* Yukon-Nevada to deliver 173,880 oz of gold over 48 months
* Money will be used for Jerritt Canyon property in Nevada
* Yukon-Nevada will not pay any interest to Deutsche Bank (Adds details on the deal, CEO quote, shares)
Aug 3 (Reuters) - Yukon-Nevada Gold Corp said it plans to enter into a deal with Germany's Deutsche Bank AG DBKGn.DE to sell gold over a four-year period for an upfront payment of $120 million.
Under the deal, 173,880 ounces of gold will be delivered over 48 months. The quantity represents about 5.1 percent of the gold resources at Queenstake Resources USA Inc's wholly-owned Jerritt Canyon property in Nevada, the gold producer said.
Queenstake is a unit of Yukon-Nevada, which owns silver, gold, zinc and copper assets in Canada's Yukon territory and British Columbia and in Nevada, U.S.
The money will be used for developing the Jerritt Canyon property, said Yukon-Nevada.
"This gold loan facility will address all of our capital needs for the Jerritt Canyon winterization and other announced capex programs, which will enable us to achieve our production targets," Chief Executive Robert Baldock said.
Deutsche Bank -- which owns more than 10 percent of Yukon-Nevada -- will lend the money to Queenstake.
About $26 million of the loan proceeds will be used to repay the senior secured notes issued to noteholders led by Sprott Asset Management LP in August 2010. Sprott owns 14.47 percent of Yukon-Nevada and is the second-largest shareholder of the company, according to Thomson Reuters data.
The company, which has a market value of about C$423 million, will not pay any interest to Deutsche Bank during the term of the facility.
After receipt of $120 million, the remainder of the purchase price will be paid to Queenstake on completion of the monthly gold deliveries and it will be equal to the amount that the gold price exceeds $850 and up to a maximum gold price of $1,700.
Spot gold was last quoted at $1,665.65 an ounce on Wednesday, after having hit a record $1,672.65 earlier.
Certain components of the deal, such as gold pricing valuations, will be finalized at the time of prepayment, expected around Aug. 12, the company said.
Yukon-Nevada shares were up at 49 Canadian cents on Wednesday morning on the Toronto Stock Exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila)