Sandstorm gets cashed-up

Sandstorm Gold (SSL-V) is looking to raise  $150 million so it can add to its precious-metal streams. The sum is comprised of $130 million from a bought-deal financing at $10 per unit, plus up to $20 million from underwriters who can buy an extra 15% over what gets sold in the market. The units consist of a share and a third of a warrant, with a full warrant exercisable at $14 for five years.

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 $9.15 to an all-time high of $10.88. The company has 70.4 million shares outstanding.

Sandstorm expects attributable production between 28,000 and 33,000 oz. gold this year, and is targeting 50,000 attributable oz. gold by 2015. 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 been acquiring royalty streams this year, including a 2.4% net smelter return royalty (NSR) 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 a 2.5% NSR on Magellan Minerals’ (MNM-V) Coringa gold project and 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, BRD-X) 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, SVLC-X) open-pit Santa Elena mine in Mexico; and 25% of the first 175,000 oz. gold and 12% of life-of-mine production from Rambler Metals and Mining’s (RAB-V) Ming copper-gold mine in Newfoundland.

Sandstorm’s gold streams that are not yet producing include the 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. Summit reached commercial production in April, but Sante Fe is looking to defer gold payments to Sandstorm.