Sandstorm Resources Ltd. (TSX VENTURE:SSL) has announced that it has entered into a gold purchase agreement with Brigus Gold Corp. (TSX: BRD).
Announcement Highlights:
- Sandstorm has entered into a gold purchase agreement with Brigus Gold Corp. on its Black Fox gold mine in Ontario
- Sandstorm to purchase 12% of the life of mine gold production
- Sandstorm will make an upfront payment of US$56.3 million with cash on hand
- Sandstorm will pay US$500 per ounce as an ongoing payment
- The Black Fox mine is currently in production and Sandstorm expects to receive delivery of gold beginning in January 2011
Sandstorm has agreed to purchase 12% of the life of mine gold produced from Brigus' Black Fox mine, located in Ontario, Canada (the "Black Fox Mine") for US$56.3 million as an upfront payment plus ongoing per ounce payments equal to the lesser of US$500 (subject to an inflationary adjustment beginning in 2013, not to exceed 2% per annum)(the "Per Ounce Payments") and the then prevailing market price per ounce of gold. Brigus will have the option, for a period of 24 months, to repurchase 50% of the gold purchase agreement by making a US$36.6 million payment to Sandstorm, upon receipt of which, the percentage of gold Sandstorm is entitled to purchase shall be decreased from 12% to 6%. Also, for no additional upfront consideration, Sandstorm will have the right to purchase, by remitting the Per Ounce Payments, 10% (decreasing to 4.5% if the full repurchase option is exercised within 24 months) of the gold produced from an area defined as the Black Fox Extension, covering a portion of Brigus' Pike River property.
About The Black Fox Mine
The Black Fox Mine is located outside of Matheson, Ontario, Canada in the Timmins Gold District and has been in commercial production since May 2009. It is currently operating as an open pit mine, but since mid 2010, began development of an underground mine which it expects to begin production in early 2011. At this time, both open pit and underground operations are expected to run concurrently. Ore is trucked to the Black Fox mill, which is a 2,000 tonne per day mill and tailings facility located east of the mine. Brigus has been operating the asset with improving production rates and reducing cash costs quarter over quarter since the beginning of commercial production. In the third quarter of 2010, the Black Fox Mine produced in excess of 21,000 ounces of gold, and production is continuing to ramp up.
The Black Fox mineralization is an Archean age, lode gold deposit located within the Abitibi greenstone belt along with several other producing gold mines and gold camps. Exploration is ongoing with a drill program being pursued at the mine.
"This is a very significant and transformative deal for Sandstorm," stated Nolan Watson, President and Chief Executive Officer of Sandstorm Resources, "the Black Fox mine is expected to provide us with cash flow from gold sales immediately and is also a project that has fantastic growth prospects on the exploration front. Brigus has assembled an excellent operating team and seems to be in a position to grow the project effectively."