Sandstorm Gold Ltd. announced that Luna Gold Corp. and JDL Gold Corp. have entered into an agreement to combine their businesses, creating a multi-asset mining company. Under the terms of the agreement, JDL will acquire all of the outstanding shares of Luna Gold. The combined company intends to change its name to Trek Mining Inc. Christian Milau from Luna Gold will be the CEO and executive director and Greg Smith from JDL will serve as president and executive director of the newly formed company.
Trek Mining has approximately $50 million in cash and no cash debt, and will be strongly positioned to advance Luna Gold’s Aurizona gold project to production. Sandstorm holds a 3% to 5% sliding scale net smelter returns royalty. Sandstorm holds a 2% NSR royalty on greenfields properties owned by Luna Gold. The greenfields exploration ground is adjacent to the Aurizona project and is under option to AngloGold Ashanti Holdings plc.
Concurrent with the closing of the transaction, the term debt facility of $20 million plus interest that is due from Luna to Sandstorm will be settled in equity or a combination of cash and equity of Trek Mining. Sandstorm will continue to hold the US$30 million convertible debt facility that is due from Luna.
The Aurizona project is located in northeastern Brazil and produced gold from 2010 until late 2015 when it was placed on care and maintenance. It produced a total of 329,042 ounces (oz) of gold at an average grade of 1.28 grams per metric ton (g/mt) and average recoveries of 88%. Remaining proven and probable reserves are estimated at 18.6 million mt at 1.62 g/mt for 969,000 oz of gold, with measured and indicated resources of 29.9 million mt at 1.67 g/mt for 1,599,400 oz of gold.