ore

Among the royalties purchased by Sandstorm Gold was a 5% NSR on portions of Copper Mountain Mining’s operations, shown above.

Streaming company Sandstorm Gold (SSL-T) has made one of its biggest forays into the royalty business yet, acquiring 56 royalties from diversified miner Teck Resources for US$1.4 million in cash and $20.6 million in shares (at $3.57/share).

The assets offer diversification geographically (33 are in North America) and across various project stages.

Four of the royalties are producing, and Sandstorm expects US$1.5 million to $2 million in cash flow this year. Sandstorm shares were off about 6% to $2.95 in early trading after the news.

The producing royalties are:

  • a 5% NSR on copper and 2.5% on other metals on a portion of Copper Mountain’s B.C. mine;
  • 5% gross revenue royalty on Westmoreland’s Sheerness coal mine in Alberta;
  • 1.25% NSR on Magmont, a lead/zinc mine in Missouri; and
  • 1.5% NSR on Altintepe, a gold mine in Turkey that had its first pour in November.

Key development-stage assets listed include a 2% NSR on Mariana’s high-grade Hot Maden gold-copper project in Turkey; a 2% NSR on Glencore’s Hackett River zinc-silver deposit in Nunavut; and a $US10/oz production royalty on the Agi Dagi/Kirazli projects in Turkey owned by Alamos Gold (which purchased them from Teck and Mark O’Dea’s Fronteer Gold).

The deal accelerates Sandstorm’s move into other metals and commodities; in March the company bought a royalty on the Diavik diamond mine in Northwest Territories.

The upside for Teck is a bit more difficult to understand, although it generates some cash and collects Sandstorm shares by monetizing assets that weren’t getting any value in their portfolio. These days, Teck is more focused on grappling with a commodity slide that has taken its share price down by 67% in the past year alone (92% in the past 5 years).

Sandstorm has struggled with previous forays into other metals, buying back spinoff Sandstorm Metals & Energy after its investments in coal and oil/gas faltered.

Sandstorm Gold also has a stake in titanium after picking up David Lowell’s Alto Parana titanium project – held by CIC Resources – in Paraguay for $1.5 million in shares in a deal announced on Christmas Eve, sources have confirmed.

CIC Resources was held in Mission Gold, which was acquired by Northern Dynasty Minerals in a deal that also closed Dec. 24.

Sandstorm Gold shares have fallen about 40% in the past year.

Price: $2.95
Shares outstanding: 128.3 million
Market cap: $380 million

NR: Sandstorm Gold Announces Agreement to Acquire 56 Royalties for US$22 Million