A global gold royalty company has entered into a net smelter returns royalty in a $45million royalty deal for a gold mine in Burkina Faso.
Sandstorm Gold, providers of upfront financing to gold mining companies across the world, has purchased an existing 2% net smelter returns royalty (NSR) on the Hondue gold mine in Burkina Faso, operated by Endeavour Mining Corporation.
In a deal valuing at $45million in cash, the NSR Royalty covers the Kari North and Kari South tenements.
Nearly the entire Hounde Mineral Reserve of 2.1 million ounces of gold is located on the Kari North and south tenements.
Sandstorm's President and CEO Nolan Watson remarked, "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,”
“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. The nearly 500 square kilometre area that applies to the royalty is one of the largest prospective land packages in Sandstorm's royalty portfolio and Endeavour has committed tens of millions of dollars in exploration spending in the coming years to aggressively search for new ore. Sandstorm will be a direct beneficiary of that work."
The Houndé exploration tenement covers more than 1,075 square kilometers within Burkina Faso’s highly prospective Birimian Greenstone belt. Following a two-year period of no drilling exploration, activities resumed in 2017 with a $5 million program totalling approximately 45,000 meters
Houndé has become the Company's flagship low-cost mine, ranking amongst West Africa's top tier cash generating mines, with an average annual production of 235,000 ounces at an All-In Sustaining Cost of $610/oz over its first four years.
Endeavour has incurred approximately US$5 million in exploration spending during 2017 and has set an exploration budget of US$40 million to be spent over the next four years.