Rye Patch Gold has signed an agreement to acquire 100% ownership of the Florida Canyon gold mine in Pershing County, Nevada, US for $15m.
In addition, the company signed a commitment letter with Macquarie Bank for a $27m credit facility which will be used to fund the proposed redevelopment of the mine.
The fully permitted Florida Canyon mine has been in continuous production since 1986 and is producing gold from its existing leach pad facilities at present.
Rye Patch proposes to redevelop the mine and plans to construct a new heap leach pad and waste storage facility, and mine a planned expansion of the Florida Canyon ore body.
Florida Canyon is expected to achieve commercial production from the new leach pad in the first quarter of next year.
The company has put in place all mining and ancillary equipment that is needed to operate the Florida Canyon mine.
Once the mine starts, Rye Patch will have cash flow from a producing mine, as well as from its existing NSR royalty along with a pipeline of nearby, advanced-stage projects.
Rye Patch Gold president and CEO William Howald said: "This is truly a unique and transformational opportunity that has fantastic synergies with our existing projects at Lincoln Hill, Gold Ridge and Wilco located 30 kilometres to the south.
"We are creating a new and exciting company with anticipated initial annual production of 75,000oz of gold expected to begin in 2017 with the potential to expand the existing Measured and Indicated Resource of 1.1 million ounces.
"Florida Canyon provides Rye Patch with a solid foundation from which to grow and significant exploration upside in and around the mine and throughout the district."
The company is currently exploring two key gold trends in Nevada, which produces about 80% of US gold and 10% of gold worldwide.