Did competition for gold streams and royalties just get more crowded?
Sandstorm Gold, if it maxes a C$150 million financing, will suddenly have C$200 million at its disposal to spend on gold streams or royalties.
mineweb.com
Author: Kip Keen
Posted: Friday , 24 Aug 2012
HALIFAX, NS (MINEWEB) -
You have to think Royal Gold and Franco-Nevada are now paying more attention to Sandstorm Gold. This week Sandstorm doubled up a C$75 million financing to between C$130 million to C$150 million. It's a bought deal, led by Cormark Securities @ C$10 a Sandstorm share, that will give Sandstorm a suddenly very swollen war chest. Add to that Sandstorm's C$50 million line of credit, undrawn as of yet, and assuming it pulls in the upper end of the financing, the upstart royalty streaming company headed up by Silver Wheaton's former CFO, Nolan Watson, will have some C$200 million to play with as it goes after more streaming deals
Now even C$200 million does not put Sandstorm, in the grand scheme of things, in the same league as its competition, say Royal Gold and Franco-Nevada. At last check Franco-Nevada had about C$1 billion to work with, having just committed another C$1 billion to buy a gold stream on Inmet's massive Cobre Panama copper-gold polymetallic project in Panama. Royal Gold, which just picked up 12.5 percent more of the gold from Thompson Creek Metals' Mt. Milligan copper-gold project for C$200 million, has a further C$375 million in cash and C$350 million on a line of credit. Meaning, Franco-Nevada and Royal Gold have more cash and, furthermore, they're both about ten times bigger marketcap-wise - C$7.1 billion and C$4.9 billion respectively - as compared to Sandstorm's C$682 million.
But then marketcap doesn't really matter when you're out buying gold streams or gold royalties. And right now, with markets down and juniors especially hungry for cash without the pain of massive equity dilution, all the gold streamers are looking hard for top assets. Mark the words of streaming CEOs. When Franco-Nevada inked the Inmet agreement August 20, David Harquail, the streamer's president and CEO stated: "Franco-Nevada has the capacity to do approximately another $1 billion of new investments to further grow its portfolio in this opportunity rich environment." Repeat, in this opportunity rich environment. Sandstorm's Watson says no different. Take your pick of media interviews Watson has done in recent months, and invariably he notes how ripe the market is for gold streamers - very - and that Sandstorm is looking to do more acquisitions.
This is what makes Sandstorm's C$200 million mark so interesting (assuming all the potential cash comes in.) It gives Sandstorm the means to compete in a way that it hasn't been able to for gold streams that until now were more in the realm of the likes of Franco-Nevada and Royal Gold. No, Sandstorm can't pull off the billion dollar deals. But it can now pull of the hundred million dollar ones. Whether it chooses to do so, is besides the point. That it could do so is precisely the point. Yes, that fact should attract more attention from its bigger gold streaming peers. |
