() () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () ()

Ely Gold Royalties (TSX-V:ELY, OTCQX: ELYGF) Closes Purchase of Important Nevada Royalty Portfolio

Ely Gold Royalties (TSX-V:ELY, OTCQX: ELYGF) Closes Purchase of Important Nevada Royalty Portfolio


Package Includes Five Properties and Leases with Royalties on Known Mineral Deposits at the Goldstrike and Marigold Mines

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Vancouver, British Columbia, May 19, 2020 – Ely Gold Royalties Inc. (“Ely Gold”) (TSX-V:ELY, OTCQX: ELYGF, FRA: A2JSL0) is pleased to announce that, through its wholly owned subsidiary REN Royalties LLC (collectively with Ely Gold the “Company”), it has substantially completed the agreement (the “Agreement”) with VEK Associates, a privately held Nevada corporation (“VEK”) announced on February 28, 2020. The Agreement provided for the purchase of up to 100% of the outstanding shares of VEK for cash consideration of US$5,000,000, plus 2,005,164 Ely Gold share purchase warrants, each exercisable over a 24-month term to purchase one Ely Gold common share at an exercise price of CAD$0.62 per share (the “Warrants”). The Company has now closed on the acquisition of 94.2% of the outstanding VEK shares.

 

 

 

The Agreement

Pursuant to the Agreement, Ely Gold made a tender offer to purchase 100% of the outstanding shares of VEK Associates, and 92.4% of the shares have been tendered for transfer to Ely Gold’s wholly-owned subsidiary REN Royalties LLC. The remaining VEK shareholders have committed to sell the remaining 7.6% of the VEK shares to the Company, pending the completion of required share transfer documentation. VEK currently has 13,734 outstanding shares; each of VEK’s shareholders, all of whom are arm’s length to Ely Gold, will receive cash consideration of US$364.06 and 146 Warrants per VEK share. VEK’s principal assets are made up of five properties made up of a portfolio of unpatented lode mining claims and leases with royalties, together with VEK’s database, all as described in greater detail below.

VEK Associates

VEK was formed in 1982 by the US Geological Survey geologist, Ralph J. Roberts. Mr. Roberts is credited with the discovery of the Carlin and Battle Mountain Gold Trends, which today comprise the richest gold-mining regions in the world. Roberts and two well-known associates, Victor E. Kral and William Andrus, joined forces to form VEK/Andrus Associates, a Nevada general partnership (“VEK/Andrus”) over 35 years ago. While the VEK/Andrus team staked a number of properties over the years, today VEK/Andrus holds five properties, all of which are currently leased (the “Leases”). Four of the Leases are with Nevada Gold Mines JV (Barrick

61.5%/Newmont 31.5%) and the other Lease is with SSR Mining Inc. VEK owns 50% of VEK/Andrus, the remaining 50% being owned by the heirs of William Andrus. Four of the Leases, discussed in greater detail below, pay advance minimum royalty payments and carry a 3.0% net smelter returns royalty with no buy-downs.

REN Property- currently leased to Nevada Gold Mines

The REN Property consists of 86 contiguous unpatented lode mining claims covering 7.4 square kilometres of the Northern Carlin Trend. REN is centered along the northern Carlin Trend and has gold mining operations surrounding the property. The Goldstrike and Meikle Mines are within two kilometers of the southern boundary of the property, the Bootstrap/South Arturo and the Dee mines wrap around the REN Property to the west and north. The REN Property is contiguous to the Banshee Mine within the Goldstrike Complex. At the Meikle, Goldstrike and Deep Post deposits, the Post fault is recognized as a potential control fault for high-grade gold mineralization within the northern Carlin Trend. Readers are cautioned that mineralization hosted on adjacent and/or nearby projects is not necessarily indicative of the mineralization hosted on the Company’s properties. The Post Fault, on the REN Property, has not been explored for 1.4 kilometers starting at the southern end of the property. With its orientation on the Post Fault, REN has the potential to host a mineralized deposit within the Devonian-age Popovich limestone along the footwall of the Post Fault.

Marigold Property- currently leased to SSR Mining

The Marigold Property consists of 205 unpatented lode mining claims covering 7.8 square kilometres within the SSR Mining operation on the Battle Mountain-Eureka trend. SSR Mining has three outlined within VEK/Andrus claims at Marigold. The areas are 8N, 8D and 8 South Extension. In a 43-101 technical report on the Marigold Mine, dated effective December 31, 2017 and released July 31, 2018, SSR Mining highlighted drill results in the following areas within their current mine expansion exploration:

! 8D & 8N (aka H1): Drill hole MR6045 intersected 164.6 meters grading 1.67 g/t gold. ! 8 South Extension: Drill hole MR6034 intersected 91.4 meters grading 2.48 g/t gold.

VEK sold one half of the Marigold royalty to Franco Nevada, reducing the VEK royalty 0.75%.

Lone Tree Property- currently leased to Nevada Gold Mines

The Lone Tree Property consists of 38 unpatented lode mining claims covering 3.2 square kilometres along the Battle Mountain-Eureka trend in sections 13,14,23 and 24 Township 34N and 36N, Range 42E in Humboldt County, Nevada. This property was generated by VEK/Andrus by plotting gravity trends extending northerly from the Lone Tree gold deposit. The trends have identified horst in the subsurface alluvium. The Company believes that there is a good potential for additional discoveries between the Lone Tree and Chimney VEK/Andrus claims.

Pinson Property- currently leased to Nevada Gold Mines

The Pinson Property consists of 53 unpatented lode mining claims covering 4.4 square kilometres along the Osgood Mountain trend in sections 4, 8 and 16, Township 37N, Range 42E, in Humboldt County, Nevada. This property was generated by VEK/Andrus using geologic mapping along structures from the existing Pinson and Mag deposits. Surface mapping revealed hydrothermally altered limestone host rocks that could be projected into the VEK/Andrus claims.

Carlin Trend Property- currently leased to Nevada Gold Mines

The Carlin trend Property consists of 84 unpatented lode mining claims covering 7.0 square kilometres along the Carlin Trend in sections 1, 2, 3, 10, 11, 12, 20, 21, 28 ,34 and 35 Township 35N and 36N, Range 49E and 50 in Eureka County, Nevada. These claims were staked in the early days of the Carlin discovery and are scattered along the Carlin Trend. They represent many targets identified by Roberts but have seen very little modern exploration.

VEK Associates Data

In addition to the 50% interest in VEK/Andrus, Ely Gold will be purchasing the entire database generated by Ralph Roberts and the VEK/Andrus team.

VEK/Andrus Advance Royalty Payments

The 2019 advance royalty payments provided in the Leases to VEK/Andrus were as follows:

Property

REN Marigold Lone Tree Pinson Carlin Trend

Total

Payments (in US$; 50% to VEK Associates 2019)

US$458,712 $156,500 $15,000 $21,780 $43,560

US$695,552

page3image10030320 page3image7891984 page3image10033024

All of the Leases with the exception of Lone Tree, have inflation adjustment clauses associated with the payments, and all the Leases carry a 3.0% net smelter returns royalty (50% to VEK Associates), except Marigold where VEK Associates holds a 0.75% royalty.

Qualified Person

Stephen Kenwood, P. Geo, is a director of the Company and a Qualified Person as defined by NI 43-101. Mr. Kenwood has reviewed and approved the technical information in this press release.

On Behalf of the Board of Directors Signed “Trey Wasser”
Trey Wasser, President & CEO

For further information, please contact:

Trey Wasser, President & CEO trey@elygoldinc.com 972-803-3087

Joanne Jobin, Investor Relations Officer jjobin@elygoldinc.com
647-964-0292

FORWARD-LOOKING CAUTIONS:

This press release contains certain "forward-looking statements" within the meaning of Canadian securities legislation, including statements regarding the potential value of the VEK royalty portfolio, including future mineral production prospects and royalty revenue gains, and the Company’s expectations for acquisitions of additional VEK shares. These matters are subject to certain risks and uncertainties. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are statements that are not historical facts; they are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," "projects," "aims," "potential," "goal," "objective," "prospective," and similar expressions, or that events or conditions "will," "would," "may," "can," "could" or "should" occur, or are those statements, which, by their nature, refer to future events. The Company cautions that Forward-looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made and they involve a number of risks and uncertainties. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Except to the extent required by applicable securities laws and the policies of the TSX Venture Exchange, the Company undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include risks of declining precious metals prices, failure or underperformance of projects in which the Company has an interest, inability to settle VEK share acquisitions due to problems with vendors or legal impediments, and political uncertainties and regulatory or legal disputes or changes in the jurisdictions where the Company carries on its business that might interfere with the Company's business and prospects. The reader is urged to refer to the Company's reports, publicly available through the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com for a more complete discussion of such risk factors and their potential effect.

This news release has been issued by the Company in order to comply with its obligations under Canadian provincial securities laws, and does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States of America. The Company’s securities may not be offered or sold within the United States or to U.S. Persons (as defined in the United States Securities Act of 1933 (as amended) (the “1933 Act”) unless registered under the 1933 Act and applicable state securities laws, or an exemption from such registration is available.

Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

Comments are closed.