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TICKERS: ELY; ELYGF

Firm to Acquire Royalty on Producing Gold Mine in Nevada
News Update

Source:

The cost is CA$8 million, payable by issuing common corporate shares.

Ely Gold Royalties Inc. (ELY:TSX.V; ELYGF:OTCQB) announced in a news release it agreed to purchase from Eric Sprott a 0.50% net smelter returns (NSR) royalty, the Target Royalty, on the gold-producing Jerritt Canyon mine in Elko, Nevada.

Ely Gold already holds a per ton royalty interest on the Jerritt Canyon processing facilities.

According to the agreement, for the Target Royalty, Ely Gold will pay Sprott CA$8 million by issuing 12,698,413 Ely Gold common shares at $0.63 per share. Also, Ely Gold will pay Medalist Capital a finder's fee amounting to 1% of the transaction price and 300,000 Ely Gold share purchase warrants. For three years, each warrant will be exercisable for one Ely Gold share at CA$0.63 apiece.

Following the closing of this transaction, Sprott will own about 16.2% of outstanding Ely Gold common shares on a nondiluted basis and roughly 28.3% on a partially diluted basis. The company noted that Sprott has agreed not to exercise any portion of his warrants if doing so would mean his holdings exceed 19.9% of outstanding Ely Gold voting shares.

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