March 31, 2023 marks my first full quarter as CEO of Sandbox Royalties Corp. With the passing of that milestone, I am excited to share with you some of the things we have been up to at Sandbox year to date in 2023.
Most importantly, Sandbox has built out our executive team by adding critical technical, financial and transaction capabilities to our existing leadership team.
I am pleased to announce that we have recently hired Paul Jones as VP, Corporate Development, Chris Haubrich as VP, Corporate Development and Diego Airo as VP, Project Evaluation.
Paul and Chris have extensive transaction and executive experience within the mining sector having worked as corporate executives and investment bankers in the sector. Diego held a similar project evaluation role at Maverix Metals Inc., a precious metals focused royalty company recently acquired by Triple Flag Precious Metals Corp. Chris and Diego are both mining engineers with operational and technical experience.
Like any organization, our people are our greatest asset.
The Sandbox team now boast deep knowledge, experience and relationships across the mining and royalty sector. With the ongoing support of the deep benches of talent within our largest shareholders, Equinox Gold Corp. (“Equinox”) and Sandstorm Gold Ltd. (“Sandstorm”), we believe we are exceptionally well positioned to succeed in the royalty and streaming space.
Corporate Development
On the corporate development front, we have been actively identifying and evaluating numerous opportunities to grow and diversify our portfolio since I joined Sandbox. We currently have a robust pipeline of opportunities, which affords us the luxury of considering which opportunities represent the best opportunities to grow, fund and scale our business.
In particular, we signed a non-binding term sheet for a gold purchase and sale arrangement (the “GPSA”) last week with Equinox whereby on closing we would deliver a US$50 million deposit to Equinox in exchange for monthly deliveries equal to the greater of: (a) 333 gold ounces, and (b) gold ounces equal to 1.2% of the monthly gold production from the Greenstone Gold Mine (100% basis). Gold deliveries would commence in October 2023 and continue until a total of 60,000 ounces have been delivered. Sandbox would make ongoing cash payments equal to 20% of the spot gold price for each gold ounce delivered. Equinox would have the option to buy down up to 75% of the delivery obligation at the then current spot gold price, subject to adjustment for the ongoing payment and a minimum price per ounce of $2,000. The GPSA can be increased to US$75 million upon the mutual agreement of the Equinox and Sandbox.
This transaction is highly strategic for Sandbox as it has the potential to deliver significant annual cash flow, positioning us to pursue additional accretive acquisitions.
1. Equinox Gold owns 60% of Greenstone
Closing of the GPSA is subject to, among other items, confirmatory due diligence, execution of a definitive gold purchase and sale agreement, Equinox lender consent and a financing by Sandbox. Our current expectation is that this transaction would be funded through an equity financing by Sandbox. The form and structure of that financing will be communicated in due course as the structure of the transaction with Equinox allows us to consider and add additional acquisitions before we execute a financing.
Infrastructure
We have also been busy building out our corporate and governance infrastructure. Our Board has adopted a formal board mandate, a Chair position description and CEO position description. We have also adopted a Corporate Code of Conduct which sets out the manner in which we intend to conduct ourselves as an organization.
Looking into the future
As we look to the future, we remain focused on our “North Stars”:
Purpose: To provide capital to sustainably produce the resources our world needs to create prosperity, drive economic growth and build a better future.
Vision: To build a leading diversified metals royalty company that creates value for all stakeholders, supports industrial growth and promotes sustainability.
Our strategy is unwavering, as we remain focused on acquiring and managing royalties on financially-viable mining operations and projects, across a diverse range of commodities which are located in mining-friendly jurisdictions and managed by strong operators. A key element of that strategy is diversification, both geographical and in terms of commodity exposure, allowing us a competitive edge by focusing on the right commodities at the right points in time. Specifically, we are focusing on three pillars:
- Precious metals: a hedge against geopolitical and financial market turbulence (both of which we have seen in abundance of late);
- Industrial metals: the foundation for economic growth and the transition to the low-carbon economy; and
- Critical minerals: the building blocks of the green and digital economy (and a focus of recent government policy in the U.S., Canada and Europe).
Values
At Sandbox, our values are integral to the way we operate. We believe integrity, honesty and trust are the foundation of every relationship we build and maintain. We believe that providing flexibility and agility for our people, partners and stakeholders allows us to be more creative and competitive. We believe in respect for our people, stakeholders, community and environment (we will integrate a focus on sustainable and responsible mining practices into all of our investments and asset management decisions). And most importantly, we are dedicated to shared success for our people, partners and capital providers.
We understand the importance of delivering value to our shareholders as we grow the business
We believe that the best way to do that is to build a portfolio that offers exposure to both cash flow and optionality. Given the current weighting of our portfolio, we have been working relentlessly to boost our exposure to cash-flowing and near-term cash-flowing royalties while maintaining our financial discipline by focusing on opportunities that are strategically and financial accretive with a focus on per share metrics. We have an enviable balance sheet, with approximately US$4 million in cash, a US$2.4 million note receivable and the Company’s only debt obligation being an interest-free, non-amortizing US$31.4 million convertible debenture held by one of our founding shareholders, Sandstorm, which falls due June 28, 2032.
Lastly, I would like to express our deepest appreciation for your ongoing support of Sandbox. We firmly believe that our success will be determined by the support of our shareholders, and we remain committed to respecting and maintaining that support.
John Armstrong
CEO & Director
Sandbox Royalties Corp.
Biography | Paul Jones
Paul brings over 20 years of experience in the mining sector. Prior to joining Sandbox, Paul was the Senior Vice President of Corporate Development for Alexco Resource Corp. until its acquisition by Hecla Mining, as well as Senior Vice President of Corporate Development for Alio Gold prior to its sale to Argonaut Gold. He has held roles of increasing responsibility in operations, financial planning and analysis, investor relations, and business development for Capstone Mining (now Capstone Copper). Paul also spent 12 years in investment banking where he advised mining clients on the execution of more than $15B in merger and acquisition transactions. Paul holds a Bachelor of Commerce degree from the University of British Columbia.
Biography | Chris Haubrich
With over 15 years of mining industry experience in corporate finance, M&A, capital raising, engineering studies, operations, investor relations, and public company management, Chris brings a unique perspective and a diverse skillset to Sandbox. Prior to joining Sandbox, Chris served as Chief Financial Officer and Vice President, Business Development at PureGold Mining, and as Vice President, Investment Banking at National Bank Financial. Chris started his career as an underground mining engineer with Cameco Corporation (uranium) and has also worked in technical and operational roles with Rio Tinto (diamonds), Mosaic (potash), Syncrude Canada (oilsands), and JDS Energy & Mining. He holds a Bachelor of Science degree in Mining Engineering from the University of Alberta, a Master of Science degree in Mineral and Energy Economics from Colorado School of Mines and is a CFA Charterholder.
Biography | Diego Airo
Diego brings over 15 years of experience in the resource sector comprised of a unique blend of operations, project, technical, and corporate roles. Prior to joining Sandbox, he worked as Director of Project Evaluations at Maverix Metals Inc, until its acquisition by Triple Flag Precious Metals Corp. He has also held various leadership, technical and operational roles at Capstone Mining Corp. (now Capstone Copper Corp.) and Kinross Gold Corporation, spanning multiple continents and commodities. Diego is a Registered Professional Engineer and holds a Bachelor of Applied Science in Mining and Mineral Processing Engineering from the University of British Columbia as well as a Master of Finance from Pennsylvania State University.