Luna Gold enters into US$17.8 million gold sales agreement contract

    VANCOUVER, May 15 /CNW/ - Luna Gold Corp. (TSXV-LGC) ("Luna" or the
"Company") is pleased to announce that it has entered into definitive
documentation (the "Agreement") with Sandstorm Resources Ltd. and a subsidiary
of Sandstorm Resources Ltd. ("Sandstorm") under which the Company's operating
subsidiary, Mineraçao 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 (the "Upfront Payment") 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 the Piaba open pit mine commences
commercial production). The defined areas in the Project make up approximately
25% of Aurizona's current property position in the region but are the areas
that have been most explored to date.
    The Upfront Payment will be used to fund construction and development of
the Piaba open pit mine and for general and administrative costs associated
    Sandstorm Resources Ltd. has guaranteed the obligations of Sandstorm
under the Agreement and will also issue 5,500,000 of its common shares to Luna
in consideration for Luna's guarantee of its operating subsidiary's
obligations under the Agreement.
    Luna has provided a completion guarantee that within 30 months from the
date that Sandstorm makes the Upfront Payment, the Project will produce a
minimum of 12,500 ounces of payable gold in any three consecutive month
    If Aurizona 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 (the "Additional Upfront Payment") 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
    The Upfront Payment and the Shares will be deposited in escrow and will
be held in escrow pending satisfaction of certain conditions including the
requirement that Luna shall have spent or irrevocably committed US$17.5
million in expenditures on development and construction of the open-pit mine
and that at the applicable time no material adverse change, as defined in the
Agreement, shall have occurred.
    Sandstorm will be granted a charge on the assets and undertaking of
Aurizona to secure the obligations of the Company and Aurizona under the
Agreement and the guarantee, which charge Sandstorm has agreed to subordinate
to any other existing and future indebtedness.
    The transaction contemplated by the Agreement (the "Transaction") was
approved by the board of directors of Luna (the "Board") following receipt of
the recommendations of a committee of independent directors of the board (the
Special Committee") that was constituted in March 2009 to, among other things,
review and advise the board in respect of the proposed transaction and other
financing alternatives. Following a full review of information and factors
that it considered relevant in assessing the merits of the Transaction and
other financing alternatives available to the Company, and having received the
advice of its financial and legal advisors, the Special Committee unanimously
concluded that it is in the best interest of the Company and its shareholders
to engage in the Transaction and it recommended that the Board approve the
Transaction and enter into the Agreement. The Board adopted the Special
Committee's recommendation and authorized the execution of the Agreement. The
Special Committee was advised by Blake, Cassels & Graydon LLP., Haywood
Securities Inc. ("Haywood") and Conseil Advisory Service Inc. ("Conseil")
provided independent financial advice to the Special Committee. Conseil was
engaged by the Special Committee to provide a comparative analysis of the
terms and conditions of the proposed Transaction and certain other financing
alternatives. Haywood provided an opinion that the consideration to be paid by
Sandstorm in connection with the Transaction is fair, from a financial point
of view, to Luna.

    About Luna Gold Corp.
    Luna is a mining exploration company focused on the acquisition,
exploration, and development of gold resources and advanced stage gold
exploration projects in northeastern Brazil.

    On behalf of the Board of Directors


    Jim Bahan - 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.

    Forward-Looking Statements

    Statements in this release that are forward-looking statements within the
meaning of applicable securities laws are subject to various risks and
uncertainties concerning the specific factors identified in Luna Gold Corp.'s
periodic filings with Canadian securities regulators and are based on certain
assumptions believed by management to be reasonable. These factors include the
risk that the conditions to release of the Upfront Payment may not be
satisfied by the funding condition deadline or any extension thereof granted
by Sandstorm, in which case Sandstorm will be entitled to return of the
Upfront Payment, the risk that due to technical or other start-up problems or
delays the Company will become obligated to repay a portion of the Upfront
Payment, unanticipated difficulties with or interruptions in development,
production or operations, the risk that the current price of gold will not be
sustained or will decrease, the possibility of project cost overruns or
unanticipated costs and expenses, uncertainties relating to the availability
and costs of additional financing that will be needed in the future to fund
the balance of the development costs in connection with the mine contemplated
to be constructed on the Project, the inherent uncertainty of production and
cost estimates and the potential for unexpected costs and expenses, commodity
price fluctuations, currency fluctuations, the risk that actual capital
expenditures and other costs related to the construction of the mine may be
materially greater than estimated, and other inherent risks involved in the
exploration and development of mineral properties, the potential for delays in
exploration or development activities, risks inherent in the estimation of
mineral resources and mineral reserves including that the grade and continuity
of mineral deposits are not as anticipated, the possibility that future
exploration, development or mining results will not be consistent with the
Company's expectations, risk of accidents, equipment breakdowns, title
disputes or defects, labor disputes or other, regulatory restrictions,
including environmental regulatory restrictions and liability, competition,
loss of key employees, and other related risks and uncertainties. The
forward-looking statements in this news release are based on certain
assumptions, including that the Upfront Payment and shares will be deposited
to escrow when required under the Agreement, that the funding conditions will
be satisfied prior to the funding condition deadline, and other assumptions
described in the Company's public filings. 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.

For further information:

For further information: Investor Relations at (604) 689-7317 or toll
free at 1-866-689-7317

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