Sandstorm Gold: An eventful week and plenty of dry powder

POSTED ON August 24, 2012 BY James Kwantes
CATEGORY Stories,

Lots of action this week for Sandstorm Gold (SSL), a gold streaming company I wrote about in my first blog post. On Monday, CEO Nolan Watson rang the opening bell as shares of Venture-listed Sandstorm opened on the New York Stock Exchange under the ticker SAND.

Shares had closed at $9.73 the previous Friday in Toronto and closed at $10.24 Monday before charging up to the $10.75 level Tuesday, where they stayed until the Wednesday close. That’s when Sandstorm announced a $75-million bought deal financing that was increased to $130 million the next morning. As the market digested the terms of the financing — units priced at $10, including one share and one-third of a warrant — the stock crashed down to the $9.60 level ($9.67 close today).

It may not have felt like it for shareholders this week, but the financing is great news. Combined with its $50M line of credit and $25M in cash, Sandstorm’s coffers are now bulging with more than $200M in dry powder that management will likely put to good use. (Perspective: By my calculations, the company’s entire market cap was about $200M in the summer of 2010.) The coming weeks could be interesting for news flow.

In my Monday post, I suggested it might be wise for existing shareholders to take some profits after this year’s 75% appreciation in the share price: Existing shareholders who have profited from SSL’s rise may want to take a page from Watson’s book and consider moving some capital over to SND, which is an earlier-stage, riskier play in the same streaming business. Sandstorm Gold shares are trading at 52-week highs, but the stock’s chart shows that pullbacks typically follow price spikes.

Shareholders who did that now have the opportunity to pick up shares at a $1 discount. And I suspect that new shareholders who bought in the $10s and have some patience will also be rewarded.

Below are links to a couple of TV interviews Nolan Watson did this week. I don’t think he’s building the company to flip it, but one detail from the BNN segment that I found quite interesting was that larger competitor Franco-Nevada owns shares of Sandstorm Gold. I also liked his reply to the question about a TSX listing (Take that, Toronto!).
On Fox Business
On BNN

Finally, the gold price went on a run this week after bouncing around between $1,550 and $1,650 since early May. The yellow metal closed at $1,671 US an ounce.

Disclosure: I own shares in Sandstorm Gold and Sandstorm Metals & Energy.

James Kwantes

James Kwantes is an editor and mining reporter from Vancouver, Canada. He spent the last decade with Vancouver Sun, covering investing, mining and other business topics. James is the founder of the World of Mining blog and is the editor of Resource Opportunities, a subscriber supported investment newsletter covering compelling early stage mining companies. More →

Twitter: @https://twitter.com/jameskwantes

worldofmining@gmail.com

James Kwantes

Twitter: @https://twitter.com/jameskwantes

worldofmining@gmail.com

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