Event: Sandstorm Gold and Equinox Gold announced a transaction to create a new
diversified-metals royalty company to be named Sandbox Royalties Corp. (currently Rosedale Resources Ltd., a private company). On closing of the transaction, Sandbox will hold a portfolio of 23 metals royalties across a range of assets and jurisdictions, including the existing royalties held by Rosedale with Sandstorm owning a 34% basic interest in Sandbox and Equinox 30%.
Key transaction terms:
• Rosedale will acquire a package of royalties (see Figure 1) from Sandstorm valued at $65 million consisting of 58.9 million shares of Rosedale at C$0.70/sh and a $32.9 million 10-year secured convertible promissory note. We currently carry no value for these Sandstorm royalties in our model.
• Rosedale will also acquire a package of royalties (see Figure 1) and C$3 million in cash from Equinox valued at $28.4 million consisting of 51.9 million shares of Rosedale at C$0.70/sh. We carry a value of $9 million for the 2% NSR on the
producing Mercedes royalty and $3 million for the 1% NSR on the producing Pilar gold mine.
• Post-completion of the transaction, Sandbox plans to undertake a public listing on a Canadian stock exchange.
• In connection with the transaction, Rosedale will undertake a non-brokered private placement financing at C$0.70/sh for minimum gross proceeds of C$5 million to be used for the acquisition of additional royalties and streams and for general corporate purposes.
• On closing (but pre-financing), Sandbox will have 173.1 million shares outstanding with Sandstorm holding a 34% basic interest and Equinox Gold 30%. Sandstorm and Equinox will obtain customary anti-dilution provisions and board representation rights.
• The transaction and the financing are expected to close by the end of June 2022, and is subject to customary approvals and closing conditions.
About Rosedale:
• Rosedale Resources is a private Canadian metals royalty company holding a portfolio of 11 exploration and development stage royalties on assets in Peru, Africa and Asia, a portfolio of equity investments in exploration-stage Canadian mining companies, and holds ~C$7 million in cash on hand.
• Sandbox will be led by Greg Smith as President and Chief Executive Officer (who will transition from President of Equinox), Marcel de Groot as Chair of the board, Victoria McMillan as Chief Financial Officer, and Craig Rollins as General Counsel.