Sandstorm looks to raise $150M for gold streams

VANCOUVER — Sandstorm Gold (SSL-T) is looking to raise $150 million so it can potentially add to its precious metal streams.

The sum includes $130 million raised from a bought deal financing at $10 per unit, plus roughly $20 million from underwriters who can buy an extra 15% over what gets sold in the market. The units consist of one share and one-third of a purchase warrant, with full warrants exercisable at $14 for five years.

The $130-million target is a significant increase over the original goal of $75 million announced only the day before.

Sandstorm’s share price dropped $1.20 or 11.2% on the news to end at $9.51 with 3.2 million shares traded. The drop ends a strong run in the days leading up to the financing that saw the company’s share price climb from around $9.15 to an all-time high of $10.88. The company currently has 70.4 million shares outstanding.

The company expects attributable production of between 28,000 and 33,000 oz. gold this year and is targeting 50,000 oz. of attributable gold oz. by 2015. But with so many juniors struggling to raise cash, Sandstorm could well add to that total.

At the end of June the company reported US$25.2 million in working capital plus US$50 million in a revolving credit facility.

Sandstorm has already been busy acquiring royalty streams this year, including a 2.4% net smelter return royalty on Solitario Exploration & Royalty (SLR-T, XPL-X) and Ely Gold’s (ELY-V) Mt. Hamilton gold project in Nevada for US$10 million, and from Magellan Minerals (MNM-V) a 2.5% NSR on its Coringa gold project and a 1% NSR on its Cuiu Cuiu gold project, both in Brazil, for US$7.5 million.

In the second quarter the company reported record gold sales of 9,259 oz. and record operating cash flow of US$11.3 million. Its producing gold streams include 17% of gold production at Luna Gold’s (LGC-V) open-pit Aurizona mine in Brazil; 12% of gold production at Brigus Gold’s (BRD-T) open-pit and underground Black Fox mine in Ontario and 10% from Brigus’ Black Fox Extension; 20% of gold production from SilverCrest Mines’ (SVL-V) open-pit Santa Elena mine in Mexico; and 25% of the first 175,000 oz. of gold and 12% of life-of-mine production from Rambler Metals & Mining’s (RAB-V) Ming copper-gold mine in Newfoundland.

Sandstorm’s gold streams that are not yet producing include Mt. Hamilton, Coringan and Cuiu Cuiu streams recently acquired, plus 20% of gold production from Metanor Resources’ (MTO-V) Bachelor Lake gold mine in Quebec; 17.5% of gold and gold equivalent of silver from the Bracemac-McLeod mine partially owned by Donner Metals’ (DON-V); and 22% of gold production from Santa Fe Gold’s Summit mine in New Mexico. Santa Fe achieved commercial production in April at the mine but has been looking to defer gold payments to Sandstorm.

The company also recently started trading in the United States on the NYSE MKT exchange, which was until May known as the NYSE Amex.