Pulled another trigger today and bought some Sandstorm Gold (TSX venture: SSL, NYSE.MKT: SAND) Currently it's about 10% of my portfolio, I bought it at CAD $9.70 after a big drop yesterday.
If you know Silver Wheaton (SLW on both TSX and NYSE) you'll know why. SLW and SSL are both streaming companies, for silver and gold respectively. Streaming companies don't directly mine or manage mines themselves, what they do is provide upfront and cash financing for mining companies that want to develop, explore or increase production of their own mines. In exchange, the mining companies will sell a percentage of silver or gold, over the life of the mine, to the streaming companies at a fixed price.
The founders of SSL were two of the original founders of SLW, so they have experience in running a streaming company, screening and picking the right projects, and overall give investors confidence in their leadership. SLW stock price has increased by 14% YTD, due to their income from silver streaming. With silver price trading at 10% increase YTD, SLW financial looks pretty good, which explains the recent jump in it's price (30% increase in the last month alone, I'm sad that I didn't pull the trigger back in July).
SSL is similar to SLW with it's streaming projects. Currently SSL has 7 projects on the go, they're in Canada, US, Brazil and Mexico, where the countries are politically stable. On their most recent Q2 financial report, SSL pays from $300 to $500 per oz of gold, or the current gold price, whichever is the lowest, to the mining companies for a percentage of gold refined. SSL then sells its gold to large corporations with good debt rating to reduce risk. SSL has a $50 million revolving credit with Bank of Nova Scotia, which SSL hasn't tap into yet. This week, SSL announced a $75 million finance deal, which later increased to $130 millions, by selling its shares at $10 each to underwriters. The recent drop is price is probably due to these underwriters dumping their stocks in the open market, causing a 10% drop in price. Overall I'm bullish on SSL, it is a speculative buy, but I believe SSL will follow SLW's footstep and become a great steaming company.