Solitario Makes Private Placement Into Ely Gold & Minerals And Signs Letter Of Intent To Joint Venture Ely Gold & Minerals' Mt. Hamilton Gold Project In Nevada
August 26, 2010
Denver, Colorado: Solitario Exploration & Royalty Corp.
("Solitario;" NYSE Amex: XPL; TSX: SLR) and Ely Gold & Minerals Inc.
("Ely;" TSX.V: ELY) announced Solitario has arranged a private
placement in Ely of CDN$250,000 for units, described below. This
placement is part of a Letter of Intent ("LOI") between Solitario and
Ely to joint venture Ely's Mt. Hamilton gold project situated at the
southern end of the prolific Battle Mountain gold trend in eastern
Nevada. The Mt. Hamilton project is an advanced gold project where over
314 drill holes have defined the Centennial gold deposit. Under the
LOI, Solitario may earn up to an 80% interest in the project by
completing various staged commitments.
Chris Herald, President and CEO, stated, "We are delighted to partner
with Ely on this very attractive advanced gold project and commend Ely
in its efforts to bring the project to this stage. Solitario's core
strategy remains exploration and royalty generation through net profit
royalty structured joint ventures. We believe the Mt. Hamilton project
has good exploration potential."
Trey Wasser, EVP of Ely, stated, we are very excited to be partnering on
the Mt Hamilton Project with Solitario. This investment and joint
venture provides the capital to fast track the development of a
significant asset in Nevada. In a difficult market environment, we are
pleased to have a partner with the proven track record and the financial
strength of Solitario.
Terms of the LOI
On signing the LOI, Solitario subscribed for a private placement of
3,333,333 units of Ely at a price of CDN$0.15 per Unit for an aggregate
consideration of approximately CDN$500,000. Each unit consists of one
common share and one-half share purchase warrant entitling the holder of
a whole warrant to purchase an additional share of Ely for CDN$0.25,
with such warrant expiring two years from the subscription date. The
private placement consists of two tranches: the first tranche of
CDN$250,000 is to be funded on or before August 31, 2010, subject to TSX
Venture Exchange acceptance; the second tranche will be funded upon Ely
shareholder and exchange approval of the joint venture arrangement
anticipated no later than late-October 2010.
Solitario will be conducting due diligence on the Mt. Hamilton project
through the date of shareholder approval. Thereafter, Solitario will be
committed to spend $1.0 million on exploration and feasibility work and
to pay US$300,000 in an advanced royalty payment. After completing
these initial commitments, Solitario may elect to terminate its interest
in the Mt. Hamilton project at any time and will have no further
earn-in obligations on the project.
To earn its full 80% interest in the project and fulfill other LOI commitments Solitario is further required to:
Make cash payments to the subsidiary of Ely which will hold Ely's
joint venture interest totaling US$2.75 million in cash, issue 300,000
shares of Solitario common stock, and subscribe to US$2.50 million worth
of Ely common stock at market, all of which are scheduled from 2011
Make payments of US$300,000 per year in advanced royalty payments
that are deductable against future production royalties to the
underlying royalty owner, and prior to commercial production, pay $5.0
million to reduce the NSR royalty rate from 8% to 3%.
Complete a bankable feasibility study.
Upon request, arrange 100% project financing for development of the
Mt. Hamilton project after completion of a bankable feasibility study.
Construction and permitting costs incurred after feasibility will be
shared pro-rata, however, Ely may elect to have Solitario fund all costs
with such costs, plus interest, to be repaid by the joint venture to
Solitario out of 80% of Ely's share of net proceeds from the joint
The proposed Joint Venture remains subject to shareholder approval and final acceptance by the TSX Venture Exchange.
Solitario is a gold, silver, platinum-palladium, and base metal
exploration and royalty company actively exploring in Brazil, Mexico,
and Peru. Solitario has significant business relationships with
Votorantim Metais, Compañia de Minas Buenaventura S.A.A. Anglo Platinum,
and Newmont Mining. Solitario has approximately US$15 million in cash
and marketable securities. Solitario is traded on the NYSE Amex ("XPL")
and on the Toronto Stock Exchange ("SLR"). Additional information
about Solitario is available online at
Ely is focused on acquisition and development of gold resources in North
America. The Company is currently working toward production from the
Centennial Gold Deposit, a project located on the Company's 100% owned
Mount Hamilton property, Ely is traded on the TSX Venture Exchange
("ELY"). Additional information about Ely is available online at
FOR MORE INFORMATION AT SOLITARIO, CONTACT:
Director -- Investor Relations
Christopher E. Herald
President & CEO
FOR MORE INFORMATION AT ELY, CONTACT:
EVP Corp Development
This press release includes certain "Forward-Looking Statements"
within the meaning of section 21E of the United States Securities
Exchange Act of 1934, as amended. All statements, other than statements
of historical fact, included herein, including without limitation,
statements regarding potential mineralization and reserves, exploration
results and future plans and objectives of Solitario, are
forward-looking statements that involve various risks and uncertainties.
There can be no assurance that such statements will prove to be
accurate and actual results and future events could differ materially
from those anticipated in such statements. Development of Solitario's
properties are subject to the success of exploration, completion and
implementation of an economically viable mining plan, obtaining the
necessary permits and approvals from various regulatory authorities,
compliance with operating parameters established by such authorities and
political risks such as higher tax and royalty rates, foreign
ownership controls and our ability to finance in countries that may
become politically unstable. Important factors that could cause actual
results to differ materially from Solitario's expectations are disclosed
under the heading "Risk Factors" and elsewhere in Solitario's documents
filed from time to time with Canadian Securities Commissions and the
United States Securities and Exchange Commission.