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SANDSTORM GOLD LTD. Message Board

  • metalschick metalschick May 4, 2012 10:55 PM Flag

    For those who are high fiving about the consolidation think about this....

    There is absolutely no sense in a 5/1 consolidation.

    The Amex rules are quite clear.

    http://nyseamexrules.nyse.com/AMEXtools/PlatformViewer.asp?SelectedNode=chp_1_1_1&manual=/AMEX/CompanyGuide/amex-company-guide/

    http://www.venturelawcorp.com/listing_requirements_amex.html

    $2 closing price for 30 days. That's what management is wanting.

    Easily could be accomplished with a 1.5 or 2/1 consolidation.

    We are not uplisting to the NYSE right now, so why have a share price of over $9?

    Also, I've been doing alot of research and I cannot find one single requirement that a institutional investor cannot buy a stock that's under $2. So, it must be their individual set standards.

    So... What does a 5/1 accomplish....

    This is what I see.

    Based on todays close, a 5/1 will artifically increase the stock price to $9.07. Granted the outstanding share count be reduced to ~ 69M.

    Now, this is important... When we do more deals this year and use up our available funding, care to guess where additional funding is going to come from?

    Not this year, and maybe not next year, but I see massive diliution coming to this company. And, when it's all said and done, we will wind up with the same share count that we have right now and all of us will have alot less shares and alot less dollars in our pockets, if any of us want to buy more shares upon news of dilution to get back to where your share count is right now.

    The institutional investors that y'all are cheering about will drive the s/p up with buying, yes we will all benefit from this (short term), but when a financing comes around (and, it will happen), I can almost guarantee that those same institutional investors that you guys are cheering about will sell and turn around and short this company for all they are worth, thus making money on the downside, then near the bottom after dilution, they will start buying again.

    Yeah, I'll make some coin with this company, but I am not happy with this massive unneeded roll back.

    So, while I am still bullish on this company, at the same time, I'm not happy that management has taken the stance that the retail investors who were here first are not worth squat anymore.

    So, you guys can buy and hold all you want. When the time comes to short this thing, yep... I can play that game too.

    Good Luck To You All!

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    • You are under the illusion that manipulating the number of shares outstanding and/or price of the shares has anything to do with its valuation. The R/S simply makes it easier to get listed on a major exchange, which is a good thing, but it won't change the outlook of this company. Dilutions can come whether the stock is $.50 or $50 and the effect of the dilutions is the same regardless of where the stock is priced. Sorry, you are very much lacking in basic stock market knowledge.

      • 3 Replies to tuckerl1985
      • Although indeed tucker should have choosen some other words, as this board is there to share information and to learn from each other, he is absolutely right that the share consolidation does not change the fundamentals of the company and the way it is valuated, neither does it rise any risk for more dilution.

        Let me show that with an example:

        Say we have 350 million shares a $ 1.80, resulting in a market cap of 630 million. The cash flow from operations is 10 million per quarter, 40 million a year, 11 cents a share, meaning the company is valuated at 15,75 its operational yearly cash flow. (1.8/0.11) The company furthermore reports a net profit of 8 cents a share, meaning its p/e is 22.5

        Now suppose it will consolidate its shares with 5:1

        The company then has only 70 million shares a $ 9 each, meaning its market cap is still 630 million. Its operational cash flow of 40 million is 57 cents a share. Again, or should I say still, the company is valuated at 15,75 its operational yearly cash flow (9/0.57). Also its p/e ratio stays exactly the same as 9 divided by 40 cents is 22.5

        With another example you can easily show that also dilution risk is not affected by a share consolidation:

        Say the company has capital needs of 90 million. With the shares still at 1.80 it needs to issue 50 million new shares. The total dilution is 50 divided by 350 or 14%. After the consolidation it needs to issue 10 million new shares as they are worth $9 each. 10 divided by 70 is again 14%.

        These examples show that the valuation of the company, as well as dilution risks, are not affected by the share consolidation. Having said that, I like to focus now on the dilution risk itself. Nolan Watson simply mentioned that there is no need for issuance of new shares. Why not believe him ? The company has sufficient cash (currently 38 million), has the availability of a 50 million revolving credit and is generating another 3.5 million each month. Besides that, they have some 700 ounces of pure gold in the safe and can furthermore choose to call in an early exercise of the warrants, bringing in another $50 million (2014 warrants only) to $ 70 million (2014 and 2015 warrants), not to mention that there is the possibility that Brigus Gold will choose to pay 36 million by year end, to pay off 50% of its streaming obligations towards Sandstorm.

      • @Tucker, I have two suggestions for you.

        First, when you respond to a message, please identify the poster so it is easier to know to whom you are responding. I can usually figure it out, but when there are many messages in between, multiple sub-threads, deleted messages, and such, at times it isn't possible, or worth the effort.

        Second, your skill at having a dialog, or ability to "educate", could use some polishing; IMO. If you do possess superior knowledge, and you seem to think you do, it would be better received by a better choice of words, and a less grating tone.

        Please accept my suggestions as a sincere wish to maintain the utility of this message board. Trin

    • With all due respect, this doesn't make a lot of sense to me. As stated by management, future acquisitions will be funded primarily (quite likely completely) from cash flow and Sandstorm's revolving line of credit, which the company will be in a position to pay off from income alone within a year or so in the unlikely event of a major downturn. The consolidation creates no increased need whatsoever to dilute share holdings in the future, since cash flow, market cap and all other relevant factors are UNCHANGED. On the contrary, since a company's ability to raise capital is largely predicated on the perceived strength of its stock in the market, by your own logic, if the stock price is higher due to the consolidation it should make raising capital without any further dilution EASIER rather than more difficult. (This is in fact exactly the dilemma facing Sandstorm's prospective new streaming partners: they need to raise capital at the same time that their stock prices and market capitalization are weakest.)

      It's unfair to say that the consolidation indicates that management thinks that retail investors "aren't worth squat." Early investors like ourselves will benefit more than anyone from institutional investors' ability to participate in Sandstorm's success even sooner than we anticipated. Anyone who has skin in the game is entitled to their opinion, but if the consolidation is such a poor decision, I would like to hear a reasonable explanation of how a person of Mr. Watson's experience and knowledge of his business could be guilty of such a grievous error of judgement. If you believe that it's simply to free the company to issue massive amounts of new shares, you'd really better sell all your holdings (to me) immediately.

      z.

      • 2 Replies to zentrarian
      • Z,

        I love and respect you tremendously, along with everyone else here.

        And healthy discussions are important, because we can't always be cheerleaders all the time. There are positives and negatives to this company. That said, no one has even made a valid point to why we need a s/p at $9, based on yesterday's close.

        I'm guilty of this: when someone is not exactly happy at the moment, raises their issues and someone (me included) goes on to say, if you're not happy sell your shares to me. Now, I understand where those folks were coming from and I'll never say that again to anyone. If I didn't have a stake in this company, then I wouldn't have a leg to stand on. But, since I do own part of this company, am I not allowed to say what's on my mind?

        Simson, no one knew that the "plan" was for a share roll back. Management has never discussed this before.

        Later on down the road, if y'all don't think that equity will be issued to help finance new deals, better think again. That's gotta be in the "plan".

        Once I'm able to, I'll convert my warrants into commons, then the money making begins.

        I truly do wish each and everyone of you luck, but know after the uplist and when the s/p is dropping, I'll be on the other side of the trade. I'll never bash, because that's childish. But, I will go with the trend weather it's up or down.

      • Z, I agree with your position completely.

        One additional point, the term "dilution" is often used when additional shares are sold by the company to raise cash. I understand that in many (most?) cases when companies raise money that way, it does in fact dilute exiting shareholders' value. However, hypothetically, if the number of shares are doubled, but the cash is used to double the value of the company, I don't see how that is dilution. True, as a percentage of the company one owns would decrease, but in my book, half the percentage of twice the company is equivalent. Besides, I've never owned enough shares to even contemplate it as a percentage. For me, it has always been the number of shares, and dollars per share, and as long as the product of the two numbers are the same, or increases, I'm happy. Trin

    • My thoughts exactly. T&C I had written that I felt a little betrayed but I erased it because I did not want to appear negative and I'm not because I have made very good money with this. the big bad world of the Amex will present its own challenges. I got a double with my shares which is great but I thought there was the capacity for a 10 bagger with patience and a good market. I got an 8X with TNX in 2005 but only had 8,000 shares but anyway I never look back and I will keep my warrants.
      I appreciate the honesty on this board. Right now the market is very ugly and the political situation for miners is dicey so in that respect SG is a very good company with good leadership. I just wish they would have had a little more patience.
      Any word from drumgirl or Spence.
      GLTA Lissa

      • 2 Replies to lissadellfarm
      • I am happy that you made some very good money Lissa. :)

        And, right now betrayed is exactly how I feel. After the uplist, I'll make my $ goal with this company on the upside and on the downside. My trading account is fully marginable, so I can short any company on a major US exchange.

        I have a feeling that management will consolidate shares in SME as well. So, I'm stocking up on that one in anticipation of a roll back, to where I'll be sitting on a outstanding share count when a roll back happens. Then I'll trade on the upside and on the downside with that one too.

        Everything as far as share roll backs, future dilution, private equity financing that is happening here and will happen here, plan on SME doing the exact same.

      • I am happy that you made some very good money Lissa. :)

        And, right now betrayed is exactly how I feel. After the uplist, I'll make my $ goal with this company on the upside and on the downside. My trading account is fully marginable, so I can short any company on a major US exchange.

        I have a feeling that management will consolidate shares in SME as well. So, I'm stocking up on that one in anticipation of a roll back, to where I'll be sitting on a outstanding share count when a roll back happens. Then I'll trade on the upside and on the downside with that one too.

        Everything as far as share roll backs, future dilution, private equity financing that is happening here and will happen here, plan on SME doing the exact same.

    • >The institutional investors that y'all are cheering about will drive the s/p up with buying, yes we will all benefit from this (short term), but when a financing comes around (and, it will happen), I can almost guarantee that those same institutional investors that you guys are cheering about will sell and turn around and short this company for all they are worth, thus making money on the downside, then near the bottom after dilution, they will start buying again.<

      TC, pip pip hurray, pip pip hurray, pip pip hurray... Right on. The Truth is the Truth. Hey folks just look at whats happening to FTR (Thats right Frontier Telco). Shorted like you would not believe. Happens all the time. Time to get REAL.. ~ Shiny

      • 2 Replies to shinyobject_2
      • When I came across Sandstorm, I was delighted by what I saw.

        Let me explain. I have invested in other excellent precious metals companies with good management, excellent balance sheets, no debt, and increasing profits over time.

        Many of the companies in this sector have seen their share prices hammered. There are massive swings in the price prior to metals prices being slammed, or prior to options expiration. In addition, there are hedge funds who are induced to go long metal (gold/silver), and short the miners - resulting in the miners getting slammed.

        There is even one company where certain entities have shorted the stock (to the tune of $250 million), and then started various rumors to bring down the stock price down.

        Naturally, the SEC is nowhere to be seen.

        So, there is a great deal of corruption and manipulation going on in this market.

        But Sandstorm seemed immune. Perhaps it was the low share price. Perhaps it was the fact that shares were thinly traded. Sandstorm stock acted the way a company that is making money should act.

        I truly hope that we don't see games being played with the stock price after the reverse split (ie: somebody buying a ton of put options, and then massively naked shorting the stock to drive the stock price down - losing money on the short position, but more than making up for it on the puts).

        In any case, I'm long on this stock because I believe it has a bright future ahead.

      • The R/S does effectively nothing to the fundamentals of the business. To say otherwise is absurd. The only credible argument (I can think of right now) against the R/S is delaying it because of compliance costs associated with up listing. In other words management will have to spend more time or hire someone to prepare the financial statements to a higher standard than the TSXV maintains as well as other up listing costs.

        Other than this slight negative, what the R/S does is increase the liquidity of the company, allow more people to short it, trade options on it, and for US investors it will give the options to convert warrants. It will likely lead to a multiple explanation and upward pressure on share price in the short to medium term due to increased liquidity etc.

        Even if it doesn't effect share price, having the ability to trade in new ways, as listed above to me is a POSITIVE and not NEGATIVE. This will help every current holder.

        I have seen many people make faulty arguments against management and baseless claims. If you are not happy, SELL your shares and warrants to me.

        When I did my DD over a year and a half ago and got in, including traveling to Vancouver and meeting management, it was obvious this was the plan. Now that is happening you feel betrayed??? They are following the plan that was in place for years. It is a good plan and it will help this company achieve a fair valuation in the market. I look forward tot he up listing and consolidation and to the eventual up listing on SME.

    • Yes, TC, I am quite familiar with BB3. He did as you said with HL, but didn't learn from his experience. He switched over to GPL, and did it again! He borrowed money from family and friends, then bought on margin! Needless to say, he lives a very stressful life.

      The worst thing that can happen to a newbie in the stock market is to make a profit on the first few trades! One gets the false impression that he/she understands how to trade, so why not increase the profits by trading on margin? A lesson to learn from BB3, though he has yet to learn it himself, never be too sure you're right. Having gotten in during the early stages of the latest bull market in PMs, no matter when BB3 purchased, the stock went up... or if it went down, he bought more, and soon the price went back up. Seems so simple that anyone can do it. But when the inevitable protracted decline happens, even within a bull market, and one keeps "buying the dips", eventually the margin limits are reached, then the margin calls start to come. All the paper profit evaporates, the margin debt grows, net assets shrink, and one is forced to sell into weakness.

      I retired the first time about 29 years ago because my stock market abilities trading on margin were so good that I could "make a good living" doing it; or so I thought. Several months later, I had to get a job! Some of that was just bad luck, but most of it was my own hubris. I am much more humble now, and doing much better too. GLTU, GLTA. Trin

    • Too late.

      Vancouver, British Columbia, May 4, 2012 -- Sandstorm Gold Ltd. ("Sandstorm" or the "Company") (TSX-V:SSL) announces that its shareholders have approved the proposed five (5) for one (1) consolidation of the Company's common shares (the "Consolidation"). The shareholders voted in favour of the Consolidation at the shareholder's meeting held today.

      It is important to note that the Company's issued and outstanding listed warrants (the "Listed Warrants"), which are currently traded on the TSX Venture Exchange under the symbols SSL.WT and SSL.WT.A, are not being consolidated. Following the Consolidation, each five (5) listed warrants of SSL.WT (expiring on April 23, 2014) will entitle the holder to purchase one post-Consolidation common share at the adjusted total exercise price of US$3.00. Each five (5) Listed Warrants of SSL.WT.A (expiring on October 19, 2015) will entitle the holder to purchase one post-Consolidation common share at the adjusted total exercise price of US$5.00.

      Subject to regulatory approval, Sandstorm anticipates to complete the Consolidation on or about May 9, 2012. A detailed press release will be issued with respect to the Consolidation upon its completion.

    • This is the "cleanest" board I have found in the metals blogosphere. Thanks to everyone here for keeping it that way.

      When people come with bad attitudes and attempt to break up reasonable threads (I know its hard) but simply do not respond.

      My take on the R/S is that it doesn't matter. The market will always discover the price split or not and if you're long,
      then price fluctuation shouldn't matter anyway, unless you're planning on adding,
      in which case a fall in price should be a welcomed event :-) IMO.

      The thing that has more affect on the share price of streamers and miners is the price of the metals themselves. We are approaching a turning point in that department in the next couple of weeks and this tech analysis says it could go either way.

      http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/4_Yamada_-_Gold_%26_Silver_at_Critical_Points_in_This_Cycle.html

    • T&C, Wow you are very unprofessional in your personal comments. I generally do not comment negatively; however, in your case, I'll make an exception. Why is Sandstorm Gold consolidating the shares? Simple answer: Because this was Nolan Watson's plan all along. He wants the shares clearly trading above 5; 10-15+ would be even better. I manage a fair amount of money and for some friends/relatives I am currently restricted from trading Sandstorm Gold due to the brokerage accounts they use (USAA Brokerage is one that does not allow the purchase of most grey/pink sheet stocks). The consolidation and up listing will make buying Sandstorm Gold a viable choice. If you dislike the actions of management, why not sell and move on to a better stock? If you chose to retain shares, bashing management when the majority of holders voted to pass the proposal is not very productive. Just my 2 cents. Disclosure: I voted over 250K shares for the consolidation.

    • town_and_country_clothing town_and_country_clothing May 6, 2012 11:17 PM Flag

      I am far from unprofessional and I did not once bash management. I merely spoke what's on my mind. As part owner of this company, I am very much entitled to do so. I make no apologizes for not waving my pom poms for a consolidation that I do not believe, when a little patience would have got us to the AMEX.

      I would wager that the majority of share owners with 20k to 50k, or even less, voted against the share consolidation.

      Please do not tell me to sell, ever, because I didn't go with the majority. You have your stake in this company and I have mine. Still, there is no sense to have a s/p above $8 to $10 to be listed on the AMEX. As I've mentioned in a earlier post the requirement is quite clear and any institutional investor can purchase any company that is listed on the AMEX, regardless of the share price, if their individual requirement is $5 (because that is not a rule set in stone), then they either wait until the s/p meets their requirement or they don't buy, it's as simple as that.

      Unlimited, Z and others whom I have the deepest respect for made very good points about why a offering probably won't be needed. I still have that in the back of my mind that at some point it will happen. I would have never in a million years thought that a consolidation would happen and neither did most people.

      That said, I believe that this company has a extremely bright future, but the trend will be my friend, if you catch my drift.

      GLTU

 

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