STANDARD GOLD, INC. (OTCBB:SDGR.ob - News), announced today the acquisition of assets from Shea Mining & Milling LLC, which will allow the Company to enter the precious-metal milling business. Standard Gold closed two simultaneous transactions with Shea Mining, which had developed a precious-metal milling company that Standard Gold projects will yield millions of dollars of annual revenue from toll milling gold and silver ores (as well as lead, zinc and copper ores, and rare earth metals).
In one of the transactions with Shea Mining, Standard Gold acquired a lease (with a right to purchase), formerly held by Shea Mining, to operate an assay lab and toll milling facility, with permits and water rights, located in Amargosa Valley, Nevada. In connection with this transaction, Standard Gold also acquired the rights to four toll-milling contracts for mines and mineral projects located in Nevada, California and Colorado, along with the rights to certain mine dumps in Manhattan, Nevada. Due to this facility’s proximity to mines within economical trucking distances that do not have their own facilities to process ore, Standard Gold believes that this facility, and the related tolling contracts, will produce profitable revenue for Standard Gold in the second half of 2011.
In the second and related transaction, Standard Gold purchased from Shea Mining certain assets located in Tonopah, Nevada, consisting of land, mine tailings, and a milling facility. The land encompasses 1,174 deeded acres, which may be the largest private land holding in Esmeralda County, Nevada.
Approximately 334 acres of this land contains 2.2 million tons of tailings, which management believes is the largest single deposit of historic mine tailings in the state of Nevada, known as the Millers Tailings, from the historic gold rush of Goldfield and Tonopah, Nevada. Based on results from 40 drill holes, the Millers Tailings show a preliminary grade of approximately 0.009 ounces per ton gold and 1.22 ounces per ton silver.
Standard Gold plans a complete characterization of the tailings, which the company believes could contain up to 100 million dollars worth of gold and silver after processing. The milling facility, known as Millers Mill, is an existing milling facility built in 1981 by Lurgi Engineering, a German firm, which had the capacity to process up to 2,000 tons of tailings per day. Millers Mill successfully processed gold and silver from the tailings on the property until 1984, when the falling price of metals caused the suspension of operations at this facility. The property comes with 387 acre-feet per year of water rights.
In exchange for the Shea Mining assets, Standard Gold has issued a total of 35 million shares of its common stock to the equity holders of Shea Mining, resulting in those holders owning an approximately 56% equity interest in Standard Gold on a fully diluted basis. Alfred A. Rapetti, the Chief Executive Officer of Standard Gold, has been granted an irrevocable voting proxy for half of the shares issued to the Shea Mining equity holders, which continues until the affected shares are publicly sold after a period of at least six months, and thereafter in accordance with all applicable securities laws. In addition to the issuance of Standard Gold common stock, Standard Gold paid approximately $450,000 in cash to Shea Mining, and has agreed to pay an additional $450,000 to Shea Mining within one year following closing. Standard Gold also agreed to pay certain transaction costs and assume certain debts relating to the assets which aggregate approximately $300,000. Standard Gold acquired the Miller’s Mill property subject to a $2.5 million existing first deed of trust which was in default at the time of acquisition. As part of the transaction, the holder of the deed of trust, NJB Mining, modified the related note to allow Standard Gold a sixty-day period to refinance this mortgage.
Simultaneous with these transactions, Standard Gold’s former majority shareholder, Wits Basin Precious Minerals Inc., exchanged 19,713,544 shares of Standard Gold common stock held by it for 10 million shares of newly created Standard Gold non-voting 5% preferred stock. The preferred stock has a liquidation preference of $10 million, payable only upon certain liquidity events or upon achievement of a market value of Standard Gold’s equity equaling $200 million or more. Additionally, Standard Gold obtained the right to transfer its entire interest and related debt of the Bates-Hunter Mine, at any time for a period of 90 days after the closing of the Shea Mining transaction, to Wits Basin in exchange for the elimination of all existing intercompany debt of Standard Gold in the approximate amount of $2.5 million. Effective as of the closing of the Shea Mining transaction, Stephen King and Donald Stoica stepped down from Standard Gold’s Board of Directors, and Alfred A. Rapetti assumed the additional role of Chairman of the Board.
Standard Gold plans to commence toll milling at the Amargosa lab and toll-milling facility in Spring 2011. Plans are to gradually increase capacity at Amargosa and seek additional small mine toll-milling sources. Amargosa has a Water Pollution Control Permit for processing of up to 18,500 tons of ore per year. The company initially plans to process 50 – 70 tons of ore per day; with expansion and the appropriate permits, management believes that processing capacity could be increased to 600 tons of ore per day.
Standard Gold’s Chief Executive Officer, Alfred Rapetti stated, “Standard Gold believes it has acquired assets capable of eventually producing tens of millions of dollars in revenue and a significant amount of net annual EBITDA income. We intend to further develop our overall business model and plan for solid and increasing cash flows and growth of stockholder value in the coming months. Nevada has historically produced 80% of all the gold and silver in the United States and with steadily increasing metal values I believe that we are in the right place at the right time.”
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