Elemental Royalties Acquires Royalties on Amancaya and Mercedes Mines

Elemental Royalties Limited, (“Elemental”), a private company expanding a diversified portfolio of mineral royalties, is pleased to announce that it has completed the acquisition of a 2.25% net smelter return (NSR) royalty on the Amancaya gold mine in Chile (the ‘Amancaya’ royalty) and a 1% net smelter return (NSR) royalty on the Mercedes gold mine in Mexico (the ‘Mercedes’ royalty).

Highlights:

  • Acquisition of royalties over two producing gold mines creates a portfolio of five royalties diversified by country, commodity & operator
  • Production at Amancaya currently from a single vein with exploration focussed on the development of an extensive vein swarm
  • Significant areas of the Amancaya licence remain covered by volcanics and thin sediment cover providing additional exploration upside
  • The Mercedes royalty area consists of 39 licences covering approximately 692sq km, encompassing 45km of mineralised faults
  • Mercedes contains a large Resource base for conversion to Reserve, with discoveries indicating ongoing Reserve replacement

Amancaya:

The Amancaya mine is located in northern Chile approximately 200km south east of Antofagasta. The mine was acquired by Austral Gold Ltd (ASX: AGD) in 2014 from Yamana Gold (TSX: YRI) and open pit operations began in 2017.

At the date of acquisition the Amancaya mine had Measured, Indicated & Inferred Resources of 505,000 ounces at 8.9 g/t gold equivalent and a Proven & Probable Reserve of 232,000 ounces at 7.6 g/t gold equivalent.

Conventional open-pit mining is focussed on the Central Vein, carried out using 30t trucks and a combination of excavators and front-end loaders. Ore from Amancaya is currently mined at 400-500tpd then trucked about 70km to Austral’s new plant at the Guanaco mine where material is batch processed due to its higher silver content. Ore is crushed and processed by a 1,500tpd agitation leach plant before a pregnant solution is passed into a Merrill-Crowe circuit where gold and silver doré is produced. Decline development has commenced to establish underground ore sources to complement open-pit production.

Exploration to date at Amancaya represents the early development of a small part of an extensive vein swarm where the extent and pattern of low sulphidation epithermal veining appears similar to that at the 20yr ~10MOz @ 7.5g/t AuEq El Penon mine in same region. Numerous epithermal veins have been mapped since 2016 and significant areas of the licence remain covered by later volcanics and thin sediment cover.

The majority of exploration is concentrated on understanding and extending the Central Vein, with preliminary work elsewhere in the tenement very encouraging with strong rock chips, trenching and reconnaissance drilling. The Nueva Vein has been identified as a prime target to the north, and it is noted that substantial portions of the lease are under younger volcanics and recent sedimentary cover.

Elemental anticipates a mine life of at least 5 years and estimates net annual royalty revenues of approximately US$1.0M.

For further information please visit the Austral Gold website.

Mercedes:

The Mercedes mine is a 2ktpd underground operation located in the State of Sonora in northern Mexico, 250km northeast of Hermosillo and 300km south of Tucson, Arizona. The mine was acquired by Premier Gold Mines Limited (TSX: PG) in 2016 and consists of 39 mining concessions covering approximately 692sq km and encompassing 45km of mineralised faults.

The geology of north-central Sonora displays a complex history of tectonic and magmatic activity. Gold-silver mineralization at Mercedes is hosted within epithermal low sulphidation veins, stockworks, and breccia zones. Over 15km of veins have been identified within or marginal to andesite-filled basins which constitute the primary exploration target. Premier has developed three new orebodies since acquisition to increase the number of available ore sources as a precursor to increased production, and has identified several additional exploration targets to extend the mine life with an extensive drill programme planned for 2018.

At the date of acquisition the Mercedes mine had Measured, Indicated & Inferred Resources of 1.3 million ounces at 4.6 g/t gold equivalent (including Reserves) and a Proven & Probable Reserve of 450,000 ounces at 4.3 g/t gold equivalent. The operator’s 2018 production guidance is 80-85kOzs Au at cash cost of US$700 – $750/ Oz Au and all-in sustaining costs of US$820 – $870/Oz Au.

In addition to the large Resource base available for conversion into Reserve, recent discoveries of new veins and small very high grade zones (>1Oz/t) near both new and old developments provide encouragement for ongoing Reserve replacement.

Elemental anticipates a mine life of at least 5 years and estimated average annual revenues of $0.9Mpa from ~2022 after a 350kOz production hurdle has been met.

For further information please visit the Premier Gold Mines website.

Frederick Bell, Managing Director, commented:

“With the acquisition of the Amancaya and Mercedes royalties, Elemental now has a portfolio of five royalties covering four producing mines diversified by country, commodity and operator. At the same time as reducing the risk associated with any single asset, we expect royalty revenue in 2018 to be double 2017 revenue and that growth will continue into 2019.

“We have also been very encouraged by the exploration being undertaken across our portfolio and recent successful resource updates have added potential future royalty revenue equivalent to 3 years’ current royalty revenue, which we hope will continue to grow without any investment from Elemental”.

 

About Elemental Royalties Limited

Elemental is a private company providing investors with exposure to a dividend-paying royalty company building a diverse portfolio of mining royalties, benefiting from ongoing royalty revenue, future exploration upside and low operating costs.

Since early 2017 Elemental has assembled a portfolio of five royalties over seven commodities in four countries, four of which cover producing mines. Immediate cash-flow has enabled the Company to limit dilutive fund-raisings to facilitate royalty acquisitions, and to pay a dividend from inception.

Elemental’s focus remains on securing royalties over advanced assets with established operators and credible counter-parties from a robust pipeline of potential royalty acquisitions across commodities and geographies.

For further information you are invited to visit the Company’s website www.elementalroyalties.com or contact:

Elemental Royalties Limited
Frederick Bell: Managing Director T: +44 (0) 203 434 633
M: +44 (0)755 487 2794
E: frederick@elementalroyalties.com
Greg Owen: Corporate Development Manager T: +44 (0) 203 434 633
M: +44 (0)7887 554 316
E: greg@elementalroyalties.com

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