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Mining project financing firm transacts royalty agreement

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Streetwise Reports
0 Comments|December 29, 2017

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Sandstorm Gold Ltd. (SSL:TSX; SAND:NYSE.MKT) has agreed to purchase a 2% net smelter return (NSR) royalty for $45 million in cash from Acacia Mining Plc (ACA:LSE) on the Endeavour Silver Corp. (EDR:TSX; EXK:NYSE; EJD:FSE)-operated Houndé gold mine, "providing for immediate cash flow starting in 2018 and upside potential through additional exploration efforts," BMO analyst Andrew Kaip noted in a Dec. 20 research report.

The deal is expected to close in January 2018. The NSR royalty covers Kari North and Kari South, almost the whole mineral reserve, according to Sandstorm.

The Houndé project, which likely will become Endeavour Silver's flagship asset, declared commercial production on Oct. 31, two months ahead of schedule and $15 million under the initial budget. Now, the company will concentrate on exploration results, "which are likely to become increasingly important in demonstrating potential to maintain production rates, extend the mine life and deliver further value," reported Kaip.

Given that Sandstorm finished Q3/17 with $6.1 million in cash and cash equivalents, "we expect the company to draw on its revolver in the near term" to fund the $45 million NSR royalty purchase, wrote Kaip.

BMO Capital has a Market Perform rating on Sandstorm Gold.

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Additional disclosures about the sources cited in this article

Disclosures from BMO Capital Markets, Sandstorm Gold, Dec. 20, 2017

Analyst's Certification: I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures:

Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Sandstorm Gold within the past 12 months.

Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Sandstorm Gold within the past 12 months.

Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Sandstorm Gold.

Disclosure 6A: Sandstorm Gold is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services

Disclosure 6C: Sandstorm Gold is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.

Disclosure 8A: BMO Capital Markets or an affiliate has a financial interest in 1% or more of any class of the equity securities of Sandstorm Gold.

Disclosure 8C: BMO Capital Markets or an affiliate has a financial interest in 0.5% or more in the issued share capital of Sandstorm Gold and Endeavour Mining.

Disclosure 9: BMO Capital Markets makes a market in Sandstorm Gold.

Disclosure 16: A BMO Nesbitt Burns Inc. research analyst has extensively viewed the material operations of Sandstorm Gold.

For Important Disclosures on the stocks discussed in this report, please click here.   
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