LAKEWOOD, Colo. — Pershing Gold Corporation (OTCBB:PGLC) announced the sale this week of its two Lander County properties — Red Rock and North Battle Mountain — to Valor Gold Corporation (OTCBB:VGLD) for cash and Valor common stock. This sale is a strategic transaction designed to benefit both companies.
“The sale of the Red Rock and North Battle Mountain properties is a win-win for both Pershing Gold and Valor Gold,” said Stephen Alfers, Executive Chairman, President, and CEO of Pershing Gold. “This deal places these promising, early-stage projects in a grassroots exploration-focused company like Valor Gold, in which Pershing Gold will have a substantial ownership interest. At the same time it will allow Pershing Gold to focus all of our management attention and resources on our Relief Canyon Mine Project and our other assets in Pershing County where we recently consolidated and increased our land position. We are actively drilling to expand the resource at Relief Canyon with the goal of resuming mining by late 2013.”
Pershing Gold acquired the Lander County properties in May 2011 — before the company bought Relief Canyon Mine in August 2011. Upon securing ownership of Relief Canyon Mine, Pershing Gold made a strategic decision to shift its focus to opportunities in mineral districts in Pershing County that management believed were under-explored.
Red Rock and North Battle Mountain are located in the Eureka-Battle Mountain Gold Belt, one of Nevada’s most important gold trends. The projects include significant landholdings comprised of unpatented mining claims. Pershing management believes that both projects represent large, untested targets with favorable geology in a highly prospective geologic setting for Carlin-style gold deposits.
The company drilled 15 holes at Red Rock in 2011 to explore for Carlin-style gold mineralization and performed several geophysical surveys. The drilling and geophysical programs successfully identified targets that Pershing Gold expects Valor to pursue in the future. North Battle Mountain is an early-stage Carlin-type mineral target where ongoing analysis of a large geologic database consisting of rock and soil geochemical surveys and detailed geophysical studies should identify future drilling targets.
In the Valor transaction, Pershing Gold sold to Valor Gold Corporation two limited liability companies that hold leases on the Red Rock and North Battle Mountain gold exploration properties.
The purchase price to Pershing Gold was a cash payment of $2 million; a $500,000 promissory note bearing interest at the rate of five percent and payable on the earlier of 18 months from the closing date or the date on which Valor raises $7.5 million; 25 million shares of Valor common stock, and a 1 percent net smelter return royalty from future production on the North Battle Mountain and Red Rock Prospects.
Pershing Gold also received a one percent production royalty on the Red Rock and North Battle Mountain properties, and following the transaction will own some 38 percent of Valor Gold’s outstanding shares. The company used a portion of the cash received in the transaction to repay a $500,000 note.
Pershing Gold Corporation is a new gold exploration and development company focusing on acquiring, exploring and developing gold deposits
in Pershing County and elsewhere in Nevada. The Relief Canyon Mine property in Pershing County is owned by Gold Acquisition Corp., the company’s wholly owned subsidiary.