Sandstorm Gold CEO Nolan Watson

The ability to make deals in bad markets is one of the best indicators of a strong management team. Today, Sandstorm Gold Ltd (SSL.TSX) and Premier Gold Mines (PG.TSX) made a deal which tells us a thing or two about strategy.

Read: Sandstorm Gold Announces the Acquisition of Common Shares and Warrants of Premier Royalty

These two groups found a win-win that aligns business objectives. PG had none-core assets that they spun out with Bridgeport Ventures into Premier Royalty (NSR.TSX). Selling their 42% position to SSL gives them access to more cash for 2013. They can now use ~$150M in their treasury without having to sell shares, thanks to a six-month credit of $70M facilitated by SSL.

The Sandstorm group looks at over 300 deals a year and Mr. Watson’s style has indicated that everything is about material shareholder value. In addition to the nominal value of the agreement, picking up a significant interest in NSR gives Sandstorm more exposure to smaller streams and royalty acquisitions.

Strategically, both of these companies look to be ramping up for an aggressive 2013. PG has the cash for their ideas, and SSL has more access to potential deals.

Take note, it could be an interesting 2013 for both companies.

See also: Conscience of a Gold Miner - Nolan Watson Interview (CEO.CA)

 

Disclaimer: As a CFA Level I Candidate, I am required to disclose the following: I own shares in Premier Gold Mines and in Sandstorm Metals and Energy, arms length to Sandstorm Gold Ltd. I am not qualified to be giving investment advice and this should not be taken as such. The contents of this article are an opinion drawn from material public information. I reserve the right to actively trade the companies named in this article without providing notice. I advise you to do your own due diligence and talk to a licensed investment advisor before buying or selling any security. All facts to be verified by the reader.