Sandstorm Gold Raises Short-Term Production Guidance, Highlights Cash-Flowing Gold Stream

Author: Benzinga Newsdesk | December 17, 2021 07:19am

Sandstorm Gold Ltd. ("Sandstorm Gold Royalties", "Sandstorm" or the "Company") (NYSE:SAND) (TSX:SSL) is pleased to announce that the Company has entered into a US$60 million financing package (the "Transaction") with Bear Creek Mining ("Bear Creek") to facilitate Bear Creek's acquisition of the producing Mercedes gold-silver mine in Mexico ("Mercedes" or the "Mine") from Equinox Gold Corp ("Equinox"). The financing package includes a US$37.5 million gold stream (the "Stream"), together with a US$22.5 million convertible debenture. Bear Creek announced today that it has agreed to acquire 100% of Mercedes from Equinox. The Transaction is expected to close by March 31, 2021 and gold deliveries to Sandstorm will commence immediately thereafter.

ACQUISITION HIGHLIGHTS

• Immediately Accretive to Cash Flow: Sandstorm expects gold deliveries of 5,400 ounces in 2022 and 7,200 ounces per annum in the first three years post-closing. Sandstorm expects the Mercedes Stream to be 13% accretive to 2022­–24 average cash flow per share1.
• Gold Stream with Fixed Deliveries: Sandstorm will receive 25,200 ounces of gold over the initial 3.5 years and a 4.4% gold stream thereafter. This is expected to increase the Company's attributable gold equivalent ounces2 by 8% in 2022 and 11% in 2023/2024.
• Increased Production Guidance: Sandstorm has increased its 2022 production guidance to be between 65,000 and 70,000 gold equivalent ounces.
• Exploration Upside: Mercedes has a strong track record of reserve replacement, complemented by an expansive regional land package, which remains relatively untested. The Stream covers all 69,285 hectares of mineral concessions at Mercedes, plus a five kilometre area of interest.
• Fully-Financed Transaction: The Transaction will be funded via a combination of cash reserves and Sandstorm's $350 million ESG-linked revolving credit facility.

STREAM TERMS

In exchange for US$37.5 million, Sandstorm will receive 25,200 ounces of gold over 3.5 years (the "Fixed Deliveries"), followed by 4.4% of the gold production (the "Variable Stream") from Mercedes for the remainder of the life-of-mine.

The Fixed Deliveries will begin on the earlier of the closing date or April 2022 and be delivered over a period of 3.5 years (the "Fixed Delivery Period"). During the Fixed Delivery Period, Sandstorm will pay Bear Creek 7.5% of the spot price of gold (the "Fixed Deliveries Ongoing Payment") for each ounce of gold delivered by Bear Creek. Beginning 42 months after the commencement of the Fixed Delivery Period, the Variable Stream will begin, and Sandstorm will pay Bear Creek 25% of the spot price of gold (the "Variable Stream Ongoing Payment") for each ounce of gold delivered by Bear Creek.

The payment of US$37.5 million will occur upon closing of the Transaction.

CONVERTIBLE DEBENTURE TERMS

The US$22.5 million convertible debenture bears an interest rate of 6% per annum and has a term of 3 years (the "Debenture"). Sandstorm has the right to convert the principal amount of the Debenture into common shares of Bear Creek, at any time prior to the maturity date, at a 35% premium, or as approved by the TSX-V, to Bear Creek's share price on closing of the Transaction.

Posted In: SAND TSX:SSL