The Aurizona Gold Project is located in Maranhão State in northern Brazil and is 100% owned and operated by Luna Gold Corp. (TSX:LGC). Aurizona is an open-pit mine with a gravity and carbon-in-leach milling operation. The mine is in commercial production and produced 74,269 ounces of gold in 2012. Luna is targeting between 80,000 and 90,000 ounces of annual gold production in 2013.
Aurizona is an orogenic gold deposit hosted in a greenstone belt of the São Luis Craton. There are a number of mineralized bodies on the property, but work to date has focused on the Piaba and Tatajuba deposits on which the current resource is based. Luna released a National Instrument 43-101 resource update in December 2011 showing a 250% increase over the previous mineral resource estimate and in March 2013, announced a resource update showing another 15% increase in mineral resources. Measured and Indicated gold resources at Aurizona now total 3.63 million ounces.
Aurizona Gold Stream
Sandstorm has a gold stream agreement to purchase 17% of the life of mine gold produced from Aurizona at a per ounce price of US$400. Sandstorm made an upfront payment of US$17.8 million in cash and 1.1 million common shares of Sandstorm (5.5 million pre-consolidation) to acquire the stream in May 2009. In September 2012, Sandstorm contributed an additional US$10 million towards the Phase 1 expansion project at Aurizona.
If Luna develops an underground mine on Aurizona, Sandstorm has the right (but not the obligation) to purchase 17% of the payable gold from the underground mine, at a per-ounce price of US$500. For consideration, Sandstorm would pay 17% of the capital expenditures incurred to determine the economic viability and to construct the underground mine.