VANCOUVER, BC -- (Marketwired) -- 08/05/14 -- Luna Gold Corp.(TSX: LGC)(LMA: LGC)(OTCQX: LGCUF) ("Luna" or the "Company")
announces a non-brokered private placement (the "Placement") of up to 30,000,000 common shares (the "Placement Shares") priced at $1.02 per share, for gross proceeds of up to $30,600,000. As part of the financing, the Company has entered into a strategic investment agreement (the "Agreement") with Sandstorm Gold Ltd. ("Sandstorm") which, upon completion, will make Sandstorm the Company's largest shareholder.
In addition, Sandstorm and Luna have commenced discussions related to the potential modification of the Aurizona gold stream. The focus of the discussions is to explore opportunities that will increase value for both Sandstorm and Luna shareholders with the goal of improving Luna's access to capital, accelerating production and cash flow to both Sandstorm and Luna and leveraging the highly prospective brownfields and greenfields exploration targets. Sandstorm currently holds a gold stream agreement to purchase 17% of the life of mine gold produced from the open-pit operations at Aurizona at a per ounce price of US$404 (increasing 1% annually). Investors are cautioned that there can be no assurances that the negotiations will lead to a restructuring of the existing streaming agreement.
Pursuant to the Agreement, Sandstorm will purchase a minimum of 19,500,000 of the Placement Shares, for gross proceeds of approximately C$19.89 million, that, when combined with the 8.5 million shares of Luna already owned by Sandstorm, would result in Sandstorm owning approximately 19.8% of the issued shares of Luna. To the extent Luna sells additional shares in the Placement, Sandstorm will also have the right to purchase up to 20% of the additional Placement Shares. Sandstorm also will have the right (so long as Sandstorm owns greater than 15% of Luna) to maintain its ownership percentage through future private placements or public offerings and to appoint one member to Luna's Board of Directors.
In connection with the transaction, David Awram, Senior Executive Vice President of Sandstorm, will be appointed to Luna's board of directors. Mr. Luis ("Lucho") Baertl will step down as Chairman of Luna's Board and will be succeeded as Chairman by Luna's current Lead Independent Director, Mr. Steven Krause. Mr. Baertl will remain a Director of Luna.
Lucho Baertl, Chairman, Luna Gold commented, "Sandstorm has continued to be a supportive stakeholder, providing capital through its initial investment, debt facilities, capital contributions and now as an equity investor. We welcome Sandstorm's equity investment in Luna, as a strong financial partner, who will continue to work with us to develop the Aurizona gold endowment to its full potential."
"Sandstorm is committed to making the Aurizona mine a success for all stakeholders, and we believe our investment is a demonstration of such intent and a sign of our confidence in the future of Luna. I would like to thank Lucho Baertl for facilitating this transaction at the Board level," said Nolan Watson, President and CEO of Sandstorm.
On closing of the initial placement with Sandstorm, Luna will have approximately $36 million in cash, $40 million in working capital and $50 million in debt and 6,800 ounces of dore. If the Placement is fully subscribed, Luna will have approximately $46 million in cash and $50 million in working capital.
No finder's fees or commissions will be paid in connection with funds provided by Sandstorm. The Company may pay cash finder's fees of up to 6% on the remaining portion of the Placement. Proceeds of the transaction will be used for expenditures related to the Aurizona mine, ongoing brownfields and greenfields exploration at and around the Aurizona mine, and for general working capital.
The Company anticipates closing the Placement in one or more tranches. Closing is conditional upon receipt of approval of the Toronto Stock Exchange. All securities issued pursuant to the Placement will be subject to a statutory hold period of four months and one day from the date of issuance.
About Luna Gold Corp.
Luna is a gold production and exploration company engaged in the operation, discovery, and development of gold projects in Brazil.
On behalf of the Board of Directors
LUNA GOLD CORP.
Geoff Chater - President and CEO
This release contains certain "forward looking statements" and certain "forward looking information" as defined under applicable Canadian and U.S. securities laws. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "continue", "plans" or similar terminology. Forward-looking statements include, but are not limited to, statements with respect to future gold production and/or the results of analysis on gold production and statements with respect to the outcome of the negotiation relating to the potential modification of the existing gold stream agreement with Sandstorm. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable and assumptions that while believed by management to be reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are subject to various risks and uncertainties concerning the specific factors identified in Luna Gold Corp.'s periodic filings with Canadian Securities Regulators. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other exploration data, the potential for delays in exploration or development activities, the geology, grade and continuity of mineral deposits, the possibility that future exploration, development or mining results will not be consistent with the Company's expectations, accidents, equipment breakdowns, title matters, labor disputes or other unanticipated difficulties with or interruptions in production and operations, fluctuating metal prices, unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, currency fluctuations, regulatory restrictions, including environmental regulatory restrictions and liability, competition, loss of key employees, and other related risks and uncertainties. The Company undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents management's best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.
Patrick BalitInvestor Relations Manager+1 (604) 568-7993www.lunagold.com
Source: Luna Gold Corp.