Designated News Release
VANCOUVER, BC, Feb. 17, 2022 /PRNewswire/ - Sandstorm Gold
Ltd. ("Sandstorm Gold Royalties", "Sandstorm" or the "Company")
(NYSE: SAND) (TSX: SSL) is pleased to announce that it has signed a
letter of intent (the "LOI") with Royalty North Partners Ltd.
("Royalty North" or "RNP") (TSXV: RNP) whereby RNP will acquire
certain non-royalty and non-stream assets from Sandstorm, including
the Company's 30% equity interest in the Hod Maden project. In
exchange, Sandstorm will receive a flagship US$200 million gold stream on the Hod Maden
project, together with equity and debt consideration outlined
below.
The transaction will be a "Reverse Takeover" of Royalty North
(the "RTO" or the "Transaction") under the policies of the TSX
Venture Exchange (the "TSX-V"). Upon completion of the RTO, Royalty
North will change its name to Horizon Copper Corp. or such other
name as may be determined. Any following references to the
"Resulting Issuer" or "Horizon Copper" are to Royalty North after
the closing of the RTO.
REPOSITIONING SANDSTORM AS A PURE-PLAY
STREAMING AND ROYALTY COMPANY
"Streamline is a key theme for Sandstorm this year,"
commented Nolan Watson, Sandstorm's
President & CEO. "Our desire is for Sandstorm to be a royalty
and streaming company exclusively while ensuring the Company
achieves industry-leading growth. The transformation of the
Company's interest in Hod Maden into a gold stream is integral to
our corporate strategy of unlocking hidden value in Sandstorm's
portfolio."
Through the proposed Transaction, Sandstorm takes the first step
in repositioning itself as a pure-play precious metals streaming
and royalty company, while still retaining long-term exposure to
the robust economics and potential growth of Hod Maden.
Additionally, the creation of Horizon Copper offers Sandstorm a
strategic partner, allowing the Company to collaborate on larger,
more accretive deals across the mining industry.
STRATEGIC PARTNERSHIP TO DRIVE
ADDITIONAL VALUE FOR STAKEHOLDERS
Horizon Copper will become a strategic partner to Sandstorm that
will allow both companies to collaborate on future acquisitions.
Horizon Copper's business intent is to actively grow its existing
portfolio of assets, with a focus on copper projects. The two
companies may partner together whereby Sandstorm purchases streams
on the precious metal by-products from the copper project
acquisitions made by Horizon Copper.
"The launch of Horizon Copper is an elegant solution that
maintains excellent exposure to the upside at Hod Maden, while also
opening new doors for creating value for both entities," said Mr.
Watson. "I am excited as Sandstorm moves forward as a pure-play
streaming and royalty company with a partnership that can help us
acquire precious metal by-product streams on high-quality copper
assets."
TRANSACTION TERMS & DETAILS
Under the terms of the LOI, Sandstorm will sell RNP its 30%
stake in Hod Maden, transfer its approximate 25% stake in shares of
Entrée Resources Ltd. ("ETG" or "Entrée"), and contribute
US$10 million in cash. As
consideration, Sandstorm will retain a US$200 million gold stream on Hod Maden, will be
issued common shares of Horizon Copper which will result in an
approximate 34% equity interest1 in the Resulting
Issuer, and enter into a US$95
million debenture with the Resulting Issuer.
The Transaction is currently expected to close in the second
half of 2022.
US$200 Million Hod Maden Gold
Stream
Concurrent with the Transaction closing, Horizon Copper will
issue Sandstorm a US$200 million gold
stream on the Hod Maden project (the "Stream"). Under the terms of
the Stream, Sandstorm will receive 20% of all gold produced from
Hod Maden (on a 100% basis) and will make ongoing payments of 50%
of the gold spot price until 405,000 ounces of gold are delivered
(the "Delivery Threshold"). Once the Delivery Threshold has been
reached, Sandstorm will receive 12% of the gold produced for the
life of the mine for ongoing payments of 60% of the gold spot
price.
Equity Position and Debenture
Upon closing of the RTO, Sandstorm will also be issued a
US$95 million debenture (the
"Debenture") and approximately 34% of the outstanding common shares
of Horizon Copper1.
The Debenture is expected to bear an interest rate of LIBOR plus
2% over a 10-year term. Principal repayments would begin once
Horizon Copper begins receiving cash flows from its 30% interest in
the Hod Maden project. Prepayment of the Debenture can occur at any
time prior to maturity without penalty. Under the terms of the
Debenture, certain additional principal amounts may be made
available under limited circumstances.
Updated Long-Term Production Guidance
Sandstorm's attributable gold equivalent production is expected
to be 65,000–70,000 ounces in 2022. Subject to the closing of the
Transaction, the Company is forecasting over 100,000 gold
equivalent ounces in 2025.
Resulting Issuer: Horizon Copper
The following is an overview of the Resulting Issuer following
completion of the Transaction:
- Hod Maden Interest: A 30% net profits interest in the
Hod Maden project. Horizon Copper will be responsible for 30% of
the initial capital expenditure, which is expected to be fully
funded based on a closing cash balance of US$33 million2 and the initial capital
expenditure outlined in the 2021 Hod Maden Feasibility
Study3.
- Entrée Resources Equity: Approximately 25% stake in
shares of Entrée (49,672,515 common shares of ETG). Entrée has a
20% joint venture interest on a portion of the Oyu Tolgoi project
in Mongolia. Sandstorm will retain
its stream interest on the project.
- Financial Position: As at October
18, 2021, RNP had a cash balance of approximately
C$4.4M and no debt. Under the terms
of the LOI, RNP will undertake a non-brokered concurrent
subscription receipt financing to raise US$15 to US$20
million (the "Financing"). Together with the US$10 million to be contributed by Sandstorm,
Horizon Copper is expected to have approximately US$33 million in cash on closing of the
RTO2.
Following completion of the RTO and the Financing, Horizon
Copper is expected to be owned approximately (i) 34% by Sandstorm,
(ii) 47% by the participants in the Financing, and (iii) 19% by the
current shareholders of RNP1.
RTO PROCESS & NEXT STEPS
The Transaction is currently expected to close in the second
half of 2022 and is subject to a number of conditions, including,
but not limited to, execution of definitive agreements, TSX-V
acceptance, and disinterested RNP shareholder approval. The RTO
cannot close until the required shareholder approval is
obtained.
The full particulars of the RTO, the transferred assets, and the
Resulting Issuer will be described in an information circular to be
prepared in accordance with the policies of the TSX-V. A copy of
the information circular, will be available electronically on SEDAR
(www.sedar.com) under RNP's issuer profile in due course.
RNP is issuing its own news release concurrently with this news
release announcing the Transaction which contains certain required
disclosures under the policies of the TSX-V.
WEBCAST & CONFERENCE CALL DETAILS
A conference call will be held on Friday,
February 18, 2022 starting at 8:30am
PST to further discuss the Transaction and the Company's
fourth quarter and annual results. To participate in the conference
call, use the following dial-in numbers and conference ID, or join
the webcast using the link below:
International: (+1) 416-764-8688
North American Toll-Free: (+1) 888-390-0546
Conference ID: 16995658
Webcast URL:
https://bit.ly/3AlH99g
Notes
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1.
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Expected pro forma
basic shares upon closing of the Transaction. Ownership percentages
assume the Financing is completed at the high end of the stated
range.
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2.
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Cash balance on
closing of the RTO assumes the Financing is completed at the high
end of the stated range.
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3.
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Based on Sandstorm
and Lidya Madencilik Sanayi ve Ticaret A.S.'s current plan to debt
finance approximately 65% of the project capital. See Sandstorm
press release dated November 24, 2021 for results from the Hod
Maden Feasibility Study.
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QP
Qualified
Person
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Keith Laskowski (MSc),
Sandstorm's Vice President, Geology is a
Qualified Professional (#01221QP) of the Mining and
Metallurgical
Society of America and a Qualified Person as defined by
Canadian
National Instrument 43-101. He has reviewed and approved the
scientific and technical information in this press
release.
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CONTACT Information
For more information about Sandstorm Gold Royalties, please
visit our website at www.sandstormgold.com or email us at
info@sandstormgold.com.
ABOUT SANDSTORM
GOLD ROYALTIES
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Sandstorm is a gold
royalty company that provides upfront financing to gold mining
companies that are looking for capital and in return, receives the
right to a percentage of the gold produced from a mine, for the
life of the mine. Sandstorm has acquired a portfolio of 230
royalties, of which 29 of the underlying mines are producing.
Sandstorm plans to grow and diversify its low cost production
profile through the acquisition of additional gold royalties. For
more information visit: http://www.sandstormgold.com.
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CAUTIONARY
STATEMENTS TO U.S. SECURITYHOLDERS
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The financial
information included or incorporated by reference in this press
release or the documents referenced herein has been prepared in
accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board, which
differs from US generally accepted accounting principles ("US
GAAP") in certain material respects, and thus are not directly
comparable to financial statements prepared in accordance with US
GAAP.
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The disclosure and
information contained or referenced herein uses mineral reserve and
mineral resource classification terms that comply with reporting
standards in Canada, and mineral reserve and mineral resource
estimates are made in accordance with Canadian NI 43-101 and the
Canadian Institute of Mining, Metallurgy and Petroleum — CIM
Definition Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council, as amended (the "CIM Definition
Standards"). These standards differ significantly from the mineral
reserve disclosure requirements of the United States Securities
Exchange Commission (the "SEC") set forth in Industry Guide 7.
Consequently, information regarding mineralization contained or
referenced herein is not comparable to similar information that
would generally be disclosed by U.S. companies under Industry Guide
7 in accordance with the rules of the SEC. Further, the SEC has
adopted amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are
registered with the SEC under the Securities Exchange Act of 1934
("Exchange Act"). These amendments became effective February 25,
2019 (the "SEC Modernization Rules") and, commencing for
registrants with their first fiscal year beginning on or after
January 1, 2021, the SEC Modernization Rules replaced the
historical property disclosure requirements included in SEC
Industry Guide 7. As a foreign private issuer that files its
annual report on Form 40-F with the SEC pursuant to the
multi-jurisdictional disclosure system, the Company is not required
to provide disclosure on its mineral properties under the SEC
Modernization Rules and will continue to provide disclosure under
NI 43-101 and the CIM Definition Standards. The SEC Modernization
Rules include the adoption of terms describing mineral reserves and
mineral resources that are "substantially similar" to the
corresponding terms under the CIM Definition, but there are
differences in the definitions under the SEC Modernization Rules
and the CIM Definition Standards. Accordingly, there is no
assurance any mineral reserves or mineral resources that the
Company may report as "proven mineral reserves", "probable mineral
reserves", "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources" under NI 43-101 would
be the same had the Company prepared the mineral reserve or mineral
resource estimates under the standards adopted under the SEC
Modernization Rules. U.S. investors are also cautioned that while
the SEC recognizes "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources" under the Modernization
Rules, investors should not assume that any part or all of the
mineralization in these categories will ever be converted into a
higher category of mineral resources or into mineral reserves.
Mineralization described using these terms has a greater amount of
uncertainty as to its existence and feasibility than mineralization
that has been characterized as reserves. Accordingly, investors are
cautioned not to assume that any measured mineral resources,
indicated mineral resources, or inferred mineral resources that the
Company reports are or will be economically or legally mineable.
Further, "inferred mineral resources" have a greater amount of
uncertainty as to their existence and as to whether they can be
mined legally or economically. Therefore, U.S. investors are also
cautioned not to assume that all or any part of the "inferred
mineral resources" exist. Under Canadian securities laws, estimates
of "inferred mineral resources" may not form the basis of
feasibility or pre-feasibility studies, except in rare cases.
For the above reasons, information contained or referenced herein
regarding descriptions of our mineral reserve and mineral resource
estimates is not comparable to similar information made public by
U.S. companies subject to reporting and disclosure requirements of
the SEC under either Industry Guide 7 or SEC Modernization
Rules.
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CAUTIONARY NOTE
REGARDING FORWARD-LOOKING INFORMATION
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This press release
contains "forward-looking statements", within the meaning of the
U.S. Securities Act of 1933, the U.S. Securities Exchange Act of
1934, the Private Securities Litigation Reform Act of 1995 and
"forward-looking information" within the meaning of applicable
Canadian securities legislation, concerning the business,
operations and financial performance and condition of Sandstorm
Gold Royalties. Forward-looking statements in this press release
include, but are not limited to, the expectation that the RTO will
be completed in the second half of 2022, the definitive agreements
will be executed, the TSX-V will accept the terms of the RTO, and
RNP shareholders will vote and approve of the Transaction;
Sandstorm's desire to be a royalty and streaming company
exclusively, while ensuring the Company achieves industry-leading
growth; the transformation of the Company's interest in Hod Maden
into a gold stream being integral to the Company's corporate
strategy of unlocking hidden value in Sandstorm's portfolio;
Sandstorm repositioning itself as a pure-play precious metals
streaming and royalty company, while still retaining long-term
exposure to the robust economics and potential growth of Hod Maden;
the creation of Horizon Copper offering Sandstorm a strategic
partner allowing the Company to collaborate on larger, more
accretive deals across the mining industry; the launch of Horizon
Copper being an elegant solution that maintains excellent exposure
to the upside at Hod Maden, while also opening new doors for
creating value for both entities; and the updated long-term
production guidance, the future price of gold, silver, copper, iron
ore and other metals, the estimation of mineral reserves and
resources, realization of mineral reserve estimates, the timing and
amount of estimated future production. Forward-looking statements
can generally be identified by the use of forward-looking
terminology such as "may", "will", "expect", "intend", "estimate",
"anticipate", "believe", "continue", "plans", or similar
terminology.
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Forward-looking
statements are made based upon certain assumptions and other
important factors that, if untrue, could cause the actual results,
performances or achievements of Sandstorm Gold Royalties to be
materially different from future results, performances or
achievements expressed or implied by such statements. Such
statements and information are based on numerous assumptions
regarding present and future business strategies and the
environment in which Sandstorm Gold Royalties will operate in the
future, including the receipt of all required approvals, the price
of gold and copper and anticipated costs. Certain important factors
that could cause actual results, performances or achievements to
differ materially from those in the forward-looking statements
include, amongst others, failure to receive necessary
approvals, changes in business plans and strategies, market
conditions, share price, best use of available cash, gold and other
commodity price volatility, discrepancies between actual and
estimated production, mineral reserves and resources and
metallurgical recoveries, mining operational and development risks
relating to the parties which produce the gold or other commodity
the Company will purchase, regulatory restrictions, activities by
governmental authorities (including changes in taxation), currency
fluctuations, the global economic climate, dilution, share price
volatility and competition.
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Forward-looking
statements are subject to known and unknown risks, uncertainties
and other important factors that may cause the actual results,
level of activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking statements, including but not limited to: the
impact of general business and economic conditions, the absence of
control over mining operations from which the Company will purchase
gold, other commodities or receive royalties from, and risks
related to those mining operations, including risks related to
international operations, government and environmental regulation,
actual results of current exploration activities, conclusions of
economic evaluations and changes in project parameters as plans
continue to be refined, risks in the marketability of minerals,
fluctuations in the price of gold and other commodities,
fluctuation in foreign exchange rates and interest rates, stock
market volatility, as well as those factors discussed in the
section entitled "Risks to Sandstorm" in the Company's annual
report for the financial year ended December 31, 2021 and the
section entitled "Risk Factors" contained in the Company's annual
information form dated March 30, 2021 available at www.sedar.com.
Although the Company has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended.
There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements. The Company does not undertake to update any
forward-looking statements that are contained or incorporated by
reference, except in accordance with applicable securities
laws.
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SOURCE Sandstorm Gold Ltd.