Vancouver, British Columbia | Sandstorm Gold Ltd. (“Sandstorm Gold Royalties”, “Sandstorm” or the “Company”) (NYSE American: SAND, TSX: SSL) is pleased to announce that the Company has entered into a US$42.5 million financing package with Americas Silver Corporation (“Americas Silver”) that includes a US$25 million gold stream and royalty on the Relief Canyon Project in Nevada, USA (“Relief Canyon” or the “Project”), as well as a US$10 million convertible debenture, and an US$7.5 million equity subscription.
•Near-Term Cash Flow: Americas Silver expects Relief Canyon to pour gold by the end of 2019 with average annual production of 91,000 ounces of gold at an all-in-sustaining cost of US$801 per ounce.
•Precious Metal Stream with Fixed Deliveries: Sandstorm will receive 32,022 ounces of gold over 5.5 years, followed by a 4.0% precious metals stream thereafter. This is expected to increase the Company’s attributable gold equivalent ounces1 by 7% in 2020 and 9% in 2021.
•Exploration Upside: Relief Canyon has a large prospective land package that is relatively underexplored. Sandstorm’s royalty covers the full property area surrounding the mine site.
•Safe Jurisdiction: Relief Canyon is located in Nevada, USA one of the world’s best mining jurisdictions. Americas Silver has mining and processing permits in place to start operations at the Relief Canyon mine.
In exchange for US$25 million, Sandstorm will receive 32,022 ounces of gold over 5.5 years followed by 4.0% of the gold and silver production from the Relief Canyon Mine. Sandstorm will also have a 1.4% - 2.8% net smelter returns royalty on the area surrounding the Relief Canyon mine, plus a four kilometre area of interest (the “NSR Royalty”).
The 32,022 ounces of fixed gold deliveries will begin on April 3, 2020 and be delivered over a period of 5.5 years (the “Delivery Period”). If the first gold pour at Relief Canyon has not occurred by April 3, 2020, the Delivery Period will begin on the earlier of i) the first gold pour at Relief Canyon, and ii) October 3, 2020. During the first 60 months of the Delivery Period, Sandstorm will receive 492 ounces of gold per month, decreasing to 417 ounces of gold during the last 6 months of the Delivery Period.
Beginning 60 months after the commencement of the Delivery Period, Sandstorm will receive 4.0% of the gold and silver produced at the Relief Canyon Mine for the life of the mine (the “4.0% Stream”) and will pay Americas Silver 30% - 65% of the spot price of gold and silver for each ounce of gold and silver delivered (the “Ongoing Payment”). The Ongoing Payment percentage varies by concession and is calculated based on the pre-existing royalty burden.
Americas Silver may elect to reduce the 4.0% Stream and NSR Royalty on the Relief Canyon property by delivering 4,000 ounces of gold to Sandstorm (the “Purchase Option”). The Purchase Option may be exercised by Americas Silver at any time. The number of gold ounces required to exercise the option increases by 10% per year, compounded annually. Upon exercising the Purchase Option, the 4.0% Stream will decrease to 2.0% and the NSR Royalty will decrease to 1.0%.
The drawdown of the US$25 million will occur alongside the Relief Canyon construction schedule.
CONVERTIBLE DEBENTURE AND EQUITY TERMS
The US$10 million convertible debenture bears an interest rate of 6% per annum and has a term of four years (the "Debenture"). Sandstorm has the right to convert principal and interest owing under the Debenture into common shares of Americas Silver, at any time prior to the maturity date, at a conversion price US$2.14 per Americas Silver share.
Sandstorm has agreed to subscribe for 4,784,689 shares of Americas Silver at C$2.09/share (the “Equity Financing”).
ABOUT RELIEF CANYON
The Relief Canyon project is a past producing open pit mine located in Nevada, USA at the southern end of the Pershing Gold and Silver Trend, which hosts other projects such as Coeur Mining Inc.’s Rochester mine. Proven and Probable Reserves as of May 2018 totaled 27.5 Mt of 0.72 g/t gold material for 635,000 contained gold ounces (based on 0.17 g/t COG, Technical Report dated May 24, 2018 by Tietz,P., et al., MDA).
A Feasibility Study that was released in May 2018 outlined average annual production of 91,000 ounces of gold over a 5.6 year mine life at an average all-in-sustaining-cost of US$801 per ounce of gold. There is significant exploration potential at Relief Canyon, as only approximately 20% of the 11,700 hectare land package has been explored to date.
Americas Silver has received permits to start construction and resume mining and Relief Canyon is expected to pour gold by the end of 2019. Infrastructure on site includes access to power and water as well as a 21,500 ton per day heap-leach processing facility that is fully permitted and constructed.
SANDSTORM FILES EARLY WARNING REPORT
Pursuant to National Instrument 62-103 - The Early Warning System and Related Take Over Bid and Insider Reporting Issues, Sandstorm is announcing the acquisition of an aggregate of 3,553,500 common shares (the “Entrée Acquired Shares”) of Entrée Resources Ltd. (“Entrée”), representing approximately 2% of the outstanding common shares of Entrée (the “Entrée Shares”).
Prior to the acquisition of the Entrée Acquired Shares, Sandstorm held 25,090,380 Entrée Shares and warrants to purchase an additional 457,317 Entrée Shares (“Entrée Warrants”), representing approximately 14.4% of the outstanding Entrée Shares on a non-diluted basis. Assuming the exercise of all 457,317 Entrée Warrants held by the Company, the Company would have previously held an aggregate of 25,547,697 Entrée Shares, representing approximately 14.6% of the outstanding Entrée Shares (on a partially diluted basis). Upon completion of the acquisition of the Entrée Acquired Shares, an aggregate 28,643,880 Entrée Shares are now owned directly by Sandstorm, representing approximately 16.4% of the outstanding Entrée Shares. Assuming the exercise of the Company´s 457,317 Entrée Warrants, the Company would then hold 29,101,197 Entrée Shares, representing approximately 16.6% of the outstanding Entrée Shares (on a partially diluted basis).
The Entrée Acquired Shares were acquired by Sandstorm on the open market over the facilities of the Toronto Stock Exchange and other published markets for the Entrée Shares at prices ranging from C$0.49 to C$0.55 per Entrée Acquired Share. The acquisition of the Entrée Acquired Shares by Sandstorm was effected for investment purposes. Sandstorm may from time to time acquire additional securities of Entrée, dispose of some or all of the existing or additional securities it holds or will hold, or may continue to hold its current position.
The early warning report, as required under National Instrument 62-103, contains additional information with respect to the foregoing matters and will be filed by the Company on Entrée’s
STREAM AND ROYALTY TERMS
Figure 1: Relief Canyon Claim Map
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