The dealUnder the terms of the agreement, Premier will make staged payments totaling US$21 million (plus bonding) to Newmont over the course of 18 months. Of that total, $15 million will be paid on signing, and will transfer to Newmont all land sections that comprise its South Carlin project. However, Chang noted that "Premier does maintain a 1.5% NSR on the South Carlin property interests." Also, Chang pointed out that key parts of the agreement are the elimination of "back-in" rights previously held by Newmont and the reduction of the royalty terms held by Newmont from a "potential" 5-percent net smelter royalty (NSR) to a 1.5-percent NSR. Those points give Premier consolidated ownership of the property, meaning it can now explore the area for near-surface heap leachable mineralization. Premier will prioritize any such areas for rapid development. Attractive economics Of Premier Gold's commitment to pursuing a heap leachable, open-pit operation, Chang stated, "[w]e estimate that production could begin as early as 2016 but work needs to be done before we would consider adding this to our model." Still, bringing a heap leach project online has just become significantly easier for Premier with the signing of Tuesday's deal. The company has acquired existing infrastructure, including lined heap leach pads, from Newmont, and the deal includes "a commitment from Newmont to process ores that might be mined at the property over a 10 year period at predetermined toll rate calculation," according to Premier's release. Certainly, Premier was not remiss in labeling the agreement "capex-friendly." All in all, Chang has given Premier Gold a "buy" recommendation with a target price of $4.10. To be sure, interested investors will want to keep an eye on the company to see what it turns up over the course of its exploration/production evaluations at the Cove-McCoy properties.
Premier Gold's stock bumped up yesterday, and today saw a modest rise again. At close of day on Wednesday, shares of the company were up 1.69 percent, trading at $3.01.Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. Premier Gold Mines Consolidates Control of Potentially World-class Cove-McCoy Project from Gold Investing News