Canada’s Royalty North Partners (RNP) has signed a letter of intent (LoI) with Sandstorm Gold to purchase non-royalty and non-stream assets.
The deal involves the sale of a 30% stake in the Hod Maden gold-copper project in north-eastern Turkey.
Under the LoI, Sandstorm Gold will also transfer its 25% stake in Entrée Resources to Royalty North Partners and a $10m cash contribution.
Entrée Resources holds a 20% stake in the Hugo North Extension project, a portion of the Hugo Dummett deposit at the Oyu Tolgoi project in Mongolia.
The transaction is structured as a reverse takeover of Royalty North. Upon completion of the deal, RNP will change its name to Horizon Copper.
In exchange for the sale, Sandstorm will receive a $200m gold stream on the Hod Maden project, around 34% interest in Royalty North Partners, and $95m debenture in Horizon Copper.
Sandstorm Gold president and CEO Nolan Watson said: “Streamline is a key theme for Sandstorm this year.
“The transformation of the Company’s interest in Hod Maden into a gold stream is integral to our corporate strategy of unlocking the hidden value in Sandstorm’s portfolio.”
The proposed transaction would allow Sandstorm Gold to position itself as a pure-play precious metals streaming and royalty firm.
Watson added: “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
“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.”
The transaction is slated to complete in the second half of this year.
In 2022, Sandstorm Gold expects its attributable gold equivalent production to range between 65,000oz and 70,000oz.
Upon completion of the deal, the company anticipates its production to reach more than 100,000 gold equivalent ounces in 2025.