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. (
), 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.