Monday, June 4, 2012

This is a Good Environment for Gold Royalty Companies

This is a great, great time for companies like Sandstorm Gold.  More deals ahead?
"RPT-BAY STREET-Royalty firms could spur junior miner deal bonanza
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* Cash-rich royalty companies poised to strike new deals
* Equity market slump puts junior miners in a tough spot
* Developers, juniors, mid-tier miners all vying for funds
By Euan Rocha
TORONTO, June 3 (Reuters) - Royalty companies that raked in cash from strong precious metal prices in the last three years look poised to drive a wave of deal activity in the Canadian mining sector, especially among junior players hungry for financing.

These companies, which fund projects in return for a portion of future revenues, generated huge amounts of cash flow from existing deals as the price of gold and silver soared since the beginning of 2009.

Now, with the recent pullback in precious metal prices and slumping stock markets, they could be the saviors for small and mid-tier miners wh o are eager to grow but strapped for capital.
Europe's debt crisis and slowing Asian growth have tempered banks' appetite for lending. And miners are not keen to issue equity when their share prices are severely depressed, leaving few alternatives to royalty and stream deals for small miners looking to fund project development.

"A lot of the juniors we work with are looking at turning over whatever rock they can in order to get financing. They are exploring it," said Krisztián Tóth, a partner with law firm Fasken Martineau in Toronto.

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