North Arrow Minerals, a Canada-based diamond exploration company, has made major business headlines recently with its decision to sell its Oro property, located in Nunavut, to Silver Range Resources.
For those unfamiliar with North Arrow Minerals, it is worth taking note that the company is engaged in the identification, acquisition, and evaluation of diamond exploration opportunities in Canada. It primarily explores for diamond, gold, and other precious elements. The Oro property, speculated to be rich in gold, was one of their prominent assets before this recent sale.
In a calculated move, North Arrow sold the Oro Gold Property to Silver Range Resources, a project generator focused on high-grade precious metals in North America. Silver Range Resources prides itself in its ability to acquire, develop, and eventually sell mineral properties, striving to maintain and increase its project portfolio through prospect generation and strategic acquisition.
This transaction’s specifics have been conversed in a certain jargon that might be foreign to many. Silver Range Resources has purchased the Oro property by issuing 500,000 common shares (being a consideration of approximately $40,000) along with a 1% Net Smelter Returns (NSR) royalty to North Arrow.
To explain this term in layman’s language, a Net Smelter Return Royalty is a percentage interest in the revenue generated from the sale of mine products less the costs of transportation, insurance, refining, and smelting. In essence, it implies that North Arrow will continue to receive a certain percentage from the profits generated from the Oro property even after the sale.
Further details reveal that Silver Range Resources has the right to buy down half of the NSR (i.e., 0.5%) for an underlined price of $1 million. This is quite a strategic caveat. It provides the option to reduce the obligation of sharing revenue in the future.
Given the Oro property’s location, this sale carries certain implications. Situated 14 kilometers southeast of the former Lupin Gold Mine and roughly 130 kilometers south of the community of Kugluktuk, the area is known for its gold-rich mineral belts. Initial work indicated the presence of gold-in-till signatures. However, North Arrow’s primary focus being diamond and not gold might have prompted its decision to hand off the property to Silver Range, which has a guided interest in precious metal exploration.
The sale of North Arrow’s Oro property indicates a shifting approach for the company, focusing more on its primary diamond exploration. The decision allows it to vest its focus, time, and resources more robustly on its other operational projects such as the Naujaat, Mel, and Pikoo Projects.
In contrast, Silver Range Resources, with its interest in high-grade precious metals, is in a favorable position to explore and optimize the potential of the Oro property. This acquisition aligns with the company’s growth and expansion strategy while ensuring a new chapter in the Oro property’s gold exploration journey.
In conclusion, the sale of the Oro property represents strategic business maneuvers from both ends- enabling North Arrow to hone in on its diamond pursuits while allowing Silver Range to add another potential goldmine to its extensive portfolio. Only time will tell the dividends this sale will yield for both companies and the Oro property itself.