Sandstorm Gold Announces Restructuring with Luna Gold
06:00 EDT Friday, March 20, 2015
VANCOUVER, March 20, 2015 /PRNewswire/ - Sandstorm Gold Ltd. ("Sandstorm" or the "Company") (NYSE MKT: SAND, TSX: SSL) is pleased to announce that the Company has agreed to restructure its gold stream and loan agreement with Luna Gold Corp. ("Luna") (TSX:LGC) (the "Restructuring"). Sandstorm currently holds a 17% gold stream (the "Gold Stream") on Luna's Aurizona project in Brazil (the "Aurizona Project") and has a loan outstanding to Luna with a principal amount of US$20 million (the "Loan").
? RESTRUCTURING TERMS
Gold Stream RestructuringUnder the terms of the Restructuring, the Gold Stream will be terminated and replaced by two net smelter return royalties ("NSR") (the "Aurizona Project NSR" and the "Greenfields NSR") and a convertible debenture. The Aurizona Project NSR will cover the entire Aurizona project, including the current 43-101 compliant Reserves and Resources, and all adjacent exploration upside that would be processed through the Aurizona mill. The Aurizona Project NSR will be a sliding scale royalty based on the price of gold as follows:
3% if the price of gold is less than or equal to US$1,500 per ounce; 4% if the price of gold is between US$1,500 per ounce and US$2,000 per ounce; and 5% if the price of gold is greater than US$2,000 per ounce. The Greenfields NSR will cover the 190,073 hectares of exploration ground held by Luna and will be a 2% NSR. Luna will have the right to purchase one-half of the Greenfields NSR for US$10 million at any time prior to commercial production.
Sandstorm will hold a right of first refusal on any future streams or royalties on the Aurizona Project and Greenfields.
The debenture will be a US$30 million debenture bearing interest at a rate of 5% per annum (the "Debenture"). The Debenture is payable in three equal annual tranches of US$10 million plus accrued interest beginning January 1, 2018. Luna will have the right to convert principal and interest owing under the Debenture into common shares of Luna, so long as Sandstorm does not own more than 20% of the outstanding common shares of Luna.
Loan AmendmentUnder the Loan amendment, the maturity date of the Loan will be extended from June 30, 2017 to June 30, 2021, the interest rate will be revised to 5% per annum, payable in cash on the maturity date, and Luna will be subject to a default rate of interest equal to 10% per annum.
Sandstorm's President & CEO Nolan Watson commented, "The restructuring puts Luna Gold on a development path to move the Aurizona mine toward sustainable, long-term production. We believe that Aurizona has the potential to produce gold profitably for many years and the agreement between Sandstorm and Luna provides an opportunity for all stakeholders to benefit." Mr. Watson added, "Sandstorm's current forward looking guidance does not include potential production from Aurizona but we are confident that this restructuring will lead to additional ounces from the project in the future."
The Restructuring is subject to Luna completing an equity raise of no less than CAD$20 million, obtaining all of the necessary governmental and regulatory approvals and the Restructuring is expected to be completed and effective on or around June 30, 2015.
ABOUT SANDSTORM GOLD
Sandstorm Gold Ltd. is a gold streaming and royalty company. Sandstorm provides upfront financing to gold mining companies that are looking for capital and in return, receives the right to a percentage of the gold produced from a mine, for the life of the mine. Sandstorm has acquired a portfolio of 57 streams and royalties, of which 14 of the underlying mines are producing gold. Sandstorm plans to grow and diversify its low cost production profile through the acquisition of additional streams and royalties.
For more information visit: www.sandstormgold.com |
