Sandstorm Acquires Royalty on Diavik Diamond Mine

- March 23rd, 2015

Sandstorm Gold Ltd. (TSX:SSL) announced it has acquired a 1 percent gross proceeds royalty over property in the Northwest Territories, including the Diavik Diamond mine operated by Rio Tinto PLC (ASX:RIO,LSE:RIO,NYSE:RIO).

Sandstorm Gold Ltd. (TSX:SSL) announced it has acquired a 1 percent gross proceeds royalty over property in the Northwest Territories, including the Diavik Diamond mine operated by Rio Tinto PLC (ASX:RIO,LSE:RIO,NYSE:RIO).

As quoted in the press release:

Sandstorm acquired the Diavik Mine Royalty from IAMGOLD Corp. (TSX:IMG,NYSE:IAG) for US$52.5 million in cash and 3 million warrants of Sandstorm. The warrants have a 5 year term, a strike price of US$4.50 per Sandstorm common share and will be exercisable following initial production from the Diavik Mine’s A21 pipe. The Royalty transaction is a unique opportunity which provides the following benefits to Sandstorm:

  • contributes long-term stable cash flows from a world-class asset run by one of the world’s premier diversified mining companies;
  • diamond markets exhibit strong demand with stable growth predicted over the near future;
  • more than 50 percent of the Company’s attributable gold equivalent production is generated from mines operated by large, reliable, diversified mining companies;
  • the Company’s gold-based revenue stream will remain above 80 percent; and,
  • Sandstorm’s corporate development efforts remain focused on gold transactions.

Nolan Watson, president and CEO of Sandstorm, commented:

Adding a royalty from the world-class Diavik Mine brings approximately US$7 million to US$8 million per annum in additional long-term, stable cash flows to Sandstorm’s portfolio. With this transaction, over 50 percent of Sandstorm’s free cash flow will come from mines operated by large, multi-asset mining companies including Glencore, Rio Tinto, Newmont, Primero, AngloGold Ashanti and Yamana. We are committed to growing our portfolio of streams and royalties and we will maintain our focus on gold. At present, over 95 percent of the potential transactions in our deal pipeline are precious metals opportunities, and with approximately US$140 million of cash and available credit facilities, we are well positioned to take advantage of this deal pipeline.

Click here to read the full Sandstorm Gold Ltd. (TSX:SSL) press release.

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