The existing 2% net smelter royalty has been owned by Acacia and its predecessor companies since 2010. Following a competitive process, the royalty has been purchased by Sandstorm Gold, a TSX- and NYSE-listed company.
Acacia’s decision to dispose of this royalty follows the announcement of commercial production at the mine in October and is consistent with the company’s disciplined approach to capital allocation.
The transaction is expected to close in early Q1, 2018 and, together with the measures taken at both Bulyanhulu and Buzwagi to reduce cash outflows, will provide further strength to our balance sheet.
The royalty covers the Kari North and Kari South tenements, representing approximately 500 km² of the Houndé property package. Nearly the entire Houndé Mineral Reserve of 2.1 Moz (as of December 2014) is located on the Kari North and Kari South tenements, including the Vindaloo deposit and most of the Bouéré deposit.
“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,” says Sandstorm’s President and CEO Nolan Watson.
“Endeavour Mining 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 km² area that applies to the royalty is one of the largest prospective land packages in Sandstorm’s royalty portfolio and Endeavour Mining 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.”
Houndé is Endeavour Mining’s flagship asset and ranks amongst West Africa’s top tier cash generating mines. The average annual production during the first four years of operations is expected to be 235 000 oz of gold at an all-in-sustaining-cost of US$610/oz.
The Houndé project is located 250 km southwest of Ouagadougou, the capital city of Burkina Faso.
It is an open-pit mine with a 3.0 Mtpa gravity circuit and carbon-in-leach plant.
In 2018, Endeavour Mining will undertake an exploration campaign on the Kari Pump target to test the continuity of the mineralised corridors and its extensions along strike and at depth.
In addition, infill drilling will be conducted to delineate a maiden Indicated Mineral Resource at Kari Pump, expected to be released during the second half of 2018. Mineralisation will also be tested at the Kari target with an exploration program on a large gold-in-soil anomaly.