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Pinecrest Resources Ltd.


Enchi Gold Project

Transaction Details with Red Back
(Subsidiary of Kinross Gold Corp.)

Pinecrest has issued to Red Back 19.9% of the issued and outstanding common shares. In addition, Pinecrest issuee to Red Back an aggregate of 5,000,000 share purchase warrants, which will entitle Red Back to purchase up to 5,000,000 post-consolidated common shares of Pinecrest at a purchase price of CDN $0.30 per share at any time during the period of five years from the closing of the Transaction;

Pinecrest will pay to Red Back a 2% net smelter returns royalty (the "NSR") on production from the Project, with an option for Pinecrest to acquire 1% of the NSR at any time for US$3.5 million;

Pinecrest will pay to Red Back US$10 for each newly defined ounce of gold contained in any new NI 43-101 measured and indicated mineral resource estimate or any ounce of gold mined, whichever occurs first. Such amount shall be payable in cash or, at Pinecrest's option in common shares of Pinecrest, provided that, Pinecrest shall not be entitled to elect to pay in common shares if such issuance would result in Red Back holding more than 20% of the issued and outstanding shares of Pinecrest;

Pinecrest will grant Red Back a right of first refusal to process ore from the Project at Red Back's Chirano Mill, if toll processing is considered by Pinecrest; and

Transaction Details with Edgewater Exploration

Edgewater will receive one Pinecrest post-consolidated common share (the "Acquisition Shares") for every five common shares of Edgewater issued and outstanding on the Closing, which will represent approximately 40% of the issued common shares of Pinecrest post-closing of the Transaction. All shares issued to Edgewater will be subject to resale restrictions of up to 12 months with 25% of the shares to be free trading six months from closing, a further 25% nine months from closing and the balance of 50% twelve months from closing;

Edgewater will agree to distribute the Acquisition Shares pro-rata to its shareholders as soon as reasonably practicable after the closing of the Transaction;

Pinecrest will pay to Edgewater a cash payment of Cdn$150,000

* The Government of Ghana can exercise the right to own a 10% interest in the Project for no additional consideration. If this right is exercised it will result in Pinecrest owning a 90% direct interest in the Project.

Simultaneous with the Transaction
Pinecrest and Sandstorm Gold entered into a Strategic Alliance

Under the terms of the Strategic Alliance it is proposed that:
  • Sandstorm subscribed for Cdn$2,000,000 of units in a non-brokered private placement of Pinecrest, see news release July 16, 2014. Sandstorm Gold now owns 18.2% equity interest of the post-consolidation common shares of Pinecrest Resources.
  • Red Back retained a 2% net smelter return royalty (the "Royalty") on production from the Enchi Gold Project. Pinecrest has the right at any time to buy back (the "Royalty Buy Back Right") 50% (1%) of the Royalty for US $3.5 million (with the result that Red Back would hold a 1% net smelter return royalty). Pinecrest has assigned to Sandstorm all of its right, title and interest and obligations in the Royalty Buy Back Right.
  • Pinecrest has also granted Sandstorm a right of first refusal for a defined period of time to provide metal stream financing sought by Pinecrest with respect to gold produced from the Enchi Project, upon industry standard terms for such financings
About Sandstorm Gold Ltd.
Sandstorm Gold Ltd. is a gold streaming company. Sandstorm provides upfront financing to gold mining companies that are looking for capital and in return, receives a gold streaming agreement. This agreement gives Sandstorm the right to purchase a percentage of the gold produced from a mine, for the life of the mine, at a fixed price per ounce. Sandstorm has acquired a portfolio of nine streams and twenty-eight royalties, fourteen of which are producing gold. Sandstorm plans to grow and diversity its low cost production profile through the acquisition of additional gold streams.