A silver stream on Yamana's Cerro Moro mine in Argentina, under development, was part of this morning's deal.

A silver stream on Yamana's Cerro Moro mine in Argentina, under development, was part of this morning's Sandstorm Gold deal.

Sandstorm Gold (SSL-T)
Sandstorm Gold is making a foray into silver and base metals through a blockbuster $152-million streaming agreement with Yamana Gold.

The deal, funded through Sandstorm's line of credit, sees the company pick up:

  • a silver stream on Yamana's Cerro Moro mine development, including interim silver deliveries between 2016 and 2018 on operating mines;
  • a copper stream on the producing Chapada mine in Brazil;
  • a potential gold stream on the Agua Rica project in Argentina.

The deal is interesting for a few reasons. Having a major such as Yamana as a counterparty mitigates the risks of dealing with smaller miners, an issue Sandstorm has run into on other deals. The company says that by 2019 more than 90% of its cash flow will come from majors, mid-tiers and debt-free junior mining companies.

The acquisition of a copper stream also broadens Sandstorm's reach into base metals. Sandstorm at one point spun out oil and gas and base metals streams into a company called Sandstorm Metals & Energy, but the strategy didn't pan out and Sandstorm swallowed up the spinout. Precious metals and diamonds will make up about 83% of cash flow by 2019, the company says.

The silver stream is intriguing too as it marks Sandstorm's first foray into a streaming area dominated by Silver Wheaton (which itself moved into gold some time ago). Sandstorm CEO and cofounder Nolan Watson was Silver Wheaton's first employee and fellow cofounder David Awram also came over from Silver Wheaton.

Sandstorm got a US$10 million extension to its $100-million revolving credit line and used the entire US$110 million, as well as US$38 million in cash to fund the deal (the remaining $4M is payable in 6 months).

The company then reduced the balance of the credit line through a US$25-million bought-deal financing, also announced this morning.

Sandstorm Gold shares traded down on the news, an 11% drop to $3.50, on the TSX and have a 52-week range of $2.80-$5.30.

NR: Sandstorm Gold Announces Multi-Asset Stream Transaction with Yamana Gold for US$152 million

Goldquest Mining (GQC-V)
Dominican Republic gold developer Goldquest Mining is out with some nice intercepts from a six-hole pre-feasibility drill program at its 100%-owned Romero gold-copper deposit.

The best result came from hole LTP-165, which intersected 223.8 metres of 3.03 g/t gold, 1.22 % copper (4.77 g/t gold equivalent), including 27.3 metres grading 11.05 g/t gold, 2.38 % copper (14.45 g/t gold equivalent).

The market liked the news: Goldquest shares were last at 18.5 cents, up 42%, in early trading.

The goal of the drilling was to gather data for metallurgical work as well as move inferred material into the measured and indicated categories. The company says all six holes met expectations for grade and thickness based on the existing resource block model.

I attended a recent presentation by Goldquest executive chairman Bill Fisher in Vancouver and came away impressed at the company's prospects. Fisher is a mine finder who developed and sold the Cerro de Maimon gold mine in the Dominican Republic and he was also chairman of Aurelian Resources, which sold to Yamana for $1.2 billion. Aurelian's Fruta del Norte deposit is now in the hands of Lundin Gold.

Goldquest recently announced a $3.5-million private placement (11-cent units with a three-year half warrant at 18 cents) and one of the participants was McEwen Mining chairman Robert McEwen, who emerged with a 10% stake in the company.

NR: Goldquest reports 224 metres grading 4.8 g/t Gold Equivalent From Pre-Feasibility Drilling at Romero Project

Related: Impressed with Goldquest | CEO.CA

This is not investment advice, and all facts should be independently verified. Do your own due diligence, and make one of your stops CEO Chat, the investment conference in your pocket.