The Sandstorm Gold Ltd (NYSEMKT:SAND) board of directors has reached an affirmative agreement with independent directors of Mariana regarding suggested share and cash acquisition. The terms of the agreement dictate that Sandstorm will acquire the entire issued ordinary share capital of Mariana. The acquisition will in the meantime be guided by a Court-endorsed system of understanding under Part VIII of the Companies law.
Benefits of the combination to shareholders
There is a lot that shareholders of Mariana and Sandstorm will draw from the combination. First and foremost will be access to a diversified portfolio of 155 streams and royalties some of which are still in the development stage. One such project is the Hot Maden, which is in the northeast of Turkey and it is not only expected to be simple but also of low cost.
The President and Chief Executive Officer of Sandstorm Nolan Watson says, “We believe that Hot Maden is a unique asset with a robust cash flow profile …… that has the potential to more than double Sandstorm’s attributable gold equivalent production once in full operation.”
Transformation of the combined group
The combined group is expected to keep hold of a strong balance sheet, which revolves around a credit facility and sturdy cash flow from operations. As at April 25, 2017, which was the last Business Day for the Mariana Group, its cash was at $5 million. This will be sufficient funding for its ongoing pro rata share of development programs.
The combination will bring on board an experienced management team. It will result into a leading mid-tier streaming and royalty company. Watson says that their focus is growth through acquisitions and explorations.
Non-Executive Chairman of Mariana, John Horsburgh also affirms that the Combination provides a stronger and diverse platform of operations. It will also be de-risking Mariana’s exposure as a single development asset company. Mariana shareholders are yet to vote in favor of the Combination but Mariana independent directors have already collectively approved it.
Meanwhile, Sandstorm stock closed at $3.64 for a fall of 0.40 or 9.90%.
