The is a smart deal that captures Luna from both sidesNo doubt many will be skeptical or negative about this deal due to the fact that it appears it is Sandstorm bailing out yet another under producing asset. This article sings that tune:
https://seekingalpha.com/article/2387425-update-sandstorm-gold-takes-a-stake-in-luna-gold-as-the-aurizona-project-falls-short?uprof=34
However, I think that this was a smart deal that works especially well because SSL is already ranked first on the balance sheet with the existing stream. In my opinion, we've taken both sides of the capital structure for a good risk return profile. The reason I like streams is because they are first ranking security should things get bumpy (as they usually do), but taking equity in a undervalued stock that we already have security over increases our total return far beyond what it could have been with only a stream. Typically it is the equity holders that benefit the most from borrowed capital if it is allocated to sucessfull projects that add value, while the lenders/streamers usually take a relatively modest coupon/stream spread. This deal adds the benefit of capital gains, which is likely to be far greater than the IRR associated with the stream alone, not to mention it doesn't sound like much would get done on the expansion side of things without it. In short, we have good security in the deal and now great return potential.
I believe Sandstorm will be gifted the balance of the offering that they did not subscribe to as an compensation offset for a lower stream. We'll see, but it doesn't make sense why SSL private placement was less than the issuance unless this is by design so Luna can compensate SSL for altering the existing stream, because we all know we won't be getting cash back.