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Sandstorm Gold Ltd

Mining Companies - Gold Companies

User Rating: / 16
PoorBest 

Junior Au Stream Company

Sandstorm Gold Ltd. is a growth focused resource based company that seeks to complete gold purchase agreements with gold mining companies that have advanced stage development projects or operating mines. A gold purchase agreement involves Sandstorm making an upfront cash payment to its partners and in exchange, Sandstorm receives the right to purchase a percentage of the gold produced for the life of the mine, at a fixed price per ounce. Sandstorm helps other companies in the resource industry grow their business, while acquiring attractive assets in the process.  The Company is listed on the Toronto Venture Exchange under (SSL) and OTC under (SNDXF).

Annual Trading Range 2011

.62-1.67

Trading on 27 July 2011 @ 1.55

Share Structure

Wednesday June 1, 2011

Share Capitalization

--------------------------------------------------------------------------------

Total Issued & Outstanding 320,140,697

--------------------------------------------------------------------------------

119,649,986 Warrants Outstanding

99,094,186 Exercise @ US$0.60, Expire April 23, 2014

19,692,025 Exercise @ US$1.00, Expire October 19, 2015

--------------------------------------------------------------------------------

13,170,000 Options Outstanding

40,000 Exercise @ $0.10, Expire July 31, 2012

3,500,000 Exercise @ $0.45, Expire June 16, 2014

700,000 Exercise @ $0.44, Expire July 6, 2014

2,000,000 Exercise @ $0.435, Expire July 28, 2014

100,000 Exercise @ $0.67, Expire May 19, 2015

6,830,000 Exercise @ $0.68, Expire November 26, 2015

Financials

Q1 2011

Cash and Equivalents 2.9M

ST Liabilities 1M

Revenues  3.66M

Cash Burn Rate 942K

Quarterly gain (0.00)

Projects

Reserves and Resources

Aurizona

The Aurizona Gold Project is located in Maranhão State in northern Brazil and is 100% owned and operated by Luna Gold Corp. (TSXV:LGC). Aurizona is an open-pit mine with a gravity and carbon-in-leach milling operation expected to average 62,000 ounces of gold production over the expected mine life. The project is currently in production and is expected to ramp up to 5,000 ounces per month by the first half of 2011. 

Aurizona is an orogenic gold deposit hosted in a greenstone belt of the São Luis Craton. There are a number of mineralized bodies on the property, but work to date has focused on the Piaba and Tatjuba deposits on which the current resource is based. As of July, 2009 Aurizona has proven and probable reserves of 729,000 ozs of gold and a resource of 909,000 ozs of gold in measured and indicated categories (resources are inclusive of previously stated reserves) and 403,000 ozs of gold in the inferred category. Refer to the table here for more details on the reserve and resource. To view the NI 43-101 technical report click here.

Sandstorm Transaction

Sandstorm has acquired 17% of the life of mine gold production from Aurizona for an upfront payment of US$17.8 million in cash and 5.5 million common shares of Sandstorm plus ongoing per ounce payments equal to the lesser of US$400 and the then prevailing market price per ounce of gold. Sandstorm will not be required to contribute to capital or exploration expenditures in respect of the mining operations of Aurizona.

If Luna decides to develop an underground mine on Aurizona, Sandstorm will also have the right (but not the obligation) to purchase 17% of the payable gold from the underground mine, at a per-ounce price equal to the lesser of US$500 and the prevailing market price, in exchange for paying 17% of the capital expenditures incurred to determine the economic viability and to construct the underground mine.

Bachelor Lake

Bachelor Lake is a greenstone hosted gold mine located outside of Val d'Or in Quebec, Canada operated by Metanor Resources Inc. (TSXV:MTO). In early 2011, Metanor released the findings from a pre-feasibility study at Bachelor Lake showing underground production of approximately 200,000 ounces over an initial three and a half year mine life. Metanor also announced that CAD$1.4 million will be invested in definition drilling to increase the known measured and indicated mineral resources. Production is expected to begin during 2012 with a ramp up to full commercial production by the end of 2012. 

The Bachelor Lake Mine is projected to produce an average of 60,000 ounces of gold per year and will be utilizing the low cost, long hole mining method along with an existing, and fully functional, operating mill and surface infrastructure. 

Sandstorm Transaction

Sandstorm has agreed to purchase 20% of the life of mine gold produced from Bachelor Lake for US$20 million plus ongoing per ounce payments equal to the lesser of US$500 and the then prevailing market price per ounce of gold. Sandstorm will be making staged payments to Metanor as follows: (i) US$5 million, from cash on hand, upon signing of the agreement, (ii) US$9 million, from cash on hand, once Metanor has achieved certain funding conditions, expected to be completed in the first half of 2011, and (iii) US$6 million, from operating cash flow, on September 1, 2011. Metanor has provided a guarantee that Sandstorm will receive a minimum of US$20 million in pre-tax cash flow over the next six years.

Sandstorm Transaction

Sandstorm has acquired 17% of the life of mine gold production from Aurizona for an upfront payment of US$17.8 million in cash and 5.5 million common shares of Sandstorm plus ongoing per ounce payments equal to the lesser of US$400 and the then prevailing market price per ounce of gold. Sandstorm will not be required to contribute to capital or exploration expenditures in respect of the mining operations of Aurizona.

If Luna decides to develop an underground mine on Aurizona, Sandstorm will also have the right (but not the obligation) to purchase 17% of the payable gold from the underground mine, at a per-ounce price equal to the lesser of US$500 and the prevailing market price, in exchange for paying 17% of the capital expenditures incurred to determine the economic viability and to construct the underground mine.

Black Fox Mine

The Black Fox Mine is located outside of Matheson, Ontario, Canada in the Timmins Gold District and is 100% owned and operated by Brigus Gold Corp. (TSXV:BRD). Since May 2009 Black Fox has been in commercial production as an open pit mine and in mid 2010 development began to add underground operations. 

Underground production began in March 2011 and together with the open-pit has an estimated average annual gold production of 110,000 ounces per year for 10+ years. The ore from the open pit and underground operations are trucked to the Black Fox mill, which is a 2,000 tonne per day mil and tailings facility. 

Brigus has been operating Black Fox with improving production rates and reducing cash costs quarter over quarter since the beginning of commercial production. In the third quarter of 2010, Black Fox produced in excess of 21,000 ounces of gold, and production is continuing to ramp up. Brigus also has an aggressive drilling program underway that is testing from underground and from surface to identify resource additions.

Sandstorm Transaction

Sandstorm has acquired 12% of the life of mine gold production from Black Fox for an upfront payment of US$56.3 million plus ongoing per ounce payments equal to the lesser of US$500 (subject to an inflationary adjustment beginning in 2013, not to exceed 2% per annum) and the then prevailing market price per ounce of gold. Brigus will have the option, for a period of 24 months, to repurchase 50% of the gold purchase agreement by making a US$36.6 million payment to Sandstorm, upon receipt of which, the percentage of gold Sandstorm is entitled to purchase shall be decreased from 12% to 6%. Also, for no additional upfront consideration, Sandstorm will have the right to purchase, by remitting the Per Ounce Payments, 10% (decreasing to 4.5% if the full repurchase option is exercised within 24 months) of the gold produced from an area defined as the Black Fox Extension, covering a portion of Brigus' Pike River property.

Bracemac-McLeod

The Bracemac-McLeod Project is a high grade volcanogenic massive sulphide (VMS) deposit located in the historical and prolific mining district of Matagami, Quebec. Xstrata Canada Corp. has been operating in the Matagami district for almost fifty years with ten previously operating mines and one current working mine called Perseverance. As Perseverance winds down, Xstrata plans to shift operations to Bracemac-McLeod while utilizing the existing Matagami Mill to produce concentrates of zinc and copper. Bracemac-McLeod will be an underground mine and is expected to be one of the lower cash cost zinc producers in the world. Xstrata has begun to drive a ramp more than 1,000 metres into the Bracemac ore body and is expected to begin ore production in early 2013. Current reserves would take the mine life to four years, but the high grade inferred resources on the McLeod Deep orebody have the potential to extend the life materially. 

Ore will be processed at the Xstrata operated Matagami Mill which is currently processing ore from Perseverance. The Matagami mill has been in operation since 1963 and underwent a recent upgrade that was completed in 2007. Historically, it has processed similar types of ore from other VMS deposits and is operating at a high availability. Production is expected to be 2,500 tonnes per day.

Sandstorm Transaction

Sandstorm has agreed to purchase, from Donner Metals Ltd. (TSXV:DON) (via a back-to-back agreement with Sandstorm Metals & Energy Ltd.), an amount equal to 17.5% of the gold and gold equivalent produced from the Xstrata operated Bracemac-McLeod Property. Pursuant to the agreement, Sandstorm Gold will make an upfront cash payment to Donner of US$5 million on June 30, 2012 plus ongoing per ounce payments equal to the lesser of US$350 and the then prevailing market price of gold. Donner Metals are the owners of a 35% joint venture interest in Bracemac-McLeod. 

Donner will have the option, for a period of 24 months, to repurchase up to 50% of the agreement by making a US$3.5 million payment to Sandstorm Gold upon receipt of which the percentage of gold and gold equivalent that Sandstorm is entitled to purchase shall be decreased from 17.5% to 8.75%.

Ming Mine

The Ming Mine is a past producing underground massive sulfide copper-gold mine located in northwestern Newfoundland operated by Rambler Metals & Mining PLC (TSXV:RAB, AIM:RMM). The area has a strong history of gold, base metal and industrial minerals mining. The project's infrastructure is excellent and the mine is immediately adjacent to a major highway. 

Rambler has recently purchased the Nugget Pond Mill located just 40 km from the Ming Mine. The gold concentrator will be adapted to process base metals sulfides from the Ming Mine through the addition of a copper flotation circuit as well as process the 'free gold' that exists in the Rambler geological system. The modification will diversify the existing facility and allow for a range of processing capabilities. Concentrate sales are expected to begin in late 2011.

Rambler recently released their final feasibility study targeting production for H2 2011. Considering the existing measured and indicated massive sulfide resources, as well as recently identified similar mineralized zones and an extraction rate of 630 metric tonnes per day, the Ming Mine has excellent exploration potential and will look to expand its mine life significantly through further drilling. Refer to the table here for more details on the reserve and resource.

Sandstorm Transaction

Sandstorm has agreed to purchase 25% of the first 175,000 ounces of payable gold, and 12% of the payable gold thereafter from the Ming Mine. In the event that the metallurgical recoveries of gold are below 85%, the percentage of gold that Sandstorm shall be entitled to purchase shall be increased proportionally. 

For consideration, Sandstorm paid $20 million in staged payments, the last payment being made on March 14, 2011 upon the receipt of final construction permits for the Ming Mine

Santa Elena

The Santa Elena Mine is located in northern Mexico approximately 150 kilometres northeast of Hermosillo in Sonora State and is operated by SilverCrest Mines Inc. (TSXV:SVL). Santa Elena is an open pit heap leach operation that is currently in production and is ramping up towards full capacity of 2,500 tonnes per day. Santa Elena is expected to produce an average of 30,000 ounces of gold and 500,000 ounces of silver per year for an 8-year mine life. 

Santa Elena is classified as a high level, low sulphidation epithermal system and further exploration of the mine is focused on a single relatively wide vein with increasing grades as it plunges. Several other mineralized showings related to other veins have been found on the concessions and will be investigated in the future. 

To view the NI 43-101 technical reports click here and here.

Sandstorm Transaction

Sandstorm has acquired 20% of the life of mine gold production from Santa Elena for an upfront payment of US$12 million in cash and 3.5 million common shares in Sandstorm plus ongoing per ounce payments equal to the lesser of US$350 and the then prevailing market price per ounce of gold. Sandstorm will not be required to contribute to capital or exploration expenditures in respect of the mining operations of Santa Elena.

In the event that SilverCrest completes a positive technical report on an underground portion of the Santa Elena Project, Sandstorm will have the right (but not an obligation) to purchase 20% of the payable gold from the Santa Elena Underground Mine for an upfront payment that is equal to 20% of the upfront capital expenditures made by SilverCrest, adjusted pro rata for the gold to gold equivalent ratio of silver, plus ongoing per ounce payments equal to the lesser of (a) US$450 and (b) the then prevailing market price per ounce of gold.

Summit Mine

The Summit Mine is an underground silver-gold mine located in southwestern New Mexico, USA operated by Santa Fe Gold Corp. (OTC: SFEG). It is a low sulphidation epithermal deposit, where Santa Fe has been mining and stock piling mineralized rock since April 2009. Mineralized rock from the Summit Mine is transported to Santa Fe 's mill located in Lordsburg where a gold-silver concentrate is produced. Sante Fe is producing and selling concentrate and smelter flux directly from the mine and has achieved above budget recoveries to date. 

Sandstorm Transaction

Sandstorm has agreed to purchase 50% of the first 10,000 ounces of gold, and 22% of the gold thereafter from Santa Fe 's silver-gold Summit mine, located in southwestern New Mexico, USA. In consideration, Sandstorm made an upfront payment of US$4,000,000 in cash plus ongoing per ounce payments equal to the lesser of US$400 (subject to an increase equal to 1% per annum commencing on the third anniversary of the date that the Summit Mine begins commercial production) and the then prevailing market price per ounce of gold. The amount of payable gold can be reduced from 22% to 15% if, within 36 months from the date Sandstorm funds the agreement, the following conditions are satisfied:

The rate of mineralized rock mined and processed from the Summit Mine averages 400 tonnes per day or more for any consecutive 12 month period; and

Payable gold production exceeds 11,500 ounces during any consecutive 12 month period.

Corporate

 

Nolan Watson Position: President, CEO and Director

Mr. Watson is the former Chief Financial Officer of Silver Wheaton Corp., a mining company listed on the Toronto Stock Exchange and the New York Stock Exchange. In that role, Mr. Watson helped raise over US$1 billion in debt and equity to fund Silver Wheaton's growth. Mr. Watson is a Chartered Accountant, holds the designation of Chartered Financial Analyst charter holder and received a Bachelor of Commerce degree, with honours, from the University of British Columbia. He has won numerous awards for his professional and charitable achievements including the Early Achievement Award by the Institute of Chartered Accountants of British Columbia and Canada 's Top 40 Under 40 award. Mr. Watson is also President, CEO and Director of Sandstorm Metals & Energy Ltd. and the Chairman of the Audit Committee of the Board of Bear Creek Mining Corp.

David Awram Position: Executive Vice President and Director

Until July 2008, Mr. Awram was the Director of Investor Relations for Silver Wheaton Corp., a mining company based in Vancouver and listed on the Toronto Stock Exchange and the New York Stock Exchange. Prior to his role with Silver Wheaton he was Manager, Investor Relations with Diamond Fields International Ltd. Mr. Awram graduated in 1996 from the University of British Columbia with a Bachelor of Science degree in Geology. Mr. Awram is also the Executive Vice President and a Director with Sandstorm Metals & Energy Ltd.

Ron Ho Position: Vice President, Finance

Mr. Ho joined Sandstorm after serving as the Chief Financial Officer for SNS Silver Corporation, where he contributed to equity capital raises and project evaluation and development. Prior to that, Mr. Ho was an Equity Analyst at Raymond James Ltd. where he was responsible for sector institutional research. Mr. Ho began his career at Deloitte & Touche, focusing on public company financial reporting in both the U.S. and Canada . Mr. Ho is a Chartered Accountant and holds a Bachelor of Commerce from the University of British Columbia .

Andrew T. Swarthout Position: Director

Mr. Swarthout is President and Director of Bear Creek Mining Corp. a multi-asset silver company based in Peru . Prior to Bear Creek, Mr. Swarthout was an officer and member of the management committee of Southern Peru Copper Corporation where he participated in decision making during a dynamic period of corporate expansions, financing and project development. As Vice-President of Exploration from 1995 to 2000, he was directly responsible for two major discoveries, as well as reserve expansions on the order of 200 per cent on the Southern Peru Copper's two porphyry copper deposits.

Mr. Swarthout has participated in several deposit discoveries and reserve expansions in North and South America which are in production, or which will be in production in the future. Mr. Swarthout has participated in project permitting and financing, has managed several prefeasibility and financial scoping studies and has evaluated reserves on numerous precious and base metals deposits. 

Mr. Swarthout served as a member of the National Mining Society of Peru's Committee for the Promotion of Private Investment, where he initiated favourable environmental and taxation policies to promote foreign mining investment in Peru.

David E. De Witt Position: Director

Mr. De Witt is a founder and chairman of Pathway Capital Ltd., a Vancouver based private venture capital company. Mr. De Witt graduated with a BComm/LLB from the University of British Columbia in 1978 and practiced corporate, securities and mining law until his retirement from the practice of law in January 1997. He currently holds directorships in a number of public companies involved in the natural resource field and has experience in resource projects located in Latin America, North America and Asia.

John P. A. Budreski Position: Director

Mr. Budreski has been involved in capital markets since 1987 and is currently the Vice Chairman of Cormark Securities Inc. Previously, he was the President and Chief Executive Officer of Orion Securities Inc. and Orion Financial Inc. from March 2005 up to its sale at the end of 2007. Prior to Orion, Mr. Budreski was the Managing Director of Equity Capital Markets, Managing Director of the US Institutional Equity Group and Head of Investment Banking for Scotia Capital Inc. He also held senior management roles in investment banking and equity sales and trading for RBC Dominion Securities and worked for Toronto Dominion Bank. Mr. Budreski holds a MBA from the University of Calgary and a Bachelor of Engineering from the Technical University of Nova Scotia.

Krysta Rehaag Position: CFO

Ms. Rehaag is a Chartered Accountant (UFE Honour Roll member) and holds both a Masters Degree in Accounting (with Honours) and a Bachelor's of Mathematics in Accounting from the University of Waterloo. Ms. Rehaag is currently the CFO of the Vancouver based private venture capital firm, Pathway Capital Ltd. Previously, she was a professional staff accountant with an international accounting firm where she gained valuable experience senioring large teams for audits under Canadian and US GAAP for public multi-national clients (including major mining companies).

 

Media

Corporate Presentation

http://www.sandstormgold.com/s/Presentations.asp

News Releases

 

July 25, 2011

Sandstorm Gold Announces 19 Metres of 4.67 g/t and 53 Metres of 2.09 g/t at Luna Gold's Aurizona Mine

July 14, 2011

Sandstorm Gold Announces Commercial Production at Silvercrest's Santa Elena Mine

July 13, 2011

Sandstorm Gold Acquires a Gold Stream on the Xstrata Operated Bracemac-Mcleod Property

July 05, 2011

Sandstorm Gold Provides a Production Update for Luna Gold's Aurizona Mine

June 28, 2011

Sandstorm Gold Announces 44 Metres of 4.94 G/T and a Drill Program Extension at Luna Gold's Aurizona Mine

June 07, 2011

Brigus Gold Provides Black Fox Mine Update

June 06, 2011

Sandstorm Gold Announces 48 Metres of 3.29 g/t at Luna Gold's Aurizona Mine

May 10, 2011

Rambler Develops Through High Grade Gold Zone Returning 227.15 g/t

April 28, 2011

Sandstorm President & CEO Nolan Watson named to The Caldwell Partners Top 40 under 40 2010 list

April 18, 2011

Sandstorm Gold Announces 55 Metres Of 4.15 G/T At Luna Gold's Aurizona Mine

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Comments (5)Add Comment
Brian Boutilier
...
written by Brian Boutilier, August 08, 2011
Earl: Most kind sir, I'm glad they are of service to you.
Earl
...
written by Earl, August 08, 2011
Brian,

I want to take a moment and say "how nicely you package and deliver this info".


Thank You
Earl

Jeff Nielson
...
written by Jeff Nielson, August 02, 2011
...and this is a good illustration about why we WELCOME the input and ideas of our Members with respect to their investing.

There are simply too many QUALITY COMPANIES for Brian (or even the three of us) to "watch" all of them. And an open "forum" is a great place for objective, honest investors to weigh the merits of various companies.
Brian Boutilier
...
written by Brian Boutilier, August 02, 2011
Thanks Nav. I nibbled a bit on this one too. My only wish is that the share structure was tighter. That being said, they appear to be on a good glide path.
navderek
...
written by navderek, July 28, 2011
Great write up Brian, thanks for compressing all the information into easily digestible pieces! Make me want to take a bigger bite into this one now :-)

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