Mineweb Article Hadn't been on Mineweb in a while and found this
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Sandstorm Gold hopes to divide and conquer the royalty world
Sandstorm Gold takes majority control of Premier Royalty in a couple transactions worth about C$90 million.
Author: Kip Keen
Posted: Thursday , 31 Jan 2013
SEATTLE, WA (MINEWEB) -
Sandstorm Gold’s acquisition of a majority stake in Premier Royalty - completed in two transactions over the past couple days for about C$90 million, mostly in shares - is largely about time management in a bid to garner a greater share of the royalty and streaming market including both smaller and larger deals.
In describing Sandstorm Gold’s rationale in buying 59.9 percent of Premier Royalty, Denver Harris, aSandstorm Gold spokesperson, said in an interview on Wednesday that it was fair to describe the acquistion as a means for Sandstorm to divide and conquer a wider spectrum of royalties and gold streams.
“We want to maintain our exposure to the smaller end of the royalty and streaming deals,” Harris said.
Harris noted that in terms of Sandstorm Gold management’s time it takes almost as much effort to complete a C$100 million royalty or streaming agreement as it does a C$10 million one. Yet, while Sandstorm Gold will obviously tend to set its sights on larger royalties and gold streams, there are still lucrative options to be had at the smaller end of the spectrum.
Thus in Premier Royalty, Sandstorm Gold ensures it gets a slice of this more humble royalty and streaming pie, while allowing it to focus on larger deals that are increasingly important to it as it grows.
But, to be sure, the deal is also about gold production.
Harris said Premier Royalty expects to have 5,000 ounces in attributable gold production this year from a series of five producing net smelter return royalties that it owns, most at the one percent level.
Its operating royalties are: a 1.5 percent NSR on Newmont’s Emigrant Springs mine; a 1 percent NSR on Lake Shore’s Thunder Creek deposit; a 1 percent NSR on Village Mina Reef’s Buffelsfontein mine; a 1 percent NSR on AngloGold’s Mine Waste Solutions facility; and a 1 percent NSR on Yamana’s Gualcamayo mine.
Sandstorm Gold, to get a 59.9 percent stake comprising about 47 million shares, first bought Premier Gold’s 43.2 percent stake of Premier Royalty common shares, along with around 7 million share purchase warrants. It paid Premier Gold about C$70 million worth of Sandstorm Gold shares.
Then Sandstorm Gold bought a 16.7 percent stake from a few other Premier Royalty shareholders for about C$20 million, or C$1.98 a share.
If Sandstorm did exercise its Premier Royalty warrants then, all other things remaining equal, its holding in Premier Royalty would grow to nearly 70 percent.