Fremont Gold (TSXV: FRE) has signed an agreement to sell its rights and interest in the Gold Canyon gold project in Nevada to McEwen Mining (TSX: MUX) in exchange for 300,000 McEwen shares.
Gold Canyon is a past-producing gold mine adjacent to McEwen's Gold Bar mine in Eureka County's Gold Bar district. It produced approximately 41,000 oz. gold between 1990 and 1994 at an average grade of 2.67 grams gold per tonne.
Fremont has four other projects in Nevada: North Carlin, Goldrun, Hurricane and Roberts Creek.
Fremont's CEO Blaine Monaghan says the sale increases the company's financial flexibility and gives it the ability to generate non-dilutive capital through the sale of any McEwen's shares.
Fremont was in the midst of acquiring Gold Canyon via an option agreement with Ely Gold Royalties (TSXV: ELY), which required staged payments from Fremont totalling US$802,500 by 2022. Under the terms of the deal, Fremont's was obligated to pay US$127,500 to date, with a US$112,500 payment due in December 2019.
Atlas Precious Metals operated Gold Canyon, one of five satellite pits to the original Gold Bar mine, from 1986 to 1994.
At press time McEwen shares are trading at $2.35 apiece, valuing the sale at $705,000.
Fremont's shares are trading at 6.5 ? in a 52-week range of 6 ? to 19 ?. The company has 53 million shares outstanding for a $3.5-million market capitalization.