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speedybure (< 20)

Sandstorm Metals & Energy: 2012 Update



November 06, 2012 – Comments (10) | RELATED TICKERS: STTYF.DL , SAND , SLW

Sandstorm Metals & Energy has quietly been adding value over the last several months, which when looked upon as a whole, shows 2012 has been a rather transformational year for the company. While it has had its share of problems early on in the company;s infancy, it seems to have taught mgmt a lesson regarding what assets it will pursue going forward.

Sandstorm has or is in the process of amending its NovaDx deal, whereby it will receive 20m, 10m in equity and a 10m debenture as well as a sliding scale gross overriding royalty on the Rex and Rosa coal mines. Sandstorm is also in great position for 2013 as it will see both its conerstone assets as well as two smaller assets come onstream. I would suspect by Q2 of the new year, Sandstorm becomes cash flow positive for the first time in company history, ramping up over the following several years.

Serra Pelada ~ Sandstorm completed its first Palladium Stream by acquiring a 35% streaming interest in this exceptionally high grade deposit. Based on analyst estimates and my own calaculations, Serra Pelada wil be ramped up and by 2015, will produce 65,000 oz.'s Pd or 23,000 attributable, however, this will be reduced as Colossus wil likely buy back half the stream or 11,500 attrituable. While this doesn;t seem like that much, it cost just 15m.

Bracemac-Mcleod ~ Two pieces of great news came out regarding this stream in 2012. First, it would operate at 30% above that outlined in the PEA/Feasibility Study, for average annual output of 28m Lbs. Second, Sandstorm increased its initial 17.5% stream by 7% to 24.5%. While Donner, who sold the stream is likely to do very well going forward, it isn;t very financially sound, at least at this time. Xstrata, the operator, however, is in excellent financial shape and has a long history of doing a great job brining mines online. In other words, Sandstorm was able to take advantage of Donner;s financial distress while at the same time not having to worry about that fact as far as its stream goes. Production will commence in Q1 and likely be ramped up in Q4/Q1 of 2012/2013.  

Gordon Creek ~ This stream is set to begin production this year, although it will not reach capacity until Q1 2014. It has significant exploration upside, which will likely be realized in the not too distant future. Sandstorm has the right to buy 35% of production for $1/mcf, giving Sandstorm great leverage to rising natural gas prices.

The net asset value calculation has the following assumptions: $3/Cu, $600 Pd, $3.50 lng, $85 barrel oil

Serra Pelada NAV ~ $14c/share. Applying the avg NAV multiple of 1.5x = .22c/share

Brace Mcleod NAV ~ $.32/share, Applying 1.5x Multiple = $.47c/Share

Gordon Creek NAV ~ $.12c/share, 1.5x multiple $.18c/share

Cash, Debenture, Investments ~ $.11c/Share

Two Creek, Strathmore, Rex, Rosa ~ $.08c/share, 1.5x multiple = $.12c/Share

Total ~ $1.10 Share


10 Comments – Post Your Own

#1) On November 06, 2012 at 5:52 PM, awallejr (38.93) wrote:

I took a position on this one when I bought Sandstom gold.  But if memory serves me correctly aren't there a lot of warrants due in December with an exercise price of either 69 or 59 cents?

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#2) On November 06, 2012 at 6:04 PM, speedybure (< 20) wrote:

69, so it is doubtful theyll be excersized.

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#3) On November 06, 2012 at 8:43 PM, outoffocus (22.84) wrote:

Do you have any opinion on CDE in light of disappointing earnings?

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#4) On November 07, 2012 at 3:08 PM, SN3165 (< 20) wrote:

Chris I'm working on a write-up on the company Gold Royalties. Stay tuned

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#5) On November 10, 2012 at 7:25 AM, skypilot2005 (< 20) wrote:

Sandstorm Bets on Buying Not Finding Gas, Gold

By Christopher Donville on October 29, 2012

“Nolan Watson, whose Sandstorm Gold Ltd. (SSL) has risen five-fold by buying and selling gold rather than mining it, says his smaller company focused on base metals and energy has even more growth potential.

Watson co-founded Sandstorm Gold to buy bullion from mining companies in so-called streaming deals that pay in advance for a percentage of output at a discounted fixed price. He then sells the gold to reap the spread between the purchase price and the spot price. Watson set up Sandstorm Metals & Energy Ltd. (SND) in 2010 to apply the same financing model for companies in non-precious metals, oil and gas.

“I firmly believe it will be the larger of the two entities in the long run just because the space is so much larger,” Watson, 33, said in an Oct. 25 interview at his Vancouver office. “The companies are bigger, the mines are bigger, there’s more of them and we’re going to take advantage of that.”

F. Y. Is.:|+SND



LOOOOONG both Sandstorms and Donner

Speedy, thanks for the post. 

Fellow Fools,  Yes.  I. M. O., Donner may be viewed as “speculative”.  I like the risk – reward %. But, that’s just me.  Do your own D. D.

Fool on...... 

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#6) On November 10, 2012 at 10:07 AM, speedybure (< 20) wrote:


I actually highlighted that company last month for our mastermind series.

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#7) On November 10, 2012 at 10:31 AM, SN3165 (< 20) wrote:

Interesting. You must be as bullish on them as I am, following the deal with Franco.

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#8) On November 10, 2012 at 10:39 AM, speedybure (< 20) wrote:

We were trying to buy a stake in the company when it was private

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#9) On November 10, 2012 at 10:42 AM, speedybure (< 20) wrote:

We like it and I bought a nice chunk when it went public, however, David nor I believe it will be able to contend with the likes of either Sandstorm, rather companies such as virginia mines and anglo pacific group.

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#10) On December 14, 2012 at 12:01 PM, charliedawgg (< 20) wrote:

Hi Speedy,

I noticed that Sandstorm recently penned an agreement with Australian miner Mutiny Gold Ltd. Have you done any DD on these guys? Any idea why their share price took a hit just a few days after the deal was finalized? Puzzling...


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