Gold in an energy-obsessed world: A conversation with Dave Awram

Growth in the value of the mining royalty and streaming sector over the past two decades has been lead by public-listed precious metals firms that have helped fill a significant financing gap in the industry. The role they play in energy transition minerals funding is now increasingly under the spotlight.

Mining Beacon editor Richard Roberts caught up with Sandstorm Gold co-founder David Awram ahead of this year’s Resourcing Tomorrow conference in London, where he will again feature as a keynote speaker.

Richard Roberts: What were your key takeaways from the recent Denver Gold Forum from a gold market perspective?

David Awram: There was certainly a more positive feeling from at least the corporates represented at the DGF.  There were also a few generalists that either have zero or small allocations to gold in their portfolio, which is a very good sign. We haven’t seen that type of investor at the DGF since 2021. Hopefully it is a sign that generalists are getting back into the gold sector.

Certainly, it felt more positive than it has been since prior to 2020. 

Richard Roberts: Sandstorm’s latest investor presentation talks about 50% of royalty/stream portfolio mines being in the lowest AISC cost quartile – versus 36% Wheaton and 22% Triple Flag – plus a high percentage in the fourth quartile. Notwithstanding the favourable competitive position, is the current mix a good mix? How can or will it be improved?  

David Awram: We’ve worked hard to build a portfolio consisting of high-quality and low-cost assets with long mine lives. As a royalty company we want our mining partners to continually invest in the exploration upside of each of our assets. Low-cost assets are key to unlocking this upside, particularly in the downside of the market cycle. Diversification of assets and jurisdiction is also important. Mining is a tough industry and as a royalty company we want to be exposed to a broad portfolio of mines and jurisdictions.  

Richard Roberts: “Planting seeds now for the next big leg of growth”. Can you talk about what that looks like?  

David Awram: Since our last set of major acquisitions in 2022 our focus has been on paying down debt while waiting for some of the new growth assets to come online. For example, Greenstone is now ramping up production and Platreef is expected to commence production in 2025.

Recently we also started buying back our shares, as we recognised the undervalued nature. However, despite this relatively quiet period in terms of acquisitions we have robust corporate development team who has their fingers on the pulse of the industry. We are always working behind the scenes looking for ways to secure optionality and growth in our portfolio.

We also already know what one of our next major acquisitions is – our gold stream option on Glencore's MARA project. This exclusive option was negotiated back in 2015 for a maximum purchase price based on much lower gold prices than what we have today. As such we are confident that this will be the best-priced deal on a stream or royalty amongst any of our peers over the next several years.

Richard Roberts: Why is the Gold 247 initiative – and its timing – important?

David Awram: The Gold 247 initiative, spearheaded by the World Gold Council, aims to modernise the trading and management of gold by incorporating blockchain technology. We expect this initiative to attract a broader base of investors and end-users by making gold trading more efficient and secure while improving transparency, trust and accessibility​ for the gold market.

The timing is critical as the global financial landscape evolves, with increasing demand for digital assets and a need for modernized infrastructure to support gold's role as a reserve asset and investment vehicle.   

Richard Roberts: How do ESG investors and investment impact gold exploration and production over the next decade or so given it’s not a critical mineral? How does the royalty-co model/royalty companies play a major role in helping fund non-gold exploration and development in future?  

David Awram: ESG considerations have become a significant factor in attracting investment even in sectors like gold that are not classified as critical minerals, and we foresee this trend continuing.

We view ourselves as the ultimate long-term investor in the mining space and are always thinking critically about how a potential investment functions successfully in its jurisdiction and community.  

Beyond the fact that companies with strong ESG practices are likely to secure more favourable financing and partnerships, part of Sandstorm’s strategy is to use precious metal stream financing as a way of financing critical mineral operations like copper. In part, this was Sandstorm’s strategy in launching a copper company in 2022. Our strategic partnership with Horizon Copper allows Sandstorm to acquire precious metal byproduct streams on significant copper assets around the world, while Horizon contributes to the funding of these critical mining operations.  

Richard Roberts: Global gold exploration has obviously been the dominant piece of the non-ferrous mineral exploration pie for a very long time. Why does that continue – doesn’t the world need more copper, nickel and quality RE deposits, etc?    

David Awram: There are many gold-only mines but much global gold production comes as a by-product of critical mineral production.

Utilising this by-product production as a financing tool through a company like Sandstorm can help critical mineral projects access hard-to-find capital. Additionally, gold mines typically require substantially less infrastructure to be profitable. These lower cost gold mines can help to accommodate and offset the infrastructure of second-stage critical mineral operations that tend to be more capital intensive.