Sandstorm Gold has acquired a 2.4% net smelter return (NSR) Royalty on the Mt Hamilton gold project in Nevada, US, for $10m.

The gold project is held by Mt. Hamilton, which is 80%-owned by Solitario Exploration & Royalty Corp, while the remaining 20% stake is held by Ely Gold & Minerals.

Mt. Hamilton received an upfront payment of $6m upon signing the agreement and will receive a future cash remittance of $4m on 15 January 2013.

Solitario Exploration & Royalty Corp president and CEO Chris Herald said, "Sandstorm‘s purchase of this royalty confirms our belief that the Mt. Hamilton gold project displays robust economics and outstanding resource growth potential."

Ely Gold & Minerals president and CEO Trey Wasser added, "This funding enables the joint venture to drill test the historic Seligman deposit where we hope to add significant economic ounces to the current mine plan."

Under the terms of deal, Mt. Hamilton will have the option to repurchase up to 100% of the NSR for $12m over a period of 30 months.

The repurchase is subject to Solitario entering into a gold stream agreement with Sandstorm that has an upfront deposit of no less than $30m.

Mt. Hamilton has also provided Sandstorm with a right of first refusal on any future royalty or gold stream financing for the Mt. Hamilton project.