Aug 6 2014
Sandstorm Gold Ltd. ("Sandstorm" or the "Company") has agreed to enter into a strategic investment agreement (the "Investment Agreement") with Luna Gold Corp. ("Luna"), as part of which, Sandstorm will participate in a Luna non-brokered private placement (the "Placement").
Strategic Investment Agreement
The Placement involves Luna issuing up to 30 million common shares (the "Placement Shares") at a price of $1.02 per share, for gross proceeds of up to $30,600,000. Pursuant to the Investment Agreement, Sandstorm will purchase a minimum of 19.5 million of the Placement Shares, which when combined with the 8.5 million shares of Luna already owned by the Company, will result in Sandstorm becoming the largest shareholder of Luna, owning approximately 19.8% of Luna's issued and outstanding shares. Sandstorm will have the right to maintain its ownership percentage of Luna through future private placements or public offerings so long as the Company owns greater than 15% of Luna's issued and outstanding shares.
The Placement is necessary due to a combination of lower than estimated cash flow and cost overruns at Aurizona, also requiring Luna to delay the completion of the Phase One Expansion at the mine. Luna has revised its 2014 production guidance to a range of 75,000 to 80,000 ounces of gold.
The Investment Agreement will allow Sandstorm to appoint one member to Luna's Board of Directors. David Awram, Senior Executive Vice President of Sandstorm, will assume the Luna directorship role. The Chairman of Luna's Board of Directors, Luis Baertl, has resigned and will be succeeded by the current Lead Independent Director, Steven Krause. Mr. Baertl will remain a Director of Luna.
Gold Stream Discussions
Sandstorm and Luna have commenced discussions related to the potential modification of the Aurizona gold stream. The focus of the discussions is to explore opportunities that will increase value for both Sandstorm and Luna shareholders with the goal of improving Luna's access to capital, accelerating production and cash flow to both Sandstorm and Luna and leveraging the highly prospective brownfields and greenfields exploration targets. Sandstorm currently holds a gold stream agreement to purchase 17% of the life of mine gold produced from the open-pit operations at Aurizona at a per ounce price of US$404 (increasing 1% annually).
Sandstorm's President and CEO Nolan Watson commented, "The interests of Sandstorm and Luna are very much aligned and we are committed to working together in order to unlock as much value as possible for our respective shareholders."
Prior to completion of the Placement, Sandstorm owned 8.5 million shares of Luna (approximately 7%) and upon completion of the Placement, Sandstorm will have ownership of 28 million shares of Luna (approximately 19.8%). The Placement Shares will be acquired for investment purposes. Sandstorm does not have any present intention to acquire ownership of, or control over, additional securities of Luna. It is the intention of Sandstorm to evaluate its investment in Luna on a continuing basis and such holdings may be increased or decreased in the future. The common shares of Luna are listed on the TSX, and the Placement Shares will be issued from treasury. The Placement and the issuance of the Placement Shares are conditional upon receipt of approval of the Toronto Stock Exchange. Sandstorm relied on Section 2.10 of National Instrument 45-106 - Prospectus and Registration Exemptions in the acquisition of the Placement Shares. The address of Sandstorm for the purposes of National Instrument 62-103 – Take-over Bids and Special Transactions is 400 Burrard Street, Suite 1400, Vancouver, British Columbia V6C 3A6. A copy of Sandstorm's Early Warning Report will be available on Luna's profile on SEDAR at www.sedar.com or by contacting Sandstorm at the numbers shown below.
ABOUT SANDSTORM GOLD
Sandstorm Gold Ltd. is a gold streaming company. Sandstorm provides upfront financing to gold mining companies that are looking for capital and in return, receives a gold streaming agreement. A gold stream gives Sandstorm the right to purchase a percentage of the gold produced from a mine, for the life of the mine, at a fixed price per ounce. Sandstorm has acquired a portfolio of nine streams and twenty-eight royalties, fourteen of which are producing gold. Sandstorm plans to grow and diversify its low cost production profile through the acquisition of additional gold streams.