Source: Streetwise Reports 12/27/2017
BMO Capital Markets reported on this company’s recent royalty transaction and its upside potential.
Sandstorm Gold Ltd. (SSL:TSX; SAND:NYSE.MKT) has agreed to purchase a 2% net smelter return (NSR) royalty for $45 million in cash from Acacia Mining Plc (ACA:LSE) on the Endeavour Silver Corp. (EDR:TSX; EXK:NYSE; EJD:FSE)-operated Houndé gold mine, “providing for immediate cash flow starting in 2018 and upside potential through additional exploration efforts,” BMO analyst Andrew Kaip noted in a Dec. 20 research report.
The deal is expected to close in January 2018. The NSR royalty covers Kari North and Kari South, almost the whole mineral reserve, according to Sandstorm.
The Houndé project, which likely will become Endeavour Silver’s flagship asset, declared commercial production on Oct. 31, two months ahead of schedule and $15 million under the initial budget. Now, the company will concentrate on exploration results, “which are likely to become increasingly important in demonstrating potential to maintain production rates, extend the mine life and deliver further value,” reported Kaip.
Given that Sandstorm finished Q3/17 with $6.1 million in cash and cash equivalents, “we expect the company to draw on its revolver in the near term” to fund the $45 million NSR royalty purchase, wrote Kaip.
BMO Capital has a Market Perform rating on Sandstorm Gold.
Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
Additional disclosures about the sources cited in this article
( Companies Mentioned: EDR:TSX; EXK:NYSE; EJD:FSE,
SSL:TSX; SAND:NYSE.MKT,
)