Sandstorm Gold (TSE: SSL)

[PMREdmonton]

I don't know if any of you follow Sandstorm Gold. It is a streamer of gold mostly. So it gives Gold mining companies some money upfront to fund their mining programs in exchange for being able to buy usually a fixed percentage of their future production at a fixed cost (usually around $400). The beauty is you get diversification of mines, no capex and some of these mines will produce many more years than initially appreciated and this really boosts the FCF over time. They are still fairly early on in this game and are run by the former CFO of Silver Wheaton. They appear to be executing really well and recently did a stock offering that was over-subscribed and now have the cash to go out and buy up some rights from junior gold miners which have been really struggling to get capital for their projects because of the collapse in their share prices.

The stock has been on a run lately but still may be a relative bargain in this field when compared to peers like FNV. They can play the smaller miners better because of their size and this is where most of the bargains are right now and this gives them a bit of an advantage compared to their brethren.

Any of you guys follow this one?

Disclosure: I am long SSL

[Argonaut]

I follow it somewhat and have recommended it before. I actually had a dream a while back discussing the relationship between Silver Wheaton, Franco Nevada, and Sandstorm Gold. Yeah, pretty lame. I love the streaming business and would say that all three are buys at the right price. Personally I only have room for one gold and one silver company, though (AR and SLW).

[maxandrelax]

I have been in it for a year now. Fantastic company with great management. Nolan Watson helped build Silver Wheaton and is at the reins. To correct the OP, it is listed on the TSX Venture exchange and they don't have any intention to move it to the TSX any time soon because it costs the company more. They just had a listing on the AMEX exchange which was received very well. Many thought that it would run up to the listing and fall, but instead, it has taken off.

[PMREdmonton]

Sorry, thanks max for pointing that out - it is on the Canadian Venture Exchange (CVE) and not the TSE.

Also anyone interested in buying this one must be careful not to buy Sandstorm Metals which I believe trades under SND in Canada. This is a streaming type company for base metals but has the same Sandstorm management. This one has been a bit of a disaster due to the crash in some of the base metal prices and some of the operations they fronted money to initially have done very poorly. May be wise to keep an eye on this one when the global economy really starts to get going again but I'd avoid it right now. The negatives are too high and I'm not even sure if they'll survive at the rate things are going.

[PMREdmonton]

I'm almost beginning to wonder if it isn't time to turn this one in. I bought it only a couple of weeks ago off a recommendation of the Stock Gumshoe and it has just taken off.

The last time one of my stocks did this it had a parabolic blow-off and then was down for a few months. Given the strength of the precious metal streaming stocks I don't think we're looking at much chance of a 50% correction or anything but a drop back to 11.xx wouldn't surprise me. I think I'll sell if it hits 14.50 to 15.00 but I'll hold for now because of all the heat from QE3 that is lifting it right now. The market can get really irrational at times before correcting itself quickly.

I still do love the company and its management and I'd be waiting for a chance to jump back on but the rapidity of its move is starting to worry me.

A large part of the move admittedly could be its recent listing on the US stock exchange. Add that to QE3, a good quarter, the success of SLW and boom - you have a PE of 57.

I'll be thinking about this one one over the next while (re: selling of shares).

[$1600 Gold by 2011]

I'm almost beginning to wonder if it isn't time to turn this one in. I bought it only a couple of weeks ago off a recommendation of the Stock Gumshoe and it has just taken off.

The last time one of my stocks did this it had a parabolic blow-off and then was down for a few months. Given the strength of the precious metal streaming stocks I don't think we're looking at much chance of a 50% correction or anything but a drop back to 11.xx wouldn't surprise me. I think I'll sell if it hits 14.50 to 15.00 but I'll hold for now because of all the heat from QE3 that is lifting it right now. The market can get really irrational at times before correcting itself quickly.

I still do love the company and its management and I'd be waiting for a chance to jump back on but the rapidity of its move is starting to worry me.

A large part of the move admittedly could be its recent listing on the US stock exchange. Add that to QE3, a good quarter, the success of SLW and boom - you have a PE of 57.

I'll be thinking about this one one over the next while (re: selling of shares).

This is my only gold stock, in since late 2010. There was a Cramer AND BNN pump over the weekend, so I took the chance to trim my position at the open today (~20%). I'd add a bit back in the low 11's as well, if it were ever reached again. Analyst concensus is north of $14 and in Watson's (CEO) presentation at the recent Denver Gold Forum, he mentioned chopping EV/cashflow in half in a couple of years. The stock was about $10 at the time so he basically forecast $20/share in a couple of years assuming a flat multiple and flat gold price.

[maxandrelax]

Back to 11. Wondering if this is the bottom or if it will test 9.50 again. Nothing fundamentally has changed.

[PMREdmonton]

Back to 11. Wondering if this is the bottom or if it will test 9.50 again. Nothing fundamentally has changed.

The only change is Jim Cramer who previously was pumping the stock and inerviewed the CEO recently uttered a fairly neutral utterance about the company and then it plunged.

Many of the gold miners have been down over the last month. The big issue with them is that even though gold cost has increased, mining costs have kept pace and they are struggling to bring new mines online without massive cost over-runs.

Now SSL is a streamer but it the companies they buy streaming contracts from decide not to operate the mine because it isn't profitable then they don't get their stream of gold.

If you believe in inflation and if you believe in inflation in gold price then this is the stock that is levered to this play with very little risk and excellent management.

[maxandrelax]

It is being listed on the TSX tomorrow. Step up to the big leagues.