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speedybure (< 20)

Sandstorm Gold Update:As good as a new acquisition



September 10, 2012 – Comments (2)

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.

2 Comments – Post Your Own

#1) On September 10, 2012 at 9:30 PM, SN3165 (< 20) wrote:

Good stuff. It's looking like this could be a 250- 300K plus mine. So in 2014 they will get 21,250 ounces from Luna alone.  Next year they will probably get 15-17K. I believe Brigus will also buy back 6 percent of the stream for $36 mill to Sandstorm - money for another deal.

I've speculated on Stockhouse that Corvus Gold could be a good fit. So could Goldgroup, Kimber, among others.

So what do you think the big deal will be with the bought deal financing? My guess would be Rainy River Resources, but who knows. Here's the numbers on Rainy River's PEA:

-Average annual production of 308,000 gold ounces 

- Life-of-mine pre-tax net present value ("NPV", at a 5% discount rate) of $846 million

Initial pre-production capital costs of $694 million (inclusive of $100 million in contingency). 

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#2) On September 10, 2012 at 11:33 PM, skypilot2005 (< 20) wrote:


Thanks for the update and all of the great D. D. you do.

 I bought several K of Defiance Silver, today.

I figure Impact Silver has completed the D. D. for me. 

I have "enough" of both of the Sandstorms, for now.  = a "ton".


Thanks, again. 


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