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Sandstorm Partners With Donner Metals

Sandstorm Partners With Donner Metals

Author: Metal Investment News

Posted: February 22, 2012

Sandstorm (SND-TSX.V) is in the business of funding mines through metal purchase agreements.

With hundreds of advanced stage explorers around the globe looking for financing, Sandstorm is not short of potential partners.

So far Sandstorm has struck deals with five companies: Novadex Assets (NDX-TSX.V), Thunderbird Energy (TBD-TSX.V), Terrex Energy (TER-TSX.V), Royal Coal (RDA-TSX.V) and Donner Metals (DON-TSX.V).

Sandstorm’s mantra is low cost, high margin mines in politically stable jurisdictions.

Since payback depends on timely production, Sandstorm’s involvement constitutes a loud vote of approval from their in-house team of analysts and geologists.  Sandstorm simply cannot afford to back a losing horse.

Sandstorm’s partners are typically able to avoid heavy share dilution as they spread the payback over the life of the mine.

Sandstorm’s recent partnership with Donner Metals is of particular note because the purchase agreement involves copper – not zinc, which is the primary targeted metal and remains unhedged.

Donner has a 35% joint venture interest in the Bracemac-McLeod Mine development operated by Xstrata (XTA.L). The Bracemac-McLeod Mine is a high grade volcanogenic massive sulphide (VMS) deposit located in the historical and prolific mining district of Matagami, Québec.

The Matagami district has been actively in production for almost fifty years, with ten previously operating mines and one current working mine called Perseverance. As Perseverance winds down, Xstrata plans to shift operations to Bracemac-McLeod while utilizing the existing Matagami Mill to produce concentrates of zinc and copper.

Bracemac-McLeod will use a ramp decline in the mine, and is expected to be one of the lower cash cost zinc producers in the world.  Xstrata has developed the ramp more than 2,300 metres into the Bracemac ore body and is now developing on multiple faces; it is expected to begin production in Q1, 2013.

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