Oct. 19, 2009 (PR Newswire) -- VANCOUVER, Oct. 19 /PRNewswire-FirstCall/ - 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.
