UPDATE: Market Chatter: Sandstorm Bets on Buying Not Finding Gas, Gold


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Nolan Watson, whose Sandstorm Gold Ltd. (SSL.V) 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, Bloomberg reported.

Watson co-founded Sandstorm Gold - which is slightly higher today - 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.V) in 2010 to apply the same financing model for companies in non-precious metals, oil and gas. SND rose 4% Friday and has edged up slightly again this morning to take it nearer to a year high 51 cents Friday.

"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."

As the cost of building mines and developing petroleum deposits soars, Watson is positioning the Sandstorms as alternative sources of funding for natural resources companies that may not be able to sell debt or equity.

Watson is developing a lucrative niche by carving out deals too small for heftier peers such as Silver Wheaton Corp. (SLW.TO), Franco-Nevada Corp. (FNV.TO) and Royal Gold Inc. ( RGLD ), said Ian Armstrong, co- founder and chief operating officer of New York-based Clear Harbor Asset Management LLC, that owns shares in both of Watson's companies.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Commodities

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