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SN3165 (< 20)

A Sandstorm is Coming...

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55

November 18, 2010 – Comments (17) | RELATED TICKERS: SAND , SLW , GLWGF.PK.DL

First off, I'd just like to say Happy Aniversary to Silverminer/TMFSinchiruna! 

Everybody who follows him religiously like I do knows what I'm talking about: His legendary call on SLW was made on November 19, 2008 (on the Silverminer Profile). If you would have put $10,000 down on SLW when he first brought it to our attention at $2.91 (on his Silverminer profile), how much would you have made? The stock currently sits at around $34 today, a solid ten-bagger in two years. I'm not good at math, but I'm pretty sure you would have more than $100,000. And many Fools, Sinch and myself included, believe that SLW is well on its way to $100...

Sure, if you enter SLW now, you probably would get the gains you would have if you entered in 2008. It's a bummer, I know. But Fools, know this: There are still ten-bagger opportunities to be had.  

And Sandstorm Resources is one of them.

Sandstorm Resources is a gold royalty company. Though they have only been operating for under two years, Sandstorm has completed four royalty acquisitions in that time.Three of their four royalty streams will come online in the next year, and the fourth is expected in 2011. Below are the details. The following is taken from a Seeking Alpha article entitled "Sandstorm Resources: The Next Big Thing" by member Hyperinflation (Someone's blog I highly recommend you to follow).

· Aurizona Project - 17% of attributable gold production for LOM, which will initially produce 60k oz/year, ramping up to 80k year with cash costs of $400/oz. They also have the option to purchase 17% of the gold produced from the underground mine ( should Luna Corp decide to develop it). In this case annual gold production will increase to a range of 100k-125k/year.

· Saint Elena - 20% of attributable of the projected 40k annual production. The kicker here is the purchase price of just $350/oz. Additionally this mine has underground potential which Sandstorm will have claim to should they develop it. This would bring total mine production to an estimated 60-70k/year.

·Summit Mine - Sandstorm will initially receive 50% of the first 10k mined, followed by a 22% interest in this small mine. Production estimates are expected to be between 12-14k/ year. Cash costs again are at the low end $400/oz. The operator also has the right to offer Sandstorm an additional 25% interest. This is a key example of generating immediate cash flow ( indicated through the provision above). 

·Ming Mine - Production expected to commence in mid 2011. Initially Sandstorm will receive 25% of the first 175k produced followed by 12% thereafter. Gold production is projected to be between 20-25k annually with excellent upside potential.  

In addition, they have nearly 90 million cash on hand, and zero long term debt. But this still isn't the reason I was brought to them. No, it was their management... The Former CFO of Silver Wheaton is the CEO of Sandstorm Resources.

In my opinion, aside from getting into Great Panther (my largest holding, GPRLF.PK) in the 60's and 70's, this is currently THE best chance for Fools to grab a ten-bagger. 

Full Disclosure: I own SNDXF, SLW, and GPRLF. 

17 Comments – Post Your Own

#1) On November 18, 2010 at 11:47 AM, BillyTG (29.44) wrote:

+1 Good info!

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#2) On November 18, 2010 at 11:51 AM, silverminer (31.45) wrote:

SN3165,

Thank you for the kind words, and for pointing out the 2-year mark since that call. November 25 is the real date of note, however, since that was the day that my article with the buy recommendation appeared, and was also the day on which the stock hit its multi-year low of $2.51 per share. :) But today is 2 years since I started my silverminer CAPS portfolio ... so far so good. :)

You may have seen in my comments to my last blog post, that I thanked you for bringing Sandstorm Resources to my attention. I will take a much closer look over the coming days and weeks, but at first glance I have to agree this is a very compelling story in the making. Thanks for bringing it to the attention of your fellow Fools.

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#3) On November 18, 2010 at 11:54 AM, silverminer (31.45) wrote:

P.S. I recommend you copy the text of this post into a CAPS pitch for your selection of the stock in your CAPS portfolio. That will help get the word out as well.

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#4) On November 18, 2010 at 12:52 PM, Bays (30.38) wrote:

Great find, imo.

I like the fact that they have some long-term warrants available!

Excercise price of $1.00 in 2015!!!

 

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#5) On November 18, 2010 at 5:30 PM, awallejr (83.85) wrote:

I like the pitch, good write up.

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#6) On November 18, 2010 at 6:42 PM, EnigmaDude (94.79) wrote:

Looks like a great business strategy.  There are an awful lot of shares outstanding though.  Nonetheless, thanks for bringing this to our attention. It's very intriguing.

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#7) On November 18, 2010 at 7:03 PM, 100ozRound (29.57) wrote:

Did you know that the guy who writes on Seeking Alpha under the name hyperinflation is our very own speedybure

Check out his blogs; there is some figurative gold in them...

I wish he'd come back and write more here!

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#8) On November 18, 2010 at 8:25 PM, silverminer (31.45) wrote:

100ozRound

I wasn't aware ... thanks for the heads-up! :) I always wondered where he went off to. He should share in some credit for recognizing the value in SLW shares early on as well. His calculations of fair value for SLW given disparate silver price scenarios were absolutely spot-on. If you run into him, please tell him I said so.

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#9) On November 18, 2010 at 10:03 PM, catoismymotor (32.05) wrote:

SN,

Thanks for the lead. I've just started doing my DD on this company.  The more I dig the more I like.

Cato

P.S. - I still have a man crush on Sinchy.  

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#10) On November 19, 2010 at 1:48 PM, SN3165 (< 20) wrote:

Well, this is my first time checking back on my Fool profile after posting my first blog post, and all I can say is... WOW! Thanks everyone for the great feedback. 

Glad to know that Hyperinflation is a fellow Fool - He is the one who brought Sandstorm to my attention in the first place, and he deserves all the credit on this call...

And Sinch, thanks a bunch, you help a ton of people out here every day. I can't offer the same type of insight in my posts that you do, but I'm going to try. 

I also recently requested Gold Wheaton as a ticker. Also definitely worth taking a look at. 

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#11) On November 22, 2010 at 1:56 PM, blesto (31.96) wrote:

Thanks for the lead.

Would it also be prudent to look into buying some warrents.  Symbol SNXXF.OTC trading about $0.366 right now. 

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#12) On November 22, 2010 at 3:03 PM, blesto (31.96) wrote:

Another good blog on Sandstorm

A Game Changer - Sandstorm Resources

PM Royalty Update

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#13) On November 22, 2010 at 5:32 PM, Bays (30.38) wrote:

Blesto,

There are two types of warrants available...

One excercisable in 2014 with a strike price of .60 cents, they trading at .38 today ---- good deal.

The other is excersiable in 2015 with a strike price of 1.00, trading at .36.

The 2014 warrants are a much better deal here. 

I usually avoid warrants because I know how the market could be in short time periods, but these warrants give you ample time for the story to pan out. 

Personally, I will be buying some 2014 warrants shortly.

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#14) On November 23, 2010 at 1:32 PM, SN3165 (< 20) wrote:

The warrants are interesting. Personally I own shares, and have never bought warrants before (and mostly shy away from options), so I need to do some research on that. But a strike price of .60 in 2014, trading at 38 cents, that's definitely intruiging. 

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#15) On December 06, 2010 at 12:30 PM, SN3165 (< 20) wrote:

Ive been doing some DD on the Black Fox aquisition (Brigus Gold) looks really really promising! 

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#16) On February 03, 2011 at 12:52 PM, Bays (30.38) wrote:

SND.V has had quite the pull back,

Same management, same model, but with coal and base metals.

 

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#17) On December 08, 2011 at 1:47 PM, SN3165 (< 20) wrote:

 

Luna Gold Corp. (TSXV-LGC/BVL-LGC) ("Luna Gold" or the "Company") is pleased to announce a significant mineral resource update at the Aurizona gold mine in Brazil. Measured and Indicated gold resources now total 78.0 million tonnes at 1.26 g/t Au or 3.17 million ounces gold, an increase of 250% from the previous mineral resource estimate published in January 2009. Inferred gold resources now total 15.2 million tonnes at 1.47 g/t Au or 0.72 million ounces gold, an increase of 79% from the January 2009 mineral resource estimate.

This is great, great news for Sandstorm as well, which of course, owns a 17 percent stream on Aurizona.Remember they are not required to pay any capital requirements for development! 

As for Luna they do have a lot of shares outstanding, but they are certainly worth a look. Aurizona will most likely ramp up to 100k annually next year.

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