Hi Lou,
Is this a good time to get into SSL-X or should I wait for a pullback?
Appreciate your looking into this.
Thanks,
Jim
Hey Jim,
Thanks for the assignment. Sandstorm Gold Ltd. is a company that finances gold mining projects using a method called streaming. SSL raises capital from the market and then invests in gold mining operations for which they receive a percentage of the the gold produced at a predetermined price.
Currently the company has entered into seven gold stream contracts and three royalty agreements, five of which are producing properties. Streaming has gained traction in the mining sector as traditional methods of financing projects have dried up.
What I have noticed is that the company has been getting a lot of play in the media which never hurts when you are in the business of raising money. The Northern Miner, which is the journal of record for the mining industry in Canada, has covered the story extensively, putting the organization and its executives in the spotlight. It would also explain the number of requests that I have received to conduct an examination of the case for SSL. To that end a review of the charts will help you with your decision.
The three-year chart depicts an elegant uptrend with support along the 50- and 200-day moving averages. There have been repeated tests of support but no serious breach. This chart very much looks like a case of buy high and sell higher.
The six-month chart indicates that the current move up needs a bit of consolidation but there seems to be a pennant forming which would suggest a continuation of the advance. The completion of a $150-million bought deal financing on Sept. 7, 2012 and the announcement of a deal with Colossus Minerals Inc. set the stage for the move through $11.50.
Given the evidence presented you could start picking away at these levels and start building a position. You have identified an opportunity with experienced management which has proven it can raise capital and deploy it strategically.
Make it a profitable day and happy capitalism!
Have your own question for Lou? Send it to lschizas@globeandmail.com.
Lou Schizas