Sandstorm Gold Ltd. (NYSEMKT: SAND, TSX:SSL) announced a partnership with Franco-Nevada Corporation that will see both companies entering into a US$120 million gold stream agreement with True Gold Mining Inc. (TSXV: TGM) with respect to its Karma Project in Burkina Faso, West Africa.
According to the press release:
In exchange for US$100 million in funding, True Gold is obligated to deliver 100,000 ounces of gold over five years, and thereafter an amount of refined gold equal to 6.5% of the equivalent production at the Karma Project. In addition, Sandstorm and Franco-Nevada have provided True Gold with an 18 month option to increase funding by up to US$20 million (“Increase Option”) in exchange for eight quarterly deliveries totaling up to 30,000 ounces of gold, based on the pro-rata portion of the amount drawn thereunder, starting 18 months from when the first tranche under the Increase Option is drawn down.
Sandstorm’s Senior Executive Vice President and Co-Founder, David Awram commented,:
Sandstorm is excited to partner with True Gold as their Karma Project is expected to be an economically robust project with excellent exploration upside, run by a highly experienced and capable management team. As the first syndicated gold stream, this transaction is a milestone event for the streaming and royalty sector. Streaming finance has become a mainstream source of funding in the mining industry and I expect we will see more syndicated transactions in the future.
Meanwhile, Mark O’Dea, Executive Chairman of True Gold stated:
The Franco-Nevada/Sandstorm funding package demonstrated the strongest solution in terms of cost of capital, operational flexibility, alignment of business interests and long-term partnership benefits, which we believe will provide maximum benefits to our shareholders.