The pressure on the share price of both Sandstorms can be attributed to a number of things. I will start with Sandstorm Gold (SSL):
  • There has been market pressure on gold and gold stocks. Although SSL has declined more than some, there are countless examples of gold companies that have experienced similar share price declines to the tune of 15%-30%.
  • Due to the poor performance of resource stocks in 2013, many resource funds are facing redemptions from their investors and have been forced to sell positions. Because SSL was one of the best performing stocks in 2012, we have been under considerable selling pressure as fund managers try to lock in gains amidst their drowning portfolios.
  • The market has not reacted favourably to our most recently announced stream with Entrée Gold. The stream is on an project in Mongolia and will not generate cash flow for 9 or 10 years, but the stream is on a world class asset operated by one of the largest mining companies in the world in Rio Tinto and we believe that our $40 million investment will generate hundreds of millions of dollars in cash flow for our shareholders.
  • A number of warrants have been exercised of late and the resulting shares from the warrant exercises are being sold into the market, creating additional selling pressure.
In regards to Sandstorm Metals & Energy (SND):
  • The first two points for SSL above relate to SND as well.
  • SND is not generating positive cash flow at the moment and is considered a riskier investment. With U.S. equities rising since the beginning of the year, investors have been reallocating their capital. Having said that, the mine underlying our copper stream with Donner Metals is going to begin producing in May of this year and SND will start receiving cash flow at some point in the third or fourth quarter. In addition, Thunderbird Energy, a company that we completed a natural gas stream with, has 1 well in production and is in the process of dewatering another 7 wells.
Our management team is committed to building fundamental value for our shareholders in both Sandstorm companies and although we can’t control market movements in the short-term, we believe that our efforts will be reflected in the share price in the medium to long-term.