Sandstorm has a gold stream agreement to purchase 17% of the life of mine gold produced from Aurizona at a per ounce price of US$400. Sandstorm made an upfront payment of US$17.8 million in cash and 1.1 million common shares of Sandstorm (5.5 million pre-consolidation) to acquire the stream in May 2009.
If Luna develops an underground mine on Aurizona, Sandstorm has the right (but not the obligation) to purchase 17% of the payable gold from the underground mine, at a per-ounce price of US$500. For consideration, Sandstorm would pay 17% of the capital expenditures incurred to determine the economic viability and to construct the underground mine.
Luna Gold Corp Receives Construction Authorization for Aurizona Phase I Expansion
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 24, 2013) - Luna Gold Corp. (TSX:LGC)(OTCQX:LGCUF)(LMA:LGC) ("Luna" or the "Company") is pleased to announce that it has received authorization from the Maranhão State Environmental Department ("SEMA") to proceed with the construction required to complete the Phase I expansion of the Company's Aurizona Gold Mine in Brazil.
The Phase I expansion is expected to produce 125,000 ounces per year. The expansion remains on target to achieve completion during the fourth quarter of 2013 at its originally estimated cost of $49.7 million, including contingency. Construction has commenced and the first concrete pour has been completed.
The Company plans to release full 2013 guidance on January 28, 2013, before the opening of TSX market trading.
"We are pleased that we have now completed this very important permitting process in Aurizona's Phase I expansion, which continues to progress according to schedule," stated John Blake, Luna's President and Chief Executive Officer. "Upon completion, this expansion will more than double the annual production proposed in the 2010 Aurizona Feasibility Study. I am confident that both Luna's talented operations team and our EPCM contractor have the experience necessary to safely execute this project on time and on budget. This expansion will play a critical role in accelerating our Company's future growth, providing the cash flow for further development at both Aurizona and our promising Luna Greenfields targets."