Acacia completes sale of royalty over Burkina Faso mine
JOHANNESBURG (miningweekly.com) – Embattled gold miner Acacia Mining has completed the sale of an existing 2% net smelter royalty over the Houndé mine, in Burkina Faso, for $45-million.
The LSE-listed company in December said it was selling the royalty to Canadian miner Sandstorm Gold after its three producing gold mines in Tanzania were hit by changes in mining laws that have dented the investment appeal of companies operating in countries such as South Africa and Tanzania.
The royalty covers the Kari North and Kari South tenements, representing about 500 km2 of the Houndé property package.
Nearly the entire Houndé mineral reserve of 2.1-million ounces is located on the Kari North and Kari South tenements, including the Vindaloo deposit and most of the Bouéré deposit.
TSX-listed Sandstorm believes the acquisition will provide it with a number of upsides, including immediate cash flow, as commercial production was announced on October 31, 2017.
The Houndé mine is expected to produce 235 000 oz/y of gold, on average, over the first four years of operations.
The mine has an initial ten-year mine life based on the current mineral reserves.
Further, Endeavour Mining, which operates the mine, has set a discovery target at Houndé of 2.5-million to 3.5-million ounces of gold over the next four years with $40-million in budgeted expenditures from 2018 to 2021.
A number of the high-priority targets are on the Sandstorm royalty ground.
Sandstorm CEO Nolan Watson noted that the Houndé royalty was a natural fit for the company’s portfolio, as the asset met all of the criteria that the company looked for in an acquisition.
“The area that applies to the royalty is one of the largest prospective land packages in Sandstorm’s royalty portfolio and Endeavour 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,” he added.
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