Live Like Kings and Queens with Royalties

Hey There Income Hunters,

We are living in the Golden Age of Liquidity.

A billion here, a trillion there …

No big deal.

We have the Fed and Treasury doing their best to make the New Roaring 20s last for years, if possible.

And there’s no doubt that if the Fed sticks to the plan of printing as much money as it takes to fuel longer-term inflation, the party will go on.

At the same time, look at the mining companies and all you see is zero debt and plenty of free cash flow …

One of my favorites, Sandstorm Gold Ltd (Ticker: SAND), has put itself in great shape to be able to invest and continue growing for years as demand for metals increases.

Check out their earnings and cash flow trends for the next few years …

What’s more, these earnings don’t account for any increase in the price of gold, copper or iron, which are commodities on which SAND collects royalties — and which are poised to rise.

SAND just announced a couple of great acquisitions and soared almost 8% on massive volume to break back above the 200-day moving average.

$138 million Cash-Flow and Asset Deal

Last week, SAND announced it increased its portfolio of producing assets and immediate cash flow by executing a $30 million gold stream and royalty agreement with Vatukoula Gold Mines PTE (Ticker: VGML).

The company also paid $108 million for 9.3 million units of Vale S.A. (Ticker: VALE) participating royalties …

That deal provides them with life-of-mine net sales royalties on Vale’s producing and exploration assets. 

These low-cost assets are expected to contribute to Sandstorm’s portfolio for several decades, including $11-$12 million of royalty revenue in 2021, based on analyst consensus pricing.

Locking in Growth in Revenue and Earnings

SAND is poised to show significant revenue and earnings growth over the next three years — even before taking into account the increase in the price of gold …

I see a 3-bagger within three years based on conservative numbers injected into my Power Income Valuation Model.


Check it out below …

I have not included any dividends, but clearly SAND has plenty of cash to tap into for those …

However, as a shareholder I would much rather see more deals like those outlined above than a dividend distribution.

FYI, I recently purchased a Jan. 21, 2022, 8-strike call and paid $1 … 

Bring It Home

This is a great risk/reward trade for a royalty and streaming company because they are basically financiers for productive mines…. 

They provide geographic and mine diversification and have very little cost

Today, SAND has 200 royalty and streaming deals in place, with plenty of cash for more.

The conservative play, if you don’t want to risk the whole premium, is to exit the trade on a close below $7.19.

Of course, your own due diligence is always required, but I’ll continue to leverage the probabilities that offer the best chance to build generational wealth.

Until next time …

Live and Trade With passion My Friends,

Griff

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.