Sanatana gained the royalty after an asset purchase agreement between it and Trelawney Augen Acquisition Corp, now known as IAMGOLD Corp (NYSE:IAG), in 2016 in which IAMGOLD acquired a 100% interest in 46 mining claims in the Chester and Yeo counties in Ontario.
Ely Gold acquired the royalty for C$2.5 million in cash and 1 million Ely Gold warrants, which have a five-year term and an exercise price of c$1.31 per share. Ely has the right to accelerate the Ely warrants if the 10-day volume-weighted average price of Ely shares exceeds C$1.97 per share. A finders' fee of C$150,000 was paid to an arms-length party, as well.
READ: Sanatana Resources receives LOI to negotiate rights to the Sutakiki copper gold tenure in the Solomon Islands
In addition to the royalty sale, Ely Gold participated in a private placement of Sanatana shares, which closed on December 10.
Sanatana and Ely Gold executed a definitive agreement whereby Sanatana assigned its rights and interest in the purchase agreement to Ely Gold (assignment) for C$10,000 cash. And in connection, Ely Gold purchased, for C$500,000, 1,666,666 Sanatana shares at C$0.30 through a non-brokered private placement. Shares are subject to a four-month hold period which will expire four months and one day from the date of closing.
"We are pleased to monetize our Watershed Royalty asset. The C$3,000,000 in cash from the Transactions will allow Sanatana to accelerate the exploration of our core property assets as well as to consider additional property acquisitions,” said CEO Peter Miles in a statement Friday.
“The 1,000,000 5-year warrants exercisable at a C$1.31 will allow Sanatana shareholders to participate in Ely Gold, an aggressive and rapidly growing royalty company. We look forward to commencing our initial drill program at the Gold Rush project early in the first quarter of 2021. In addition, initial landholder negotiations for our Sutakiki letter of intent are proceeding well and we look forward to travelling to the Solomon Islands to conduct initial due diligence."
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