03/23/2015 10:23 EDT | Updated 05/23/2015 05:59 EDT

Iamgold sells Diavik royalty stream to Sandstorm Gold for US$56.8 million

TORONTO - Iamgold Corp. (TSX:IMG) has signed a deal to sell the company's Diavik Diamond royalty stream to Sandstorm Gold Ltd. (TSX:SSL) for US$56.8 million.

Under the deal, Sandstorm has agreed to pay US$52.5 million in cash on closing and three million warrants exercisable after for up to five years after initial production from the Diavik Diamond Mine's A21 pipe, at an exercise price of $4.50.

The royalty covers a property in the Northwest Territories that includes the Diavik Diamond Mine, which is owned 60 per cent by Rio Tinto and 40 per cent by Dominion Diamond Corp. (TSX:DDC).

Sandstorm said the deal with Iamgold will add US$7 million to US$8 million per year in cash flow to its portfolio.