Sandstorm Gold Update:As good as a new acquisition
Sandstorm gold (SAND), this morning, announced it will remit $10m to Luna gold (LGCUF.PK) for the phase 1 expansion. This expansion, initially estimated to up production to 100,000 (oz.), will now have a run rate of 125,000/year. Luna has guaranteed Sandstorm Luna will reach 125,000/year (annualized, by the end of 2013). This further increases Sandstorm production growth profile by 4,250 (oz.)/year. However, it is worth noting, the fabulous deal Sandstorm struck with Luna initially has more upside as Luna looks at initiating Phase 2 of its expansion.
Sandstorm obviously has something up its sleeve, per the recent 150m financing. This is because the company has often said it will only revert to the equity markets, should the right opportunity come along. Last time this happened a new stream was in place 1 month after closing of the bought deal(The Black Fox stream, followed by Bachelor Lake). Sandstorm will likely have revert another 10-20 million to Silvercrest as it begins its expansion in 2013, to double metals production.
Ideally, whatever Sandstorm has lined up will amount to anywhere between 40 - 80 million as I think it will have a deal in place with Solitario(XPL) by the end of Q1 2013, given the financial constraints Solitario is facing. Making a deal with Sandstorm for 20% +/- will give them the cash they need as opposed to having to go to the equity markets and face severe dilution.