Press Release: Sandstorm Gold Ltd. Signs Asset Purchase Agreement
VANCOUVER, BC, May 2, 2024 /PRNewswire/ – Sandstorm Gold Ltd. (“Sandstorm Gold Royalties”, “Sandstorm”, or the “Company”) (NYSE: SAND) (TSX: SSL) has announced the signing of a definitive asset purchase agreement for the sale of non-core, non-precious metals royalties. The Company will receive cash proceeds of $21.0 million plus the retention of the next $10 million in proceeds from the Copper Mountain Royalty.
Sale of Non-Core, Non-Precious Metals Royalty Package
The transaction with Evolve Strategic Element Royalties Ltd. involves selling eight royalties for $21.0 million in cash along with retaining $10 million in proceeds from the Copper Mountain Royalty. This move is in line with Sandstorm’s plan to accelerate debt repayment through the disposal of non-core assets.
Additional Insight: Accelerated deleveraging is crucial for companies like Sandstorm to strengthen their financial positions in volatile commodity price environments.
The sale of over $50 million in non-core assets since 2023, with approximately $40 million in cash, signifies Sandstorm’s commitment to improving its financial health. Although further monetization of the investment portfolio is possible, the focus remains on debt reduction and enhancing shareholder value.
Royalties Purchased by Evolve:
- Highland Valley Copper: includes a 0.5% net profits interest on Teck Resources Ltd.’s project in British Columbia.
- Copper Mountain North Pit: consists of a 2.5–5.0% net smelter returns royalty on the Copper Mountain mine in British Columbia.
- Seymour Lake: covers a 1.5% NSR royalty on Green Technology Metals Limited’s lithium development project in Ontario, Canada.
- Obalski: holds a 1.0–1.5% NSR royalty on TomaGold Corp’s copper-zinc project in Quebec.
- Scott Lake: entails a payment upon commercial production on Yorbeau Resources Inc.’s project in Quebec.
- Saints-Leinster & Scotia: includes a 2.5% NSR royalty on nickel development projects in Western Australia.
Sandstorm expects to receive the Cash Purchase Price in the second quarter of 2024 upon fulfilling customary closing conditions.
Based on analysts’ net asset value of the Royalty Package, the Transaction was concluded at approximately 1.0x street consensus NAV, excluding proceeds from the Retained Copper Mountain Royalty. With an internal rate of return exceeding 20% on the Royalty Package, Sandstorm remains focused on maximizing returns for its stakeholders.
Production Outlook Unchanged
The Transaction’s impact on production guidance is expected to be minimal due to the ongoing cash flows from the Retained Copper Mountain Royalty and the early-stage nature of certain assets in the Royalty Package.
About Evolve Strategic Element Royalties
Evolve is a private royalty company focusing on battery and energy transition projects, led by industry veterans Joseph de la Plante and Vincent Metcalfe. Their commitment to strategic commodities aligns with the global shift towards a low-carbon economy.
Renewal of Normal Course Issuer Bid
Following recent non-core asset sales, Sandstorm’s board has approved the renewal of the NCIB, allowing the Company to repurchase its common shares when undervalued by the market.
Additional Insight: By repurchasing its undervalued shares, Sandstorm aims to enhance shareholder value and demonstrate confidence in the Company’s long-term prospects.
The renewed NCIB permits the repurchase of up to 20.0 million Common Shares, representing around 7% of the Company’s total outstanding shares. The Company plans to commence purchases on May 7, 2024, focusing on value creation for shareholders.
With a strong commitment to fiscal responsibility, Sandstorm aims to optimize capital allocation through share repurchases and strategic investments.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Contact Information
For more information about Sandstorm Gold Royalties, visit www.sandstormgold.com or email [email protected].
About Sandstorm Gold Royalties
Sandstorm Gold Royalties is a precious metals-focused royalty company providing upfront financing to mining companies in exchange for a percentage of production. With a growing portfolio of approximately 230 royalties, including 39 producing mines, the Company aims to expand its low-cost production profile by acquiring additional gold royalties.
CAUTIONARY STATEMENTS TO U.S. SECURITYHOLDERS
Financial information in this press release has been prepared in accordance with International Financial Reporting Standards, which may differ from US GAAP, impacting comparability.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements related to Sandstorm Gold Royalties’ business, operations, and financial performance, subject to various risks and uncertainties that could affect actual results. Investors are advised to exercise caution and consider the Company’s risk factors and market conditions before making investment decisions.
SOURCE: Sandstorm Gold Ltd.
Additional Insight: Emphasizing the importance of responsible financial management, Sandstorm’s decisions to sell non-core assets, leverage the NCIB for share repurchases, and focus on optimizing capital allocation are strategic moves to create long-term value for shareholders. This approach reflects the Company’s commitment to enhancing financial performance and fortifying its position in the competitive mining industry.
