Earlier in April, Sandstorm Gold Ltd (NYSEMKT:SAND) reported that it had finalized a deal to buy all the issued and ordinary stock capital of Mariana Resources Ltd. that company does not own. Under the arrangement terms, Mariana investors will get 0.2573 of a SAND common share and 28.75 pence in cash in exchange of one Mariana share held.
The highlights
Mariana has a joint venture stake in the Hot Maden assignment, which Sandstorm plans on converting into a gold stream. This project is an innovative asset with a strong cash flow profile that boasts the potential to double company’s attributable gold equivalent output once in full operation. Upon closure, the arrangement is projected to create a major mid-tier streaming and royalty firm.
It is presently projected that Mariana will post its scheme document to Mariana stockholders around mid-May. The deal will then move to a vote by Mariana stockholders, warranting a majority in number, showcasing 75% in value of scheme investors present and voting, to permit the scheme. That vote is projected to happen around mid-June and with a positive vote, the deal would then move back to the U.K. court for approval in this month.
Sandstorm’s shares and cash would then be released to shareholders of Mariana. Nolan Watson, the CEO and President, mentioned that the strong operating cash flow and record production figures helped grow their cash balance to over $32 million by close of quarter, enabling them to add a number of fresh source and royalties to the portfolio and accept to terms on the planned combination with Mariana reported in late April.
The quarterly report is a great example of the stream power and royalty business setup at work; the current portfolio is recording strong free cash flow and those funds are being reinvested into accretive deals that will create the per share value of the firm for their shareholders.
