BMO Financial Group, acting as sole sustainability structuring agent, financed a deal with a sustainability-linked loan structure with royalty company Sandstorm Gold Royalties. Adopting this structure as part of its 2021 revolving credit facility renewal enables Sandstorm to link its environment, social and governance strategy and cost of capital.
The deal introduces a margin adjustment incentive mechanism tied to Sandstorm’s commitment to continue building strong workforce diversity and maintaining its solid ESG governance while furthering sustainability and climate-related disclosure developments in the mining and metals industry through its investments.
“We’re pleased to announce that Sandstorm is the first royalty company with a credit facility linked to sustainability goals. With this credit agreement, Sandstorm is helping to lead a new era of corporate lending that benefits shareholders while promoting corporate responsibility,” Erfan Kazemi, CFO of Sandstorm Gold Royalties, said.
“We’re excited to support Sandstorm’s environmental and social sustainability objectives through this new financing. Deals like this are aligned to BMO’s purpose to ‘boldly grow the good’ in business and life and to the way we work with clients across industries both to serve their needs and work toward a more sustainable future,” Jonathan Hackett, head of sustainable finance at BMO Capital Markets, said. “Our experience as a leading global metals and mining practice, combined with our expertise in sustainable finance, makes us the ideal partner in helping Sandstorm reach its goals.”
The new sustainability-linked, four-year, $350 million revolving credit facility includes terms that reduce or increase the borrowing costs as sustainability performance targets are met or missed. According to Sandstorm Gold, the performance determinants include maintaining or improving an ESG rating of ‘A’ from MSCI, increasing diversity at the leadership level to 50% and increasing the percentage of assets’ alignment with sustainability and climate related reporting standards and frameworks.