to a right of first refusal in favour of Premier Gold Mines. Premier initially said it would exercise the right of first refusal, but has now indicated that it will let it pass.
Maverix has acquired a significant portfolio of 51 royalties from Newmont Mining and its affiliates for a consideration of 60-million common shares, 10-million common share purchase warrants and a gross cash payment of $17-million.
McCoy-Cove is a development stage project located along the highly prospective Battle Mountain-Eureka Trend in Nevada. Cove was mined by Echo Bay Mines between 1987 and 2001 and produced 2.6-million ounces of gold and 100-million ounces of silver. McCoy was mined between 1986 and 2001, and produced about 0.9-million ounces of gold and three-million ounces of silver.
In January this year, Premier and Barrick Gold entered into an exploration and development agreement whereby Barrick Gold will have an option to earn a 60% interest in the exploration portion of the McCoy-Cove property by spending $22.5-million in exploration before June 30, 2022.
In May, Premier announced the results of a preliminary economic assessment of the Cove project that outlined an eight-year mine life producing an average of 92 400 oz/y. Premier has allocated $19-million towards development and exploration at the Cove project in 2018 with more than 8 000 m of drilling planned.
The Cove project has indicated resources of 0.9-million tonnes at 11.2 g/t containing 342 000 oz of gold and inferred resources of 3.7-million tonnes at 11.2 g/t, containing 1.3-million ounces of gold.
Meanwhile, Maverix announced record revenue of C$8.5-million for the second quarter, with operating cash flow of C$5.4-million. The firm’s adjusted net income amounted to C$0.4-million.
Maverix reported record attributable gold equivalent ounces sold of 5 017 oz.
"Maverix had a strong first half of 2018 highlighted by record revenue and attributable gold equivalent production this quarter," said Maverix president and CEO Dan O'Flaherty.
"We were also pleased to complete our acquisition of a significant royalty portfolio from Newmont in the second quarter and we remain focused on using our increased financial capacity to continue to expand our growing royalty portfolio."
Based on its existing royalties and streams, the company continues to forecast attributable gold equivalent production of between 18 000 oz to 19 000 oz for 2018, a 50% to 60% increase over 2017.