Northern Empire Resources (NM.V) has entered into a letter of intent with Sterling Gold Mining to acquire the Sterling property in Nevada.
The property contains the past-producing Sterling gold mine (where almost 200,000 ounces of gold were produced at an average grade of in excess of 7 g/t) which consisted of both an open pit and an underground mining operation. The Sterling property contains no less than three past-producing open pits on the Sterling and Daisy land claims and perhaps the most important feature of the project is the fact the Bureau of Land Management has issued a Finding of No Significant Impact (FONSI) and approved the next mining phase at Sterling.
Northern Empire will pay US$10M to Imperial Metals (III.TO) which is the owner of Sterling Gold Mining, and issue 5 million shares to Imperial. Additionally, Sterling will be awarded a 2% NSR on the zones which currently aren’t subject to an existing NSR, whilst an additional net operating profit interest will kick in when/if Northern Empire elects to use a proprietary bioleaching technology.
The company is currently in the process of raising a few million dollar in a bridge financing. The debt will be interest-free and can be converted into common stock at C$0.175 per share (even if the transaction would fall through, which we don’t expect to happen). This cash will allow Northern Empire to make the first US$250,000 cash payment (which should already have been made by now), and to complete a first resource estimate using the NI43-101 standards.
This could be an interesting acquisition for Northern Empire as it provides the company with a clear scenario towards cash flow. Of course, a lot of work still needs to be done, and the upcoming resource estimate will be a first important indication of how big and interesting this project could be.