The royalty is linked to two claims formally held by Atlantic, which covers the Egerton-Maclean, Hudson, 149 East Zone, and the majority of the Plenty deposit. These are collectively known as the Fifteen Mile Stream project (FMS Project) in Nova Scotia, Canada.
READ: Metalla Royalty & Streaming repeats revenue guidance for fiscal 2019 as it reports second-quarter numbers
FMS is being developed by Atlantic Gold as part of its multi-phase mine plan (Moose River) outlined in a pre-feasibility report disclosed in January last year. According to Atlantic Gold, the FMS project is expected to produce approximately 80,000 ounces of gold in 2021 in its first year of production.
"Metalla is pleased to add another high-quality royalty on a growing deposit in Eastern Canada with emerging mid-tier operator Atlantic Gold," said Brett Heath, Metalla's president and CEO.
"Fifteen Mile Stream represents the next leg in the growth at the Moose River Consolidated Gold Mine which has undergone extensive drilling aimed at expanding the resource. Atlantic Gold has quickly established itself as one of Canada's premier operators through the successful commissioning of Moose River on time and within budget. This transaction is consistent with our long-stated strategy of acquiring existing royalties on quality assets with strong operators."
A five-year mine life
FMS has a five-year mine life, which will recover a total of 391,000 ounces of gold at a cash cost of C$561 per ounce of the yellow metal and generate a 60.9% pre-tax IRR (internal rate of return).
Since Atlantic Gold completed its resource and reserve estimate, it has drilled an additional 290 holes spanning over 35,000 meters, which will be included in an updated resource estimate expected to be released in the first half of 2019.
Metalla will satisfy the transaction with an upfront payment of $2.2 million in cash and over 2.6 million company shares.
Metalla shares nudged up 2.8% to $1.07 in Toronto before easing back to $1.04..
Contact Giles at [email protected]
Follow him on Twitter @Gile74