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Paramount Gold Nevada reduces royalty on Grassy Mountain project to 1.5% from 6%

Paramount Gold Nevada Corp. said Feb. 20 that it exercised its option to reduce the existing net smelter royalty on the Grassy Mountain gold property in Oregon from 6% to 1.5% and acquire all of the rights to the private land at the site.

Under the original 2004 lease agreement, the company secured an option to purchase the private land and reduce the royalty for a total of US$2.4 million.

The company noted that the reduced royalty will save it from making approximately US$28 million in future royalty payments over the projected life of the mine, based on assumptions in the project's preliminary economic assessment including metal prices of US$1,300/oz of gold and US$17.50/oz of silver.

"The reduction of the NSR will add to our mine cash flows well in excess of the exercise price," Paramount Gold CEO Glen van Treek said. "We also have the added certainty of direct ownership of the land on which the deposit is located."

A 2015 preliminary economic assessment on Grassy Mountain outlined a 10-year underground mining operation producing an average 53,000 ounces of gold and 82,000 ounces of silver each year.

Paramount Gold expects to complete a definitive preliminary feasibility study for an underground mining operation in March, with the study to include an initial reserves estimate.

The company also plans to submit a consolidated mining permit application to the Oregon Department of Geology and Mineral Industries in the first half of 2018, with a decision anticipated within the subsequent 300 days.