Thursday, October 29, 2015
Sandstorm Gold makes huge streaming agreement with Yamana
For upfront cash consideration of $148 million, $4 million in cash payable in six months and 15 million warrants of the company (at a strike price of $3.50 and a term of five years), Sandstorm will receive a silver stream on the Cerro Moro development project in Argentina (interim silver delivered during years 2016 - 2018 from currently operating mines until Cerro Moro gets to production), a copper stream on the operating Chapada mine in Brazil, and a potential gold stream on the massive Agua project in Argentina.
Sandstorm is in the portfolio. The company is a gold/silver streaming company. They basically pay an upfront fee to a mining company that buys them the right to purchase a set amount of metal from the mining company at a below market price for a period of time. This is an alternate form of financing for the mining company, which is good as financing is sparse during this resource bear market. The metals market has been in a severe bear market for years so if you are a contrarian you should like this deal. With all major central banks in QE mode or at zero interest rates I think gold/silver prices will be heading higher over the mid to long term. This deal should work out well if that scenario takes place.