GREY:STTYF - Post by User
Post by
greenandgoldon Jul 13, 2011 2:54pm
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Post# 18827452
Donner Metals deal
Donner Metals dealThe copper deal looks worse at first glance. Sandstorm pays $20 million for 17.5% of Bracemac mine's measured and indicated 84 million pounds of copper. Copper is relatively expensive at $4.35 per pound, not at historical lows like natural gas.
84 million pounds x 17.5% x ($4.35 per pound minus unit payment of
.80 per pound = $3.55 per pound) = $52 million in revenue for Sandstorm.
Positive considerations: there are additional inferred resources at the mine. Could this add another 50 million pounds of copper? That would mean an additional $28 million in revenue for Sandstorm. The quality of the mine is also rock-solid. The Matagami camp, which Bracemac is a part of, has been around for 50 years and the infrastructure, operator, permitting and facilities are all in place. Xstrata, the operator, is very large, experienced and successful. The danger of this deposit not becoming an economic mine is minimal.
Sandstorm pays more upfront for the safe returns from this project.