Nolan Watson is breaking new ground in the mining sector with a company that plans to turn a profit via streaming agreements for base metals and energy.
Streaming agreements involve one company that makes upfront cash payments to its partners in exchange for a percentage of the commodity a mine will eventually produce.
The deals allow small and medium-sized mining companies to access the financing they need to build the mine without signing debt packages or issuing shares.
Until now, metal streaming companies were few and far between and focused solely on precious metals such as gold and silver.
But Watson’s latest venture, Vancouver-based Sandstorm Metals & Energy Ltd. (TSX-V:SND), has broken the mould.
“We are going to be doing these streaming concepts in all forms of energy and base metals and bulk commodities, so you’ll see it in oil, gas, coal, copper, you name it,” Watson told Business in Vancouver.
Last month, Sandstorm signed an agreement to acquire six Appalachian coal streams from NovaDX Ventures Corp. (TSX-V:NDX) and Royal Coal Corp. (TSX-V:RDA) for a total upfront payment of US$49 million plus ongoing payments per tonne of coal produced.
Sandstorm, which was spun out of Watson’s gold streamer Sandstorm Resources Ltd. (TSX-V:SSL) in May, has been guaranteed it will receive cash flow from both deals starting next year.
Earlier this week, Watson met with investors in the U.S. to close a $60 million equity financing to fund Sandstorm.
He hopes the company will be able to use the equity money and cash flow from the coal streams to acquire more streams and fuel rapid growth.
“We’re the first ones in the base metals and energy space, and we’re hoping to get a multi-billion dollar market capitalization before anybody else shows up.”