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 [Music] I'm Charlotte McLoud with investing news.com and here today with me is Nolan Watson president and CEO of Sandstorm Gold thank you so much for being here great to have you oh thanks for having me appreciate it really really good to be speaking with you I think our audience will probably be pretty familiar with you and with Sandstorm but just since it's our first time speaking I thought we could start with a brief introduction to you your background in the mining industry and your work now at

Sandstorm yeah well my my background I've been in mining my entire career uh started want I say 23 years ago as a a young Captain Finance guy auditing companies like ieno mins and traveling world to molia and Myanmar and auditing those Minds like go too and things like that um I did a CPA a CFA and as soon as I qualified I started working in a company called wheat Burger minerals which very quickly became a company called goark and I was there on the ground floor as that company grew up eventually it sold

itself off to numont but in the middle of that they started up this company called Silver Wheaten and I was the first employee at Silver Wheaten and the idea behind creating silver Wheaten was to create like a royalty company but more chunky streams of streams and royalties on mines around the world and um we built that company I was their Chief Financial Officer in my 20s actually I think I still hold the world record for being the youngest Chief Financial Officer ever of any multi-billion dollar New York Stock

Exchange listed company and so I did that uh through my 20s we grew that to about a $5 billion company and then I left and I started up Sandstorm Gold and we've been building Sandstorm ever since silver Weeden has turned into one of the world's largest precious metal companies called the weak precious metals and uh but now at Sandstorm we've been growing it for years uh we're New York Stock Exchange listed we're about a 1.8 1.9 billion market cap company and we do effectively the same thing focused the

vast majority of of what we do on gold with a little bit of silver a little bit of copper a mosty gold okay quite quite a background with a lot of familiar names in there so thank you for for going into that we're definitely going to get into details of what the company has going on but I thought we could start by taking a look at what's going on in the gold market right now because that's a very exciting Hot Topic for for a lot of people so maybe you could give me your take on where we're at right now

in in the cycle for gold yeah gold if you would have asked me what I thought about gold when I started in my career uh versus what I think about gold now it has changed dramatically uh I think when I started it in my career I didn't really understand gold you know I knew that it was valuable I read the Bible a number of times I know C's reference in the Bible I knew it had something related to De with money uh didn't and you know jewelry didn't value it that much I think when I got my first

job offer they said we're going to give you stock options to the company and I said I don't really think those are worth anything because gold has already gone $280 an ounce to $330 an ounce so it's run is over and and boy was I wrong but um I I do consider myself an intellectual person I validor of of just about every institution I've ever been in and I think deeply and thoughtfully about things and as I've gotten older and wiser and have been in the gold industry in my career I have understood

it from multiple angles in ways that I think even regular people uh don't and even veterans in the industry sometimes don't and I believe that gold not only has it been a fundamental part of human society and human monetary systems since the existence of humans it took a brief pause over the last 60 years and it has come back now and it is going to be and will be in the future the backbone of the world's Financial system and so I sit now on the board of the world's gold Council I'm

actually um chair of the audit Committee of the world go Council and I sit on the gold 247 committee and I sit on the advisory committee of the world gold Council and uh although I can't talk about all the things that we're doing publicly that what I will say is some of the things that we are building and putting in place now excite me massively for the role that gold will have in the world so when you ask the question where are we in the cycle I think that the cycle has been reset up and that countries like China and

India and the rest of the world now know that the US dollar its days not are numbered but its days uh as the world's dominant Financial system are dissipating and will continue to dissipate and will continue to erode and that gold is taking its place and uh and we're trying to create the legal infrastructure for that around the world in all of the countries and uh I'm pretty excited about what I see so gold prices has gone higher I think it's GNA stay higher I think it's gonna keep

going higher yeah very fascinating to hear how your perspective has changed over the years and I know you talked a little bit about some of the elements that are driving the gold price now but just to add on a little bit anything else you would say about key go price drivers that you you're keeping an eye on at the moment yeah whenever you think about price drivers you have to think about time Horizons so I'm always reluctant to say what's going to happen in the next two years because anything can happen in

the next two years and you know you get a liquidity crisis you got a Donald Trump keeps doing what he's doing and who knows what's gonna happen to to World Financial systems in in the short term and that can cause unexpected price fluctuations but in in the long term the fundamental driver of gold is that there there is an increasing population in the world there is increasing wealth per person in the world and there is a very limited number of Golds and it is going to be and is starting to be the financial backbone of

the world already uh I don't have time to go into it on this but I know a lot of people think about Bitcoin and and those types of things as as Alternatives but one day I plan on giving a speech on a an intellectual takeown on technology limitations of Bitcoin once quantum computers come into effect and why they will be worthless and uh an asset that is backed by nothing in a quantum computer world is worth nothing but an asset backed by gold is still worth gold and so gold is going to be the thing I

think that outside of the US dollar that that people gravitate towards and so we're at sassor we're trying to buy as much gold in the ground of other people's minds as possible because that's what we do yeah yeah I I would love to someday hear more on on the whole Bitcoin angle there because that's that's very interesting but we'll stick with gold today for sure so very strong outlook for gold clearly as you've been saying I know that though when people look at the

cold stocks there is still some disappointment that we haven't seen a more broad based breakout there so of course some companies move are moving especially the larger companies but what would you say about that situation because I know a lot of people are are curious about this this disconnect that seems to still persist was funny you asked that I literally had a call with one of my best friends about an hour ago and he's like Gold's almost at $3,000 he's like do you think it's still make

sense to buy gold companies andan he's not at all in the gold industry he doesn't think about gold he he invests in in other things but uh I said would you believe me if I told you that if you assume that gold was going to drop from $33,000 an ounce to $1,700 an ounce that the present value of future discounted cash flows of what Sandstorm is worth is still higher than what our share price is today and he's like what like yes the the world is pricing in the Assumption of a crash in the gold price

and I think therein lies the opportunity which is if the go price is it doesn't you don't even have to convince yourself that it's reset itself to 3,000 you just convince yourself that it's reset itself the $2,200 there's a number of gold companies as Sor included that are worth way more than what they're trading at today that's really interesting to to hear the numbers put out like that and one of the things I I wanted to ask on the note of gold stocks is I hear a lot

that generalists just aren't interested in Gold stocks right now but I also know when people are coming into the gold sector a royalty company might be among the first things that tool to take a look at because it's less risky so do you find yourself seeing that happen and do you find yourself doing more more education to people who are new to the sector what does that look like for you yeah so the large generalist investors the institutional investors really ran away from gold kind of in 2014 15

onwards and sort of stayed away for for a very long period of time and haven't had to think about it since gold such a small percentage of the overall benchmarking that they get benchmarked against that they really don't have to think about it unless it really starts overperforming materially and continues to overperform for a period of time I think we're at that inflection point now so I use an example uh there's one of Canada's largest pension plans I won't name them by name but one of Canada's

largest pension plans totally disassembled its gold investment investing team about 10 years ago and in had no gold Investments and I was recently at uh the beo conference in Florida and met with them and they've said that they've reassembled an investing team in Gold that they have taken a small 2% position in Sandstorm and they're building a portfolio now again and they're trying to figure out what they buy more out abely including Sandstorm and so you're starting to see the generalist investors go okay we've

been out of this for too long it's time to get back and I'm hearing that more and more and being a royalty and streaming company like sandstorm we're the first types of companies to see uh flow from generalist investors because we are the most Diversified the last thing an a an Institutional generalist investor wants to do is get fired because they bought a gold mining stock that only owns one mine and they're not a technical person and they didn't understand the mine right and they'll

lose a bunch of money and so it's much safer for a jist investor to own a royalty company or streaming company because we're we're Diversified you know s we've got 240 streams in royalty around the world 40 which are uh which are producing right now and so we're very very Diversified and no generalist investor is going to get fired because they invested in SAR and that something went wrong with one of our minds and um and so we're seeing the inflow of those General investor dollars now like we

haven't seen them in a lot of long time okay okay good to get your thoughts on that so royalty and streaming space this is a first stop for generalists often who are coming into the space and as we learned from your introduction it's still a a part of the mining industry that's relatively new so but there are more companies emerging in the royalty and streaming space so the other thing I wanted to ask you on that note is how people can take a look at the different royalty and streaming offerings and

determine which companies are them to look at yeah that's a really tough question to answer you know I I would say that the amount of royaly and streaming companies ABS flows people's memories are really short I've been in the industry basically as long as it's existed and they forget that there were periods of consolidation you know there's a period of time where silver weaton bought out a company called Silverstone and with Rog gold bought out IRC royalty and Frankin Nevada you know

took out a company called gold Wheaten that I happen to be on the board of and so you know they see the number of companies grows and then the industry consolidates you know they forget that you know companies like Sandstorm have bought companies like Nomad and we we bought companies like Premier royalties and and the company called gold royalty and so on and so forth so the industry does consolidate itself over time it's been a little while since there's been a wave of consolidation but um I truly

believe we're we're on the cusp of another wave of consolidation within the the big six you know there's six largest streaming realy companies in the world that matter I think there's going to be some consolidation in those um below Sandstorm so we're the sixth of the big six below Sandstorm that's it's kind of a cliff there's almost nothing below us that is uh anywhere near a billion dollars in size in precious metals and so you've got much smaller companies

like metala and gold royalty and Elemental and and things like that but they're they're really really tiny companies that don't have access to large amounts debt nor should they because they don't have any material cash flow and their share prices are trading below their inherent and asset value so if they raise Equity to buy anything then it's deluded to their shareholders so they're kind of stuck as and in terms of a value proposition for be investing in them is a really really

hard I mean if you can't raise equity and you can't low money how do you grow and I don't know I don't know the answer to that and so I I don't see them as great value propositions from an investor perspective well and interesting to hear that you seeing perhaps some m&a among those big six companies I I don't know if there's anything else you can add there no I would say that that uh all of the CEOs of the big six we talk to each other regularly we we know each other

we've been doing this together for a long period of time um I'll just make a general statement about m&a in general and I think it applies specifically to the the royalty space is that CEOs don't like merging or selling their companies when their share price is low because it makes them look stupid when when gold prices go up and share prices go up and they can sell their their company at a higher price or merge at a higher price it makes them look smarter and therefore it increases

the probability with which they're willing to make those decisions so I just I think at this environment we I I think there's still more to run in this gold price environment I think the equities have a lot of catching up to do I just am foreseeing a future where those equities do catch up and then people start wanting to transact yeah yeah I think that's very fair of course everybody wants to look smart when they're doing deals okay so that'll be a space to watch let's look over now more

closely at Sandstorm I know the company recently released 2024 results 2025 guidance there's there's really a a lot to unpack there I don't think we have time to go into every detail but are there any key highlights that you would pull out for people to know about I would say that you know we're very Diversified last year we had about 72,000 Golds equivalent royalty in streaming outes this year 2025 we're expecting about the same the year after that about the same but what's what's

not in those numbers and what you can't see in those numbers is that we have invested an enormous amount of capital in some of the world's highest quality development projects and so there are several multi-billion dollar mining companies building multi-billion dollar assets some of the top assets being developed in the world that we have streams and royalties on and so our production if all I do as CEO is just sit on my hands and be patient our production we expect it to more than double over the next five years based on

contracts that we already have so one of the questions I get from people is like well where are you going to go and buy next and I I kind of have to say is honestly I just want to buy back our own shares in the market because we don't need to buy more streams and royalties our production is going to to more than double over the next five years it'll make us the fourth largest streaming and royalty company in the world once those mins are built it's mines like uh o tooy and hod moden and glenor Mara project

and Ian hose plat Reef project those types of things once those get built and our production is up there we're just going to have this fire hose of cash coming at us and so right now we're we're trading in a a discounted value and we literally are just in the market buying back our own shares every day I believe the gold price is high and going higher I believe our production is going to be doubling and our Shares are on sale and so we are putting our money where our mouth is and we're we're in

the market right now buying 30,000 of our own shares every single day and cancelling them every single day okay yeah you certainly anticipated my question of course I was going to ask you if you're going to be out there making Acquisitions so we won't go into that but yeah I did watch I think one of your recent investor presentations where you're kind of explaining how you took on debt to make all these Acquisitions and now the focus is really paying down that debt doing the share BuyBacks

anything else you would add on how that process is is playing out no what I would say is two and a half years ago we swung really big to buy some of these assets and some of the things that I just talked about and at the peak we had $640 million us of debt May some people a little bit of nervous but we I'm very conservative person we very aggressively paid that down debt down very quickly we've already got it down to 340 Million last we reported and uh what people forget is in addition to our

portfolio of streams and royalties we actually have a portfolio of Investments and other money companies debt and equity and that is generating us a yield and income that is higher than our cost of the $340 million of debt and our our portfolio investment and other things is about $330 million so they're about uh equal they're about offset and the the income generation here is higher than the debt payment over years so from a debt perspective we don't we don't need to pay off for de anymore that our our

portfolio of things that are not streams and Realties is covers the cost of that and as we shrink it over time that's our plan is to shrink our portfolio Investments other money company's debt and Equity we'll just use that to pay off the debt so from a a free cash flow perspective the cash flow generated by our streams and royalties is all free cash flow our our EIT Deb that our portfolio is generating this year should be over $150 million us this year alone at today's gold prices as our correction

doubles you know that number goes closer to $300 million us per year and you and and we can maintain that for a very long period of time because the mins are high quality mines with long mine lives and uh when you when you think about that your market cap is only 1.8 billion doll us if we're cash can cash flow $300 million a year you it's like six times cash flow I mean you you want to buy Apple stock you have to pay I think last time I checked it was 35 times cash flow I mean we're one

one that and uh I think I think our business is better yeah I think it it helps when you lay out the numbers in that way it's it's really important to understand so the other thing I wanted to ask you about so I've I'm just back from pdac where of course one of the main topics as it often is is how tough it can be to get financing in the mining sector if you're an exploration or development company so I wanted to just as we're starting to finish up here ask you about the role

you see royalty and streaming companies playing in that part of the market yeah since I've been in this industry things have changed a lot when I first got into it there were lots of banks willing to lend money companies money and including development companies and there were a lot of small Equity shops that were capable of raising real amounts of equity for development companies a lot of those Equity shops have closed and and or Shadows with their former selves the amount of equity that uh can be raised

by development companies has just evaporated I mean I gave a speech number of years ago called where did all the equity go and you know part of it is the things I've talked about but part of it is structural changes that have happened in the market where a lot of money has been moved out of actively managed mutual funds into passively managed ETFs if the money is in a mutual fund a CEO like me can go to the mutual fund manager and say I'm doing an equity raise I want to I want to raise money

for my uh can you please write a check into this Equity financing the mutual fund manager can decide yes or no an ETF cannot they don't pick up the phone there's no number to call they don't rate Equity checks they just buy you if your name is on a list in an Indy and they don't if your name is not on that indic and so there's nobody to call in these pools of capital to raise money so if you're you're a mining company and you're trying to develop your project or move it

forward and and or build a mind there's nobody to call for L this capital anymore and so uh the streaming and royalty space is stepping into that void we are the people you call when you need to developed asset yeah I think that kind of underscores a lot of themes that probably mining companies and investors out there are feeling so thanks for going into that I'll put it back to you one more time before I let you go any any final thoughts you would leave investors with right now no every investor has their own and I'll

I'll I'll leave them to it I I would say if there's one thing that I've learned or one piece of wisdom I've learned in the mining industry it's that the best way to make money is to Arbitrage time which is the market is so shortsighted and so focused quarter to quarter that really amazing things that aren't going to happen for five years are sometimes valued at zero and you can make really amazing investment returns in this industry if you're willing to be a little bit patient okay I think that's

a very nice note to end on so thank you for coming on to talk today about gold and about Sandstorm this is really informative for me oh thank you of course and once again I'm Charlotte McLoud with investin news.com and this is Nolan Watson with Sandstorm Gold thank you for watching if you like this video make sure you hit the like button and subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below [Music]