DESIGNATED NEWS RELEASE
- Nomad Royalty Company Acquisition:
Sandstorm and Nomad Royalty Company Ltd. (NYSE: NSR, TSX: NSR) ("Nomad") have entered into a definitive agreement (the "Arrangement Agreement") whereby Sandstorm will acquire all of the issued and outstanding common shares of Nomad ("Nomad Shares") pursuant to a plan of arrangement under the Canada Business Corporations Act (the "Nomad Acquisition"). The implied equity value of the Nomad Acquisition is approximately$590 million (approximatelyC$755 million ). - BaseCore Metals Royalty Package: Sandstorm has agreed to acquire nine royalties and one stream (the "Royalty Package") from
BaseCore Metals LP ("BaseCore") for total consideration of$525 million , payable as to$425 million in cash and$100 million in common shares of the Company (the "Sandstorm Shares") (the "BaseCore Transaction", and together with the Nomad Acquisition, the "Transactions"). Concurrent with the BaseCore Transaction, Sandstorm has partnered with Royalty North Partners Ltd. ("Horizon Copper", "Horizon" or "RNP") to sell a portion of a copper royalty acquired in the BaseCore Transaction and retain a silver stream on the asset.
All figures are in
- Considerable Upsize to Sandstorm's Scale: The Transactions are expected to substantially increase the Company's scale and size, cementing Sandstorm's status as the largest1, highest-growth, and most liquid mid-tier royalty and streaming company.
- Precious Metals Focused with Exceptional Assets: The addition of several high-quality and low-cost assets fortifies Sandstorm's focus on gold, silver, and copper exposure. By 2025, Sandstorm's revenue is expected to be nearly 90% precious metals2.
- Highest Growth Amongst Peers: Sandstorm expects its production to grow more than 85% between 2022 and 2025, positioning the Company with the highest growth amongst peers3. The Transactions add several development stage assets contributing to this growth including Greenstone, Platreef, and Cortez (Robertson deposit).
- Industry Leading Portfolio Diversification: On completion of the Transactions, Sandstorm's resulting portfolio will total 260 streams and royalties, of which 39 of the underlying assets will be cash-flowing with no asset contributing more than 15% to the Company's consensus net asset value.
- Increase to Long-term Guidance: The Transactions increase Sandstorm's 2022 production guidance by approximately 22% from 65,000–70,000 gold equivalent ounces ("GEO") to 80,000–85,000 GEO2 and increase long-term production guidance by 55% from 100,000 GEO to 155,000 GEO2 in 2025.
- Strengthening Sandstorm's Partnership with Horizon Copper: Furthering Sandstorm's strategy to acquire precious metal streams on high-quality copper assets, Sandstorm will sell a portion of a copper royalty to Horizon and retain a silver stream, adding diversification and size to Horizon's growing copper portfolio, while increasing Sandstorm's precious metal exposure.
"These Transactions mark the next step in the strategic growth plans for Sandstorm," commented
Nomad is a high-growth precious metals-focused royalty company with a portfolio of 20 royalty and stream assets, of which seven are on currently producing mines (see Appendix for an overview of Nomad's assets). In 2021, the portfolio contributed
Sandstorm expects Nomad's production to grow to approximately 40,000 GEO by 2025, which is below current analyst expectations. Sandstorm has included assets that are currently in production, construction (Greenstone and Platreef) or at the advanced stage of development (Robertson) in the 2025 production figure. Based on the Company's review of current operating plans at Blyvoor, Sandstorm is budgeting for long-term production rates of 60,000–80,000 ounces of gold per annum, based on conventional mining methods.
Through the Nomad Acquisition, Sandstorm adds several high-quality and low-cost assets. Based on analyst consensus, Nomad's portfolio comprises 91% precious metals and nearly 50% producing assets, further diversifying Sandstorm's portfolio and increasing exposure to gold and silver. With several assets in active development, Nomad's portfolio adds meaningful increases to Sandstorm's production in both the near and long-term. Assets anticipated to commence production between 2024 and 2025 include the Platreef and Greenstone projects as well as the Robertson deposit at the
The Nomad Acquisition will be completed by way of a court approved plan of arrangement under the Canada Business Corporations Act. Pursuant to the terms of the Nomad Acquisition, Nomad shareholders will receive upfront consideration of 1.21 Sandstorm Shares for each Nomad Share held, which implies consideration of
The Nomad Acquisition is expected to close in the second half of 2022, subject to receipt of all applicable court, regulatory and securityholder approvals and satisfaction of other conditions precedent customary for transactions of this nature, as further described below.
BaseCore is an entity equally owned by affiliates of Glencore Plc ("Glencore") and
Sandstorm has agreed to acquire the Royalty Package for total consideration of
The BaseCore Transaction is expected to close in 4–6 weeks and is subject to regulatory approvals including the approval of the TSX for the listing of the Sandstorm Shares issuable thereunder, the
Concurrent with the BaseCore Transaction, Sandstorm has signed an amended and restated letter of intent with Horizon Copper whereby Sandstorm will sell the acquired 1.66% Antamina NPI (the "Horizon Antamina Agreement") to Horizon and Sandstorm will retain a long-life silver stream on the Antamina mine.
Horizon Copper's business intent is to actively grow its existing portfolio of assets, with a focus on copper projects. The subsequent spin-out of the Antamina NPI will position Horizon Copper as a competitive copper company with a portfolio of high-quality cash-flowing and development stage copper assets. This transformative transaction provides Horizon Copper with the size and scale required to further grow and diversify the company, further strengthening the strategic partnership opportunities with Sandstorm.
The full consideration that Horizon will issue to Sandstorm under the Horizon Antamina Agreement includes:
- 1.66% Antamina Silver Stream: Sandstorm will receive 1.66% of silver based on production from the Antamina mine with ongoing payments equal to 2.5% of the silver spot price (the "Antamina Silver Stream").
- 0.55% Antamina Royalty: Sandstorm will receive approximately one-third of the Antamina NPI, paid net of the Antamina Silver Stream servicing commitments (the "Antamina Residual Royalty").
- $50
Million Cash Payment : Under the Horizon Antamina Agreement, Horizon will raise$50 million by way of equity financing, which will then be payable to Sandstorm on closing of the Horizon Antamina Agreement. $105 Million Debenture: Sandstorm will be issued a$105 million debenture (the "Debenture"). The Debenture is expected to bear an interest rate of 3% over a 10-year term. Principal repayments are subject to a 100% cash sweep of the excess cash flow Horizon receives from the 1.66% Antamina NPI after the Antamina Silver Stream and Antamina Residual Royalty obligations are paid. Prepayment of the Debenture can occur at any time prior to maturity without penalty.$26 Million Horizon Copper Shares: Horizon will issue Sandstorm approximately$26 million 5 worth of Horizon Copper shares to maintain Sandstorm's 34% equity interest.
The Antamina Silver Stream and the Debenture will be senior obligations of Horizon, secured by the 1.66% Antamina NPI.
The full particulars of the Horizon Antamina Agreement will be described in a management information circular of RNP to be prepared in accordance with the policies of the
The Horizon Antamina Agreement is subject to several conditions, including but not limited to, execution of definitive agreements, TSX-V acceptance, disinterested RNP shareholder approval and Horizon Copper raising
With the close of the Transactions, Sandstorm is increasing its 2022 production guidance to be between 80,000 and 85,000 gold equivalent ounces, increasing to 155,000 gold equivalent ounces by 20252.
As part of the Transactions, Sandstorm will issue approximately 78.6 million6 Sandstorm Shares to Nomad shareholders and approximately 13.5 million Sandstorm Shares to BaseCore. Upon closing of the Transactions, existing Sandstorm shareholders will comprise 67% of the Company's ownership, while Nomad shareholders and BaseCore limited partners will own approximately 28% and 5% of Sandstorm, respectively.
Sandstorm has entered into an agreement with The Bank of Nova Scotia ("Scotiabank") and
The amounts drawn on the Revolving Loan are subject to interest at SOFR plus 1.875%–3.5% per annum, and the undrawn portion of the Revolving Loan is subject to a standby fee of 0.422%–0.788% per annum, both of which are dependent on the Company's leverage ratio. With the amendment, Sandstorm's leverage ratio covenant has increased to 4.75x, with step-downs to 4.00x after five quarters post-closing of the BaseCore Transaction.
The Revolving Loan matures in
The Revolving Loan maintains the existing sustainability-linked incentive pricing terms that allow Sandstorm to reduce the borrowing costs by up to five basis points (from the interest rates described above) as the Company's sustainability performance targets are met (see press release dated
A conference call will be held on
International: (+1) 416-764-8688
North American Toll-Free: (+1) 888-390-0546
Conference ID: 94124833
Webcast URL: https://bit.ly/3LNzTIx
The acquisitions of both Nomad Royalty Company and the BaseCore Royalty Package introduce several meaningful cash-flowing and development stage assets to Sandstorm's royalty portfolio. Noteworthy assets from the Transactions include:
Antamina is an open-pit copper mine located in the Andes mountain range of
In addition to copper, Antamina is also a significant zinc and silver producer. The mine is operated by Compañìa Minera Antamina ("CMA"), a top-tier operator jointly owned by Glencore (33.75%), BHP Billiton (33.75%), Teck (22.5%), and Mitsubishi Corporation (10%).
Antamina contains Resources that support a multi-decade mine life producing high-grade copper. The mine's Measured & Indicated Mineral Resources, inclusive of Reserves, total 925 million tonnes ("Mt") at 0.87% copper, 0.69% zinc, and 11 grams per tonne ("g/t") silver. Mineral Reserves total
Per the terms of the Antamina Silver Stream, Sandstorm will receive 1.66% of all silver produced at Antamina for ongoing payments of 2.5% of the spot price of silver. Under the terms of the Antamina Residual Royalty, Sandstorm will hold a 0.55% NPI on all metals produced at Antamina, which represents approximately one-third of the total 1.66% Antamina NPI, net of the Antamina Silver Stream servicing commitments.
Platreef is a development stage project located in
A Feasibility Study was released in the first quarter of 2022 by majority owner Ivanhoe Mines outlining a multi-phase construction approach. The first phase of production, currently expected to start in the second half of 2024, is based on an initial 0.7 million tonnes per annum ("Mtpa") underground mine targeting high-grade mining areas close to the project's recently completed shaft 1. The Feasibility Study outlines phase 2 expanding production to 5.2 Mtpa, driven by the addition of the second, larger shaft (shaft 2). Platreef's phase 2 would rank Platreef as the world's fifth-largest PGM mine on a palladium equivalent basis9. Previous studies completed on Platreef have demonstrated the potential for expansions up to 12 Mtpa.
Through the Nomad Acquisition, Sandstorm will hold a streaming agreement whereby the Company has the right to purchase 37.5% of gold produced from Platreef until 131,250 gold ounces have been delivered, 30% until an aggregate of 256,980 ounces of gold are delivered, and 5% thereafter. The gold stream will be based on all recovered gold from Platreef, subject to a fixed payability of 80%. Sandstorm will make ongoing payments of
The Greenstone project, owned jointly by Equinox Gold Corp. (60%) and
Through the Nomad Acquisition, Sandstorm will hold a gold stream on the project for 5.938% of gold production attributed to
Robertson is a development stage deposit part of the
Barrick released an updated Feasibility Study on Cortez in
Through the Nomad Acquisition, Sandstorm will hold a sliding scale NSR royalty between 1.0%–2.25% based on the average quarterly gold price. When the average price of gold for the quarter is between
The Bonikro gold mine is a producing gold-silver mine located in Cotê d'Ivoire. The operation consists of two primary areas: the Bonikro mining license and the Hiré mining license. Gold has been produced from the Bonikro open-pit and through the Bonikro CIL plant since 2008 and over 1.0 Moz have been produced from Bonikro and Hiré. Hiré is a collection of three deposits and open-pits that are approximately 5.0 kilometres from the Bonikro mine and utilize the same Bonikro processing plant. Production in the last few quarters of 2021 was focused on the Hiré pits.
Through the Nomad Acquisition, Sandstorm will hold a variable gold stream on the Bonikro mine whereby Sandstorm will receive 6% of gold produced at the mine until 39,000 ounces of gold are delivered, then 3.5% of gold produced until 61,750 ounces of gold have been delivered, then 2% thereafter. Under the stream agreement Sandstorm will make ongoing payments at the lesser of a)
The Caserones copper mine is an open-pit operation located in the Atacama region of
Through the Nomad Acquisition, Sandstorm's royalty interests will be an effective 0.63% NSR royalty on the Caserones mine when the copper price is above
The Blyvoor Gold mine is an underground operation located on the Witwatersrand gold belt,
Under the terms of the gold stream, until 300,000 ounces have been delivered ("Initial Blyvoor Delivered Threshold"),
The Canadian Electrolytic Zinc smelter ("CEZinc") is located in
A planned expansion project at CEZinc includes the installation of additional belt filters and related equipment to increase the facility's filtration capacity. The required permits from the government of
Upon closing of the BaseCore Transaction, Sandstorm will receive 1.0% of zinc processed at CEZinc until the later of
Highland Valley Copper ("HVC") is located in
Copper production in 2022 is anticipated to be between 127,000–133,000 tonnes, with an expected increase to 130,000–160,000 tonnes per year from 2023 to 2025.
Teck continues to evaluate the Highland Valley Copper 2040 Project ("
At the close of the BaseCore Transaction, Sandstorm will hold a 0.5% NPI on
At the close of the BaseCore Transaction, Sandstorm will hold a sliding scale gross returns royalty ("GRR") after 85 million pounds (Mlbs) of copper have been produced. A 1.0% GRR rate is expected, increasing to a 2.0% GRR if Southern Copper defines Measured & Indicated Resources (inclusive of Reserves) greater than 3 billion pounds ("Blbs") CuEq. The royalty further increases to a 3.0% GRR if Measured & Indicated Resources (inclusive of Reserves) exceed 5 Blbs CuEq.
Horne 5 is a past-producing gold-silver-copper mine located in
At the close of the BaseCore Transaction, Sandstorm will hold a 2.0% NSR royalty on the Horne 5 project.
The Nomad Acquisition is subject to approval of at least 66 2/3% of the votes cast by the shareholders of Nomad present in person or represented by proxy, at a special securityholders' meeting to consider the Nomad Acquisition.
In connection with the Nomad Acquisition, Nomad's principal shareholder,
The issuance of Sandstorm Shares pursuant to the Nomad Acquisition will require approval by a simple majority of votes cast by the shareholders of Sandstorm present in person, or represented by proxy at a special shareholders' meeting to be called to consider the issuance of Sandstorm Shares pursuant to the requirements of the TSX. Officers and directors of Sandstorm collectively holding approximately 1.5% of the issued and outstanding Sandstorm Shares have entered into voting support agreements with Nomad pursuant to which they have agreed to, among other things, vote their Sandstorm Shares in favour of the issuance of the Sandstorm Shares pursuant to the Nomad Acquisition.
The completion of the Nomad Acquisition is also subject to applicable regulatory approvals including but not limited to approval by the
None of the securities to be issued pursuant to the Transactions have been or will be registered under
The Arrangement Agreement has been unanimously approved by the Boards of Directors of each of Sandstorm and Nomad, including in the case of Nomad, following the unanimous recommendation of a special committee of independent directors. Both Boards of Directors unanimously recommend that their respective securityholders vote in favour of the Nomad Acquisition.
Notes | ||
1. | Based on 2025 production guidance after Transactions close | |
2. | Commodity Price Assumptions: | |
3. | Gold equivalent production based on peer production guidance and analyst estimates. Peers include Franco-Nevada Corp, Wheaton Precious Metals Corp., Royal Gold, Inc., Triple Flag Precious Metals Corp., and Osisko Gold Royalties Ltd. | |
4. | See Appendix for calculation of 1.66% Antamina NPI. | |
5. | Value of Horizon shares issued to Sandstorm based on assumption Horizon raises | |
6. | Assumes the conversion of Nomad's dilutive instruments on close of the Nomad Acquisition. | |
7. | Source: | |
8. | Source: | |
9. | Ivanhoe Mines Feasibility Study Results press release dated | |
10. | ||
11. | Barrick 2021 Annual Report | |
12. | Caserones Technical Report |
QP Qualified |
Project | Operator | Stage | INITIAL Terms | Location |
Blyvoor | Blyvoor Gold | Producing | 10% Au stream* @ | |
Caserones | Lumina Copper Chile | Producing | 0.63% NSR* | |
Bonikro | Allied Gold | Producing | 6% Au stream* @ | |
Mercedes | Producing | 100% Ag stream* @ 20% of Ag spot ongoing payment; fixed gold deliveries of 1,000 oz per quarter* | ||
Moss | Elevation Gold | Producing | 0.5–3.0% NSR | |
RDM | Equinox Gold | Producing | 1.0% NSR on Au, 2% NSR on other metals | |
South Arturo | Barrick Gold | Producing | 40% Ag stream, 20% of spot ongoing payment | |
Chapada | Lundin Mining | Development | 2.0% NSR | |
Platreef | Ivanhoe Mines | Development | 37.5% Au stream* @ | |
Greenstone | Equinox Gold | Development | 2.375% Au stream* @ | |
Heron Resources | Development | 80% Ag stream* @ 20% of spot ongoing | ||
Barrick Gold | Development | 1-2.25% NSR | ||
Gualcamayo | Mineros S.A. | Development | 2% NSR on oxides (excluding first 396 koz produced after 1.5% NSR royalty on non-oxide material | |
Blackwater | Artemis Gold | Development | 0.21% NSR | |
Troilus | Troilus Gold | Exploration | 1.0% NSR | |
Gold Hawk | O3 Mining Inc. | Exploration | 2.0% NSR | |
Valdora | O3 Mining Inc. | Exploration | 1.0% NSR | |
Obalski | Exploration | 1.0-1.5% NSR | ||
Blue Quartz | McLaren Resources Inc. | Exploration | 0.5% NSR | |
Yorbeau Resources Inc. | Exploration |
*Stream terms change after certain deliveries are made or royalties percentages vary based on commodity price. See Nomad's annual information form dated
Project | Operator | Stage | Terms | Location |
Antamina | BHP, Glencore, Teck, Mitsubishi | Producing | 1.66% NPI | |
CEZinc | Glencore | Producing | 1% Zn stream, 20% ongoing payment | |
Teck Resources | Producing | 0.5% NPI | ||
Horne 5 | Falco Resources | Development | 2.0% NSR | |
Southern Copper | Development | 1.0% GRR | ||
Callinex Mines Inc. | Advanced Exploration | 1.5% NSR | ||
Canterra Minerals Corp | Advanced Exploration | 2.0% NSR | ||
South Tally/ | Canterra Minerals Corp | Advanced Exploration | 2.0% NSR | |
Tulks South | Canterra Minerals Corp | Advanced Exploration | 2.0% NSR | |
Joannès Lake | Bullion Gold Resources Corp. | Exploration | 2.0% NSR |
The 1.66% Antamina NPI is calculated based on free cash flow at CMA. The calculation includes net proceeds from all sales less all site costs, offsite costs, capital expenditures, all incoming and mining taxes and environmental costs, third-party financing inflows and outflows, third party interest, and working capital changes. The holder of the NPI cannot be called upon to contribute cash to the operation.
Sandstorm is a gold royalty company that provides upfront financing to gold mining companies that are looking for capital and in return, receives the right to a percentage of the gold produced from a mine, for the life of the mine. After the Transactions close, Sandstorm will have acquired a portfolio of 260 royalties, of which 39 of the underlying mines are producing. Sandstorm plans to grow and diversify its low cost production profile through the acquisition of additional gold royalties. For more information visit: www.sandstormgold.com.
The financial information included or incorporated by reference in this press release or the documents referenced herein has been prepared in accordance with International Financial Reporting Standards as issued by the
The disclosure and information contained or referenced herein uses mineral reserve and mineral resource classification terms that comply with reporting standards in
This press release contains "forward-looking statements", within the meaning of the
Forward-looking statements are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performances or achievements of Sandstorm Gold Royalties to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Sandstorm Gold Royalties will operate in the future, including the receipt of all required approvals, the price of gold and copper and anticipated costs. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, amongst others, failure to receive necessary approvals, changes in business plans and strategies, market conditions, share price, best use of available cash, gold and other commodity price volatility, discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries, mining operational and development risks relating to the parties which produce the gold or other commodity the Company will purchase, regulatory restrictions, activities by governmental authorities (including changes in taxation), currency fluctuations, the global economic climate, dilution, share price volatility and competition.
Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: the impact of general business and economic conditions, the absence of control over mining operations from which the Company will purchase gold, other commodities or receive royalties from, and risks related to those mining operations, including risks related to international operations, government and environmental regulation, actual results of current exploration activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined, risks in the marketability of minerals, fluctuations in the price of gold and other commodities, fluctuation in foreign exchange rates and interest rates, stock market volatility, as well as those factors discussed in the section entitled "Risks to Sandstorm" in the Company's annual report for the financial year ended
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