Rayrock gains remainder of Daisy mine

Rayrock Resources (RAY-T) is acquiring the remaining 65% interest in the Daisy gold mine from sister company Inter-Rock Gold (IRO-T).

Currently, 35%-owner Rayrock operates the open-pit mine, which is near Beatty in southern Nevada.

Rayrock will make a cash payment (net of debt owed by Inter-Rock to Rayrock) and grant Inter-Rock a 2-stage royalty. The cash portion amounts to US$3.7 million less the amount of principal and interest owing on the loan as of the date of closing. As of July 1, the principal amount of the loan was US$2.8 million.

The base royalty — 2% of proceeds from gold sales on production in excess of 105,000 oz. — is payable when proceeds exceed US$300 per oz. gold, to a maximum of US$1.3 million.

The second-stage incremental royalty will be payable only after the base royalty has been paid in full, when proceeds exceed US$350 per oz. This royalty will be 2% on any remaining production, to a maximum of US$1 million.

The deal requires the approval of Inter-Rock’s shareholders.

This year, Daisy is projected to produce 32,500 oz. gold at an average cash cost of US$220 per oz. Based on a review by Roscoe Postle Associates, Daisy’s proven and probable reserves stand at 4.9 million tons grading 0.029 oz. gold per ton (equivalent to 142,457 contained ounces), based on a gold price of US$325 per oz. The total measured and indicated resource, including reserves, is estimated at 22.5 million tons grading 0.024 oz. gold, or 545,900 contained ounces.

For its part, Inter-Rock’s board has decided to redirect the company’s focus towards acquiring specialty industrial-minerals businesses in the U.S. and possibly elsewhere. The company says it has already begun evaluating potential acquisitions.