Canada’s CFO of the Year™ Award 2019 finalist Erfan Kazemi
From mining to libraries: Sandstorm Gold CFO brings a keen eye for the books
It’s an understatement to say that Erfan Kazemi joined the mining industry at an interesting time. It was 2011, a year in which gold prices reached their peak of almost US$1,900 per ounce. They would fall later that year and largely continue on a downward trend, reaching a low of less than US$1,100 an ounce in late 2016. Prices have recovered modestly since then.
During the industry’s heyday in 2011, Erfan made the move to become Chief Financial Officer of Sandstorm Gold Ltd. after a five-year stint at PwC Canada. While the industry as a whole faced many challenges in the years after 2011, Erfan saw a different side of the sector. Sandstorm Gold is in the royalty and streaming side of the business, which involves purchasing the right to a mine’s future production at a fixed cost. It’s an activity where the company’s CFO plays a pivotal role in making deals and an area of the mining industry that has seen significant growth—even during those lean years—with stream and royalty financing rising to more than US$2 billion in 2018 from $350 million in 2011.
“It’s an environment where you’re constantly evaluating and reviewing companies, reviewing deal flow, determining whether or not this transaction makes sense at this time of the cycle and if it will provide you growth in a few years’ time,” says Erfan.
“Being in that environment can be pretty exciting. For example, we bought four public companies in the last several years, and just the issues of integrating and making that part of our overall business can be exciting in itself.”
A true business partner
Being the CFO of a royalty streaming company means Erfan has to understand the business of not only Sandstorm Gold but also the organizations it enters into financing deals with.
“That means understanding your partner's unique concerns, so what we're constantly trying to do is look at how we can solve other companies' capital problems. Each company has their own unique set of circumstances, whether it's the . . . need to fix their balance sheet or unique considerations with the project they’re developing or the location of their assets.” - Erfan Kazemi
It’s an aspect of the role that puts him at the heart of Sandstorm Gold’s business and strategy. Erfan estimates the company looks at more than 150 potential transactions a year but may reach a deal in only a handful of them. Since joining Sandstorm Gold in 2011, Erfan has helped raise over half a billion dollars in debt and equity capital and has deployed more than $600 million across 30 transactions.
The role also gives Erfan a front-row seat as mining finance undergoes a significant transition. Amid the industry’s years of price swings, equity markets saw massive growth of passive investment vehicles like exchange-traded funds (ETFs). The shift has created challenges for some mining companies, which may not be large enough to get the weighting from ETFs necessary to support their capital needs and attract investor interest. For royalty and streaming companies, it’s a significant opportunity since they’re one of the alternative sources of capital mining producers can tap into.
The shift has been part of what has allowed Sandstorm Gold to grow significantly in recent years, to the extent that the vast majority of its cash flow now comes from larger and mid-size mining companies as opposed to the junior miners it relied on in its early days.
While Erfan has a lot on his plate making deals and overseeing Sandstorm Gold’s financial affairs, he has been careful to make time for his other passions, notably the Vancouver Public Library. For more than eight years, he served as the library’s Vice-Chair and is currently a trustee of the Vancouver Public Library Foundation.
“I love libraries and always have,” says Erfan.
“When I emigrated to Canada, I found the library to be a very welcoming place, and it’s one of the few free, public indoor spaces in the city. There is no expectation of commerce. You’re not expected to buy something. It’s a place where people can share stories and ideas, read, relax and meet new people, and that’s something that’s always appealed to me.”
Ever the businessperson looking to the future, Erfan notes the many ways organizations like the Vancouver Public Library are undergoing their own transformations.
“I would say over the last five years at least, there’s been a lot of innovation in libraries that you wouldn’t expect. I think there’s a preconception that libraries are just about books, but here at least in Vancouver, there’s been a lot of innovation in sharing stories. We’ve got this one place called the Inspiration Lab. It’s a free space dedicated to digital creativity, storytelling and collaboration. You can record professional-quality content like video and you can take your old VHS and beta tapes and audio cassettes and convert them to digital formats.”
Whether he’s negotiating a royalty deal or guiding a non-profit organization, Erfan is always looking ahead. And when it comes to what future financial leaders can expect, he suggests paying attention to some of the shifts in the financial markets—notably the rise of passive investments—that have changed the landscape for the mining industry. “Without truly understanding the shift, they’re not going to be successful and neither will their companies,” he says.
Canada’s CFO of the Year™ Award Gala
Presented by Financial Executives International (FEI) Canada, PwC Canada, and Robert Half, Canada’s CFO of the Year™ Award is given annually to recognize and honour the best in financial leadership.
The winner will be announced at our gala April 25, 2019.