Premier Gold Mines has announced that its subsidiary, Premier Royalty Corp, has agreed to purchase a 1% net smelter return royalty on the Thunder Creek Deposit of the Timmins West Mine Complex in Ontario, Canada, for a cash consideration of $7m.

Under the terms of the agreement, Premier Royalty will issue $500,000 in common shares to Lake Shore Gold Corp, which owns the gold project.

Premier Royalty Corp chairman Abraham Drost said the company has been successful at growing a portfolio of producing royalties as it prepares for a go-public event in the near future.

"The acquisition of the Thunder Creek Deposit royalty asset adds income from a relatively new Canadian gold mine in the world class Timmins gold camp, with a capable operator in Lake Shore Gold Corp," said Drost.

The royalty acquisition is anticipated to close by July and is subject to closing conditions.

The Thunder Creek Deposit started commercial production on 1 January 2012 and has a mineral reserve estimate of 2.67Mt at 4.86 grams per tonne of gold (g/t Au), amounting to 418,000 ounces of probable mineral reserves of gold.