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NEWS

To date, much of the streamers’ activity suspicious that we were doing too well
has been restricted to North and South but they don’t acknowledge the risk we
American interests but with even take on. We’ve got 19 contracts delivering
development stories now drying up in the metal but only one is doing so ahead of
Northern Hemisphere, the companies are schedule. The others are either late or
eager to test new markets, particularly the significantly behind the production levels
buoyant Australian gold sector. they should be hitting. So, when you are
“Australia has had a healthy market for in an industry that has a reputation of
providing financial support and a robust overpromising and underdelivering you
equity market for development, so we have to ensure your investment. We
haven’t seen the level of activity we make those investments upfront and if it
have in North America,” Smallwood said. is late, we suffer. There is no obligation to
“We’ve come close on four transactions. pay into the stream if it is not operating.
The limiting factor for us is that there is All the risk is ours.”
plenty of access to risk capital.” However, with the North American
Nolan Ward
Smallwood admitted breaking into the resources sector continuing to struggle in
Australian market was proving difficult. the face of high-performing alternatives, The premier Africa-Australia mining forum
Royalty agreements are often viewed as an inconvenient Wheaton and Sandstorm are being forced further afield.
historical overhang in Australia, where new owners are “For us to find opportunities we need companies investing
lumbered with net smelter royalties to no benefit. Sandstorm’s into growth because our business is supplying capital,”
engagement with the Australian sector has also proven far Smallwood said. “The problem has been that outside of gold
from fruitful. commodity pricing is not going all that well so there are not a
“We have probably talked to 20 companies in Australia lot of investments into new developments.
without closing a deal, but we do have some existing royalties “This means we have gone further upstream and created
we bought,” Ward said. “We find Australian companies are an early deposit model. A lot of companies are struggling
more reluctant to participate in streams or royalties. In my to even get to the BFS stage which means they only
experience, Australian management teams have been less have access to equity markets. Under this new model, if
reluctant to issue equity, regardless of price, than their North a company has a scoping study or a PEA, we are willing
American peers where management is wary of dilution and to take a look. Obviously, the return is greater because we
is therefore prepared to consider alternatives.” have taken a gamble on some of the cash.”
Smallwood believes Australian miners and developers Smallwood said the early deposit structure was available
should reconsider streaming and royalties as an alternative to companies with assets in Australia and Africa as well as
funding source, much as their North American peers did Wheaton’s traditional Americas domain.
more than a decade ago. “There has been a lot of interest, the problem is there are
“For the first six or seven years of our existence, the simplicity not a lot of good projects around,” he said. “If it is a standout
was confusing to people,” Smallwood explained. “They were project, they are going to have access to equity capital.
Instead, we are looking for the hidden gems. We have done
four deals but have looked at more than 100 projects.”
Sandstorm has also spread its global reach and Ward said
the company was comfortable taking on political risk.
“We have found investors place too much emphasis on
political risk and underemphasise technical risk,” he said.
“Technical problems are 10 times more likely to cause a
mine to close than an expropriation event. You can often ride
out the political risk and I would rather take that political risk
than technical risk.”
Ward sees further opportunities opening up in the base
metals space in 2020 and beyond.
“If we head into a global recession there is going to be
tremendous opportunity in the base metals space,” he said.
“We are already seeing a squeeze on the copper producers
and if prices fall further, they will increasingly look for ways
to realise value from their by-products.”
Construction on gold projects is often frustrated by a lack of access
to traditional sources of project finance
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