VANCOUVER, Oct. 19 /CNW/ - Luna Gold Corp. (TSXV-LGC) ("Luna" or the "Company") is pleased to announce that it has satisfied the conditions set out by Sandstorm Resources Ltd. ("Sandstorm") in the Gold Sales Agreement (the "Agreement") announced on May 15, 2009. As a result the upfront payment of US$17.8 million and 5,500,000 shares of Sandstorm have been released from escrow to the Company.
Jim Bahan, Luna's President, comments: "The release of the Sandstorm funds demonstrates how quickly the Company has advanced the Aurizona Project and we remain on target to start gold production in Q2 2010. The escrowed upfront payment was converted to Brazilian Reais at the time the Agreement was closed and was invested in a high yielding CDB (Certificado de Deposito Bancario). This allowed the Company to realize the benefits of the stronger US dollar to Real exchange rate at the time, as well as earn an attractive interest rate."
Under the Agreement, the Company, through its subsidiary, Mineracao Aurizona S.A. ("Aurizona"), has agreed to sell, and Sandstorm has agreed to purchase, 17% of the payable gold to be produced from any open-pit mine within defined areas (the "Project") belonging to Aurizona, in Maranhao State, Brazil, in exchange for an upfront cash payment of US$17.8 million and ongoing payments of $400 per ounce of gold delivered to Sandstorm (subject to an increase of 1% per annum beginning on the third anniversary of the date that Aurizona commences commercial production).
If the Company decides to develop an underground mine (the "Underground Mine") on the Project, Sandstorm will also have the right to purchase 17% of the payable gold from any such Underground Mine if it elects to pay 17% of the capital and other expenditures incurred to determine the economic viability of and to construct the Underground Mine and make ongoing payments of $500 per ounce delivered to Sandstorm during the life of the mine (subject to an increase of 1% per annum beginning on the third anniversary of the date that the Underground Mine commences commercial production).
About Luna Gold Corp.
Luna is a mineral exploration and development company engaged in the acquisition, exploration, and development of gold resources and advanced stage gold exploration projects in Brazil. The Company is currently developing its Aurizona gold project in Maranhao, Brazil.
On behalf of the Board of Directors
LUNA GOLD CORP.
Jim Bahan - President and CEO
Neither the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Statements in this release that are 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, the possibility of project cost overruns or 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.
SOURCE LUNA GOLD CORP.
For further information: For further information: Investor Relations at (604) 689-7317 or toll free at 1-866-689-7317