RE:CGT and Sandstorm Interest?So while like any good royalty company, SAND continues to search and sign on potential projects still in their infancy, with hopes of fruition down the road. I think they believe we're headed for a longer-term bull cycle, one that might run a good 20 years, thus want projects that will give them some bigger bangs for their bucks. We indeed might be in their sights, as they already have a partnership in a mine similar to ours getting ready to be built in Turkey. Here are some of those details. Note: This was from a 2018 PR, but you can look it up.....it's progressing and only getting better.
The Hot Maden Project
In 2017, Sandstorm acquired a 30% stake in the Hot Maden project in Turkey, which was discovered a few years ago. Early analysis shows that when this large mine is in production starting in early 2022, it could have all-in sustaining costs (AISC) of less than $400 per ounce of gold.
In comparison, the vast majority of mines have AISC of over $800, with many of them having AISC over $1,000. This mine could be one of the cheapest sources of gold in the world, which makes it incredibly profitable at current gold prices or even at moderately lower gold prices.
According to their November 2018 investor presentation, Sandstorm estimates that their average attributable gold ounces from the project will be 80,000 per year when it is active, which is more than their entire company-wide current gold equivalent ounce production in 2018. The project could have an after-tax internal rate of return as high as 50%, with a payback period of under 2 years.
Due to the size and expected profitability and this project, it is by far Sandstorm's most important asset going forward, is key for reaching Sandstorm's expected 140,000 ounces of annual company-wide production, and will likely play a dis-proportionally large role in the company's future.
However, over the very long run as a greater share of the company's 187 mineral rights assets start to come online, going from less than 40% of their book in production to over 70% of their book in production like the more mature royalty and streaming companies, Sandstorm will hopefully further grow and diversify its holdings. In addition, as they reinvest free cash flow into more mineral rights, this should further grow and diversify their sources of revenue.