Franco-Nevada (FNV.TO) and Sandstorm Gold Inc. (SAND,SSL.TO) have entered into a US$120-million stream financing agreement with True Gold Mining Inc. (TGM.V) to assist in funding the construction of the Karma Project in Burkina Faso, West Africa. True Gold is targeting first gold pour at Karma by the end of 2015.
Under the terms of the transaction, Franco-Nevada and Sandstorm will provide True Gold with US$100 million in initial funding. Franco-Nevada and Sandstorm will provide 75% and 25% of the upfront deposit respectively.
The company said over a period of five years, starting March 31, 2016, True Gold shall deliver to the Syndicate an aggregate of 20,000 ounces of gold each year, for a total of 100,000 ounces of gold.
The Agreement covers all of the concessions within the 856 km2 Karma project and also includes a defined area of interest of 5 km surrounding the borders of the Karma project.
Also, it is noted that True Gold has the option to increase the funding provided by the Syndicate by up to US$20-million.
Stream financing will be provided by Franco-Nevada Corporation or FNB, a wholly-owned subsidiary of Franco-Nevada, to a wholly-owned subsidiary of True Gold and the deposit will be funded conditional on the project being fully funded and all permits being in place and will be made available pro-rata with other sources of funding for the project.
The company stated that the completion of the stream financing, together with True Gold's other funding sources, will fully fund the current project plan and the supplemental permits for True Gold's Kao and Nami deposits are expected to be in place in September 2014 to allow for initial draws on the deposit.
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