Why Sandstorm Gold Royalties CEO is Bullish on Gold Prices | Summary and Q&A

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July 30, 2018
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Investing News
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Why Sandstorm Gold Royalties CEO is Bullish on Gold Prices

TL;DR

Investing in royalty agreements eliminates risks associated with mining, offers diversification, and provides potential for high returns on investment.

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Questions & Answers

Q: Why would investing in royalties be a better decision compared to investing directly in mining?

Investing in royalties eliminates many risks inherent in mining, such as jurisdictional and political risks. Diversification is also achieved by investing in a wide range of assets and companies, reducing exposure to any one mine. Additionally, royalties offer benefits including lower risk of cost overruns and inflation.

Q: What factors does Sandstorm Gold consider when looking for a royalty project?

Sandstorm Gold focuses on assets with significant exploration upside. They consider factors such as good counterparties, favorable political jurisdictions, low technical risks, and high-quality deposits. The company aims to acquire assets where they have paid for a certain mine life, while the potential for future exploration for investors comes at no additional cost.

Q: Can you give an example of a royalty asset that Sandstorm Gold finds compelling?

One such asset is Sarah Marrow, which has two thousand square kilometers of future exploration potential. Another noteworthy asset is Hot Mad, a 40-meter-wide gold deposit in Turkey with a 30 percent profit interest. Sandstorm Gold also values smaller royalties that they have acquired for low prices and have significantly appreciated in value.

Q: What are your thoughts on the recent decline in gold prices?

Despite factors such as the trade war and rising interest rates, gold's price remaining above $1,200 per ounce is a bullish sign. Sandstorm Gold sees this as an opportunity to acquire royalties at great value, as gold mining companies face challenges in raising capital. The company believes that the price of gold will shine in a couple of years.

Summary & Key Takeaways

  • Sandstorm Gold is a gold royalty company that acquires royalties from mining companies worldwide.

  • Investing in royalties reduces risks associated with mining, such as political and jurisdictional risk, and allows for diversification across various assets and companies.

  • Sandstorm Gold aims to return capital to shareholders while continuing to acquire new royalties and grow the company.

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