Mining is not for sissies, Cramer's right on that one, but If your a trader you probably fade Cramer's recommendations, after a day or so. I'm not suure how to value the streamers other than how Cramer did the valuation ~ a growth rate Y-Y of 48% and a current PE of 29 verse PE of 39 for Franco Nevada.
I took a look at one of Sandstorms revenue streams - Silvercrest Mines SVL.v / SVLC. Using the five ryear average price for gold ~ $1100, SVL.v/ SLVC is valued at about 40% of net net asset value. Given the fact that gold is $1750, the valuation discount to NAV is lower ~ 25% of NAV. The reserve life for Silvercrest is only about 5 years, but it appears that Silvercrest can fund development of new resources from cash flow. Silvercrest began increasing production revenue to a self-funding level in Q1 2012, which is about when Sandstorm Gold made their revenue stream investment in Silvercrest Mines.
Jim Cramer makes a positive presentation of Sandstorms business model, when compared to the precious metal miners. I'm not clear on how to value Sandstorms future revenue streams, but I doubt Sandstorm Gold is trading at 25% of NAV on the current gold futures strip ~ $1750.
By comparison the SEC and Sedar allow oil and gas companies to use the forward futures strip for oil and gas, which over the life of production is in all valuations I've seen, the forward / future prices are higher than the current, and much higher than the weighted average on the multi-year trailing gold and silver price.
I have a full position in Sandstrom Gold, which I might trade around, but I continued to build a position in the Sandstrom 2014 and 2015 warrants. Last week I took smaller positions in two of Sandstorm Gold's revenue streams - Silvercrest Mines and Colossus Minerals, CSI.to / COLUF with the thought that I have to eventually understand the relative valuation of Sandstorm to their investments, and Sandstorm rejects hundreds of companies for every company they invest capital.
In the US there were some big block buying early on Friday, prior to the video, maybe Cramer, and his friends buying. The after hours trading in the USA was 30K total with all the trades under 1k. I'd love to see a continuation of block buying next week in SAND. |
