NYSE- and TSX-listed Sandstorm Gold Royalties on Friday that it would reposition the company as a pure-play streamlining and royalty company with the disposal of its 30% interest in the Hod Maden copper/gold project, in Turkey.

The company would sell its interest in the project to TSX-V-listed Royalty North Partners (RNP) in a reverse takeover transaction, which would result in the launch of a mining company, Horizon Copper.

Under the terms of the letter of intent, Sandstorm would sell RNP its 30% stake in Hod Maden, transfer its 25% stake in shares of Entrée Resources (which has a 20% interest in the Oyu Tolgoi project in Mongolia) and contribute $10-million in cash.

In exchange, Sandstorm would receive a $200-million gold stream on the Hod Maden project and a 34% interest in the resulting issuer, Horizon Copper, and enter into a $95-million debenture with Horizon Copper.

Sandstorm CEO Nolan Watson said it was the group’s desire for Sandstorm to be a royalty and streamlining company exclusively. “The transformation of the company’s interest in Hod Maden into a gold stream is integral to our corporate strategy,” he commented.

Horizon Copper would be a strategic partner to Sandstorm that would allow both companies to collaborate on future acquisitions. In future, Sandstorm might purchase streams on the precious metal by-products from the copper project acquisitions made by Horizon Copper.

"The launch of Horizon Copper is an elegant solution that maintains excellent exposure to the upside at Hod Maden, while also opening new doors for creating value for both entities," said Watson. "I am excited as Sandstorm moves forward as a pure-play streaming and royalty company with a partnership that can help us acquire precious metal by-product streams on high-quality copper assets."

Under the terms of the stream, Sandstorm will receive 20% of all gold produced from Hod Maden and will make ongoing payments of 50% of the gold spot price until 405 000 oz of gold is delivered. Once that threshold has been reached, Sandstorm will receive 12% of the gold produced for the life of the mine for ongoing payments of 60% of the gold spot price.

Sandstorm stated that its attributable gold equivalent production would be 65 000 oz to 70 000 oz this year. Subject to the closing of the transaction, the company is forecasting more than 100 000 gold-equivalent ounces in 2025.

The Hod Maden project is located in north-eastern Turkey within the Eastern Pontides metallogenic belt. The project has a proven and probable mineral reserve of 8.7-million tonnes at an average grade of 8.8 g/t gold and 1.5% copper for 2.45-million ounces of gold and 287-million pounds of copper.

A 2021 feasibility study considered an underground mine with a processing rate of 800 000 t/y. The base case has a mine life of 13 years with average production of 195 000 oz/y of gold-equivalent.

Upfront capital expenditure is estimated at $309-million and once the mine is up and running the all-in sustaining costs are estimated to be $334/oz of gold on a by-product basis and $595/oz gold on a co-product basis