Sandstorm Gold Ltd. has agreed to purchase an existing 2% net smelter returns royalty (NSR Royalty) on the Houndé gold mine in Burkina Faso, operated by Endeavour Mining Corp., which is owned by Acacia Mining, for US$45 million. The NSR Royalty will cover the Kari North and Kari South tenements, representing about 500 square kilometers of the property. Nearly the entire Houndé mineral reserve of 2.1 million ounces (oz) is located on those tenements, including the Vindaloo deposit and most of the Bouéré deposit. The NSR Royalty acquisition is expected to close in January.
Commercial production was announced on October 31 and the Houndé mine is expected to produce 235,000 oz of gold per year on average over the first four years of operations. The mine has an initial 10-year mine life based on the current mineral reserves, Sandstorm Gold said.
The construction of the Houndé mine was completed ahead of schedule and below budget and is now Endeavour’s flagship gold mine.
“The Houndé royalty is a natural fit for the Sandstorm portfolio as the asset meets all of the criteria that we look for in an acquisition,” said Sandstorm President and CEO Nolan Watson. “Shareholders will benefit from an immediate 10% increase in cash flow per share beginning in 2018. Endeavour has proven to be an adept operator in West Africa and we’re extremely excited about the exploration potential on what is a massive property.”