Consolidation is coming to the royalty space. Sandstorm Gold (TSX: SSL) this morning announced it has entered into a series of transactions to significantly expand its size, making it one of the largest mid-tier royalty and revenue streaming firms.
The company this morning has reached an agreement to acquire Nomad Royalty Company (TSX: NSR) in an all cash transaction, valued at US$590 million, or roughly C$755 million. The purchase will bring a further twenty royalty and streaming assets to Sandstorms portfolio, of which seven are on producing mines.
Nomad in 2021 recorded US$27 million in revenues, while producing roughly 16,000 gold equivalent ounces.
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Under the terms of the transaction, Nomad shareholders are to receive 1.21 common shares of Sandstorm for each share held, which translates to roughly C$11.57 per share, a 21% premium to Friday’s close, and a price not seen by Nomad shareholders since May 2021.
At the same time, Sandstorm is also set to acquire a royalty package from BaseCore Metals. The transaction, pegged at a figure of $525 million, will add a further nine royalties and one stream to the firms portfolio, three of which are presently producing.
As part of the BaseCore transaction, one of the assets, a 1.66% net profit interest on the Antamina Copper Mine, will be resold to Horizon Copper. Sandstorm is to retain a 1.66% interest on the silver stream, and a 0.55% royalty on the asset. Consideration is to also include a US$50 million cash payment, a US$105 million debenture, which is valued for a 10 year term at a rate of 3%, and US$26 million in Horizon Copper shares.
Consideration to BaseCore meanwhile is to consist of US$425 million in cash, as well as US$100 million in Sandstorm shares.
All told, the transactions are expected to result in significant improvements to Sandstorms operation. The company is expanding guidance for 2022 by a total of 22%, resulting in 80,000 to 85,000 gold equivalent ounces of production, while long term guidance for 2025 has increased from 100,000 gold equivalent ounces to 155,000 ounces. All told, the transactions are to bring the firms assets to 260 streams, of which 39 are producing currently.
The Nomad transaction is slated to close in the second half of 2022, while the BaseCore transaction is expected to close in 4-6 weeks. The purchase of Nomad remains subject to sharehodler approval, with a total of 66% of the votes already locked up in favour of the transaction.
Sandstorm Gold last traded at $9.56 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
