Transaction overview

In December 2017, Sandstorm agreed to purchase a 2% net smelter returns royalty on the producing Houndé gold mine in Burkina Faso, operated by Endeavour Mining Corporation. The NSR royalty was acquired from Acacia Mining plc for US$45 million in cash and covers the Kari North and Kari South tenements, representing approximately 500 square kilometres of the Houndé property package. The majority of the reported 2.1 million ounce Houndé Mineral Reserve (as of December 2016) is located on the Kari North and Kari South tenements, including the Vindaloo deposit and much of the Bouéré deposit.

 

Acquisition Highlights

  • Immediate Cash Flow: Commercial production was announced on October 31, 2017 and the Houndé mine is expected to produce 235,000 ounces of gold per year on average over the first four years of operations, at an all-in-sustaining-cost of US$610 per ounce. The mine has an initial ten year mine life based on the current Mineral Reserves.
     
  • Strong Operator: Endeavour is a mid-tier gold producer with five operating mines in Africa. The construction of the Houndé mine was completed ahead of schedule and below budget and the asset is now Endeavour’s flagship gold mine.
     
  • Exploration Upside: Endeavour has set a discovery target at Houndé of 2.5 million to 3.5 million ounces of gold over the next five years with US$40 million in budgeted expenditures. A number of the high-priority targets are on the Sandstorm royalty ground.

 

 

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About THE Houndé Gold Mine

The Houndé project is located 250 kilometres southwest of Ouagadougou, the capital city of Burkina Faso. Infrastructure in the area includes a paved highway approximately 2.7 kilometres from the mine site, a 225 kV power line as close as 200 metres in some areas and a rail line that extends to the port of Abidjan, Côte d'Ivoire approximately 25 kilometres west of the deposit area.

Houndé is an open-pit mine with a 3.0 million tonne per year gravity circuit and carbon-in-leach plant. The gravity concentrate is processed through an intensive cyanide leach reactor followed by electrowinning to recover the gold. The carbon-in-leach feed is thickened and fed into a standard carbon-in-leach circuit. Construction of the project began in April 2016 and and was completed in October 2017, ahead of schedule and below budget. Production results to date have exceeded design parameters including recovery rates which have averaged 95%.

The mineralization at Houndé is mainly quartz stockwork-style and is weakly to moderately pyritic. The Vindaloo trend, where the bulk of the Mineral Reserves have been identified, has been drill tested for a distance of approximately 7.7 kilometres along strike and up to 350 metres depth. The intrusion-hosted zones range up to 70 metres in true thickness and average close to 20 metres true thickness along a 1.2 kilometre section of the zone called Vindaloo Main. The mineralization remains open both along strike and to depth.

 

EXPLORATION POTENTIAL

The Sandstorm NSR royalty covers approximately 500 square kilometers within the highly prospective Birimian Greenstone belt. Exploration drilling resumed on the property in early 2017 following a two year period of inactivity and has confirmed the occurrence of high-grade mineralization at the nearby Kari Pump as well as other targets such as Bouéré, Bombi, Koho and Kari Fault. Endeavour has incurred approximately US$5 million in exploration spending during 2017 and has set an exploration budget of US$40 million to be spent over the next four years.

Hounde Royalty Map

In 2018, Endeavour will undertake an exploration campaign on the Kari Pump target to test the continuity of the mineralized 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. Mineralization will also be tested at the Kari target with an exploration program on a large gold-in-soil anomaly.

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