Erdene Resource Development Corp. has signed financing agreements with Sandstorm Gold Ltd. that provide total consideration of $2.5-million to Erdene to advance exploration and development programs on the company's gold projects in southwest Mongolia.
The transaction is subject to approval from the Toronto Stock Exchange.
Transaction highlights
Provides financing to Erdene for 2016 projects, specifically drilling of the high-grade Bayan Khundii gold project;
Sandstorm will provide cash consideration of $1-million through a private placement of five million common shares of Erdene at 20 cents per share;
Sandstorm will provide consideration of $1.5-million in common shares of Sandstorm for the purchase of a 2-per-cent net smelter returns royalty on the company's Bayan Khundii gold project and Altan Nar gold-polymetallic project;
Erdene has a three-year option to buy back 50 per cent of the NSR royalty for $1.2-million to reduce the NSR royalty to 1 per cent;
Sandstorm to hold the Erdene shares for a minimum of 18 months.
"We welcome Sandstorm as an investor in Erdene and view this transaction as an endorsement of the quality and potential of our company's flagship gold projects," said Peter Akerley, Erdene's president and chief executive officer. "This financing allows us to create value by completing a detailed evaluation and drilling program at Bayan Khundii in a manner that balances our need for capital with preserving shareholder ownership in what we believe could be a very significant new gold district."
Transaction summary
The Sandstorm transaction includes both equity of Erdene and Sandstorm and royalty components that provide total cash and securities consideration of $2.5-million to Erdene. The financing includes the purchase by Sandstorm, by way of private placement, of five million common shares of Erdene at 20 cents per share. Sandstorm has committed to hold the Erdene shares issued under the equity private placement for a minimum of 18 months. The royalty in favour of Sandstorm is a 2-per-cent NSR royalty on the company's two flagship gold projects in southwest Mongolia: Bayan Khundii and Altan Nar. The transaction provides Erdene with a three-year option to buy back 50 per cent of the NSR royalty for $1.2-million, reducing the Sandstorm NSR royalty to 1 per cent. Erdene has granted to Sandstorm a right of first refusal on future stream and/or royalty financings related to the Bayan Khundii and/or Altan Nar projects. No fees or warrants are associated with the transaction. The transaction is subject to approval from the Toronto Stock Exchange.
Bayan Khundii gold project
Discovered in the second quarter of 2015 with initial drill results reported in the fourth quarter of 2015, Bayan Khundii has rapidly become the highest-priority project for the company based on its very high grades (up to 12 metres of 16 grams per tonne gold from 11 metres to 23 metres depth), favourable metallurgy (99-per-cent gold recovery from high-grade composite using gravity and leach) and size potential (shallow average drill depth of 46 metres). An exploration program is now being launched which includes a 3,500-metre drill program (commenced April 8, 2016), extensive geophysical and geochemical testing, as well as multiple studies in advance of a mining licence application and economic evaluation. Results of these programs are expected to be available late in the second quarter and third quarter of 2016. The program is designed to determine the continuity, grade and extent of the gold mineralization at Bayan Khundii, and is anticipated to result in a maiden resource estimate.
Altan Nar gold-polymetallic project
Discovered in 2011, Altan Nar hosts a total of 18 mineralized (gold, silver, lead and zinc) target areas within a 5.6-kilometre-by-1.5-kilometre mineralized corridor. Two of the early discoveries, Discovery zone (DZ) and Union North (UN), are the most advanced targets, hosting wide zones of high-grade, near-surface mineralization, and were the focus of an initial National Instrument 43-101 resource estimate released in the first quarter of 2015 (March 31, 2015, news release). The remaining 16 targets are either undrilled or scout-drilled, and are considered by Erdene to have good potential for hosting additional resources. The 2016 exploration programs at Altan Nar may be influenced by results from Bayan Khundii in that certain synergies could exist in various areas of the project that assist in prioritizing what programs will be completed at Altan Nar. Studies related to a mining licence application at Altan Nar, similar to those being carried out at Bayan Khundii, are expected to commence in the second quarter of 2016.
Qualified person
Michael MacDonald, PGeo (Nova Scotia), director of exploration for Erdene, is the qualified person, as that term is defined in National Instrument 43-101, and has reviewed and approved the technical information contained in this news release. All drill result samples have been assayed at SGS Laboratory in Ulan Batar, Mongolia. In addition to internal checks by SGS Laboratory, the company incorporates a quality assurance/quality control sample protocol utilizing prepared standards and blanks. All metallurgical testing and analysis was carried out by Blue Coast Research Ltd. at its facility in Parksville, B.C.
tijd 17.20
Sandstrom Gold
Time X PriceChg Vol Buyer Seller Markers
11:02:38 T 5.16 0.53 700 1 Anonymous 101 SG Capital W
11:02:38 T 5.16 0.53 400 79 CIBC 101 SG Capital
11:02:38 T 5.16 0.53 600 79 CIBC 79 CIBC W
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