Elissa Resources acquires gold projects in South Dakota

6 March 2014 (Last Updated March 6th, 2014 18:30)

Elissa Resources has acquired 104 gold lode claims in two separate blocks, located in two gold mining camps at the Black Hills gold province in South Dakota, US.

Elissa Resources has acquired 104 gold lode claims in two separate blocks, located in two gold mining camps at the Black Hills gold province in South Dakota, US.

Black Hills is home to the Homestake mine, which is considered to be the largest iron formation-hosted gold deposit in the world.

Elissa Resources' new acquisitions include the South Standby property, which is situated 16 miles south of the Homestake mine, and the False Bottom property, about three miles west-north-west of Homestake.

The South Standby property has 18 unpatented lode claims, including eight claims staked by Elissa and ten claims optioned from BHB Partners of Newcastle, Wyoming, which together span about 290 acres.

"Elissa Resources has now successfully acquired a very strong and geologically strategic footprint." 

The Standby mine, which has been inactive since 1910, is believed to have produced 25,000t to 50,000t of ore averaging 0.20oz to 0.25oz per tonne of gold.

Elissa's False Bottom property consists of 86 newly staked lode claims, including 24 staked by BHB Partners and 62 staked by Elissa, which comprise a major claim block spanning about 1,214 acres.

The property is north and partially adjoined to Goldcorp's active Wharf gold mine, which has produced more than two million ounces of gold since 1986, and it is south-east of Barrick's inactive Richmond Hill gold mine, which is currently in care and maintenance.

Commenting on the acquisition, president and CEO of Elissa Resources Paul McKenzie said: "Elissa Resources has now successfully acquired a very strong and geologically strategic footprint inside the second most prolific gold district in the United States."

Elissa has entered into an option agreement with BHB Partners on 24 February, where in consideration for a 100% interest in the South Standby property, Elissa will issue an aggregate of 800,000 shares and make cash payments of an aggregate of $170,000 to BHB over a four-year period.

Elissa has agreed to pay BHB an additional $35,000 one year following the date of the option agreement; $45,000 two years following the agreement date; $60,000 three years following the agreement date; and 500,000 additional shares of Elissa Resources four years following the agreement date.

Following the successful conclusion of the agreement, Elissa Resources has agreed to grant BHB a net smelter return royalty of 2% on the commercial production from the South Standby property, while reserving the right to purchase up to 80% of the royalty for the aggregate sum of $1m.

Elissa has agreed to make advance royalty payments of $50,000 a year, if commercial production has not been achieved on the South Standby property by 1 January 2018.

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