SANDSTORM GOLD ROYALTIES COMPLETES SALE OF HOD MADEN INTEREST AND CONCURRENT GOLD STREAM WITH HORIZON COPPER

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Overig advies 02/09/2022 15:58
Sandstorm Gold Ltd. (“Sandstorm Gold Royalties”, “Sandstorm” or the “Company”) (NYSE: SAND, TSX: SSL) is pleased to report the closing of the first part of the previously announced reverse takeover transaction (the “RTO Part A”) of Horizon Copper Corp. (formerly Royalty North Partners Ltd.) (“Horizon Copper” or “Horizon”), including the sale of the Company’s 30% interest in the Hod Maden project to Horizon (the “Sale Transaction”) and the receipt of a $200 million gold stream on production from Hod Maden (the “Hod Maden Gold Stream”).

“Since announcing the transformation of our Hod Maden interest into a traditional gold stream earlier this year, we have received overwhelmingly positive feedback from shareholders who are eager to see Sandstorm become a pure-play royalty and streaming company once again,” commented Nolan Watson, Sandstorm's President & CEO. “This is a significant milestone that we have been working towards since acquiring Hod Maden several years ago. Furthermore, we’re very pleased to see Horizon Copper complete the first part of its RTO and solidify its position as Sandstorm’s strategic partner for future acquisitions.”

As part of the Sale Transaction, Sandstorm transferred to Horizon its 30% interest in Hod Maden as well as US$10 million in cash and a 25% equity stake in Entrée Resources Ltd.1 ("Entrée") (collectively, the “RTO Part A Assets”). Consideration for the RTO Part A Assets provided to Sandstorm by Horizon include the Hod Maden Gold Stream, an approximate 34% equity interest in Horizon Copper2 common shares, and a secured convertible promissory note with a principal amount of US$95 million. For full details see the Company’s press releases dated February 17, 2022, May 2, 2022, and May 26, 2022.

Under the terms of the Hod Maden Gold Stream, Horizon will sell to Sandstorm gold ounces equal to 20% of all gold produced from Hod Maden (on a 100% basis) at a price equal to 50% of the gold spot price until 405,000 ounces of gold are delivered (the “Delivery Threshold”). Once the Delivery Threshold has been reached, Horizon Copper will sell to Sandstorm 12% of the gold produced for the life of the mine for a price equal to 60% of the gold spot price. The Hod Maden Gold Stream will be secured by Horizon’s indirect interest in the Hod Maden project.

The second part of the transaction, independent of RTO Part A, will encompass the acquisition of a 1.66% net profits interest on the low-cost, high-grade Antamina copper mine from Sandstorm (the “RTO Part B” and together with the RTO Part A, the “Transaction”) and is expected to close in the second half of 2022. RTO Part B is contingent, among other conditions, on Horizon completing the proposed concurrent financing for gross proceeds of a minimum of US$20 million (the “Concurrent Financing”) payable to Sandstorm as described in Horizon Copper’s Management Information Circular available on SEDAR at www.sedar.com under its issuer profile.

Upon completion of the Transaction, Horizon Copper will continue to be listed on the TSX Venture Exchange as a Tier 1 Mining Issuer under the anticipated trading symbol "HCU". Pending the completion or termination of RTO Part B, the trading of Horizon’s common shares on the TSX Venture Exchange will remain halted.

SANDSTORM FILES EARLY WARNING REPORT
Pursuant to National Instrument 62-103 - The Early Warning System and Related Take Over Bid and Insider Reporting Issues, Sandstorm is announcing the receipt of an aggregate of 25,475,487 common shares (the “Horizon Shares”), in partial consideration for the Sale Transaction. The acquisition of the Horizon Shares represents approximately 34% of the outstanding common shares of Horizon Copper, on a non-diluted basis. Prior to the Sale Transaction Sandstorm did not own any securities of Horizon Copper.

In addition, as partial consideration for the Sales Transaction, Sandstorm received a convertible promissory note (the “Note”), which is convertible into common shares of Horizon either by Sandstorm or Horizon in repayment of the Note subject to certain conditions.

Pursuant to the terms of the Note the initial principal amount of the Note will be US$95 million (the "Term Loan"). In addition, Sandstorm will make certain additional funds available to Horizon, (the "Additional Funds" and together with the Term Loan, the "Loans") under certain limited circumstances, including the purchase of refined gold to meet Horizon’s ongoing gold delivery obligations. The Loans will bear interest at SOFR plus a margin (currently 2.0%–3.5% per annum). Notwithstanding the foregoing, the Loans will not bear interest during the holiday period, being the period from the Closing Date, to the earlier of (x) January 1, 2026; and (y) when Horizon or its affiliates have started to receive dividends from the entity holder of the Hod Maden project.

The Loans are payable in cash and have a term of ten years. The Loans will be convertible into Horizon common shares at the option of Sandstorm at a conversion price for the Term Loan equal to the greater of (x) the current market price as of the date of conversion and (y) the floor price of C$0.60 per Horizon common shares, and for the Additional Funds at a conversion price equal the greater of (xx) the current market price as of the date of conversion, (yy) the current market price as of the date of any drawdown and (zz) the floor price of C$0.60, subject in each instance to adjustments in certain circumstances. Horizon may also, at its option repay the Term Loan in Horizon Copper Shares at the then current market price, provided that if the current market price is lower than the C$0.60 per Horizon common share, Horizon shall not be entitled to exercise its right to repay the Term Loan in Horizon common shares. Horizon shall not effect any conversion of any amount under the Note or any payment by the issuance of and Sandstorm shall not have the right to convert any amount thereunder, to the extent that after giving effect to such conversion or issuance Sandstorm, alone or together with any of its affiliates, would beneficially own in excess of 34% of the number of Horizon common shares outstanding immediately after giving effect to such conversion or issuance on a non-diluted basis.

In connection with RTO Part A, Sandstorm was granted certain rights by Horizon under an investor rights agreement, including, among other things a right to maintain its pro rata equity interest so long as it holds at least a 30% equity interest in Horizon.

The acquisition of the Horizon Shares and the Note is being completed pursuant to the terms of a definitive acquisition agreement entered into between Horizon and Sandstorm in connection with the RTO Part A. Depending on market conditions and other factors, Sandstorm may, from time to time, acquire additional securities of Horizon, dispose of some or all of the existing or additional securities it holds or will hold, or may continue to hold its current position.

An Early Warning Report, as required under National Instrument 62-103, contains additional information with respect to the foregoing matters and will be filed by the Company on Horizon Copper’s SEDAR profile at www.sedar.com. To obtain a copy of the report, contact Mark Klausen at 604 628 1164. Horizon Copper’s head office is located at 400 Burrard St, Suite 1400, Vancouver, BC V6C 3A6.

Notes

As part of the Sale Transaction, a principal amount CAD$43.2 million promissory note was transferred to Horizon Copper which was issued pursuant to the earlier sale of an approximate 25% equity stake in Entrée to Horizon Copper. See May 26, 2022 press release.
Sandstorm’s 34% equity interest in Horizon Copper is calculated before any share issuances under the RTO Part B as defined in Horizon’s Management Information Circular dated July 26, 2022.



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