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FutureMoneyTrends.com: Thank you for joining us at FutureMoneyTrends.com. We're here with Nolan Watson, he's the CEO and founder of Sandstorm Gold and Sandstorms Metals & Energy. These are two very high quality junior resource stocks that are very unique because they're a lender for the resource sector. He actually previously worked for Silver Wheaton, which I know everyone will know. Nolan, thank you for joining us.
Nolan Watson: Thank you. Thanks for having me.
FutureMoneyTrends.com: Nolan let's start off. First of all, we're at the Casey Summit. You are on their NexTen list, this is a special list for people who are under 40, correct?
Nolan Watson: Yes.
FutureMoneyTrends.com: So you're under 40 years old, very successful, you've already made these guys a lot of money, and your company is unique, I don't think anyone else in there is a royalty company. So if you could just introduce people to what is the idea of a royalty company. Because most people when they buy a gold miner they buy these guys who are drilling holes and they're mining it. What do you guys do at Sandstorm Gold?
Nolan Watson: Well at Sandstorm Gold we are what you would call a streaming and/or royalty company. So we have right now nine gold streams from mines around the world. The majority of those gold streams are in production. What a stream effectively is, is we'll give a mining company money on day one so they can go build their mine. What we get back in return is a contract that allows us to buy a certain percentage of their production at a fixed price per ounce and we go on and sell it at spot. So the contract might say something like: 'We get to buy fifteen percent of their production at 500 dollars an ounce and every time they give us an ounce we buy it at five hundred and sell it the same day for spot price'. And so we have this stream of cash flow coming back because we're buying and selling the gold from various mines around the world. And that's why we call ourselves a streaming company. But we also, we just actually closed the acquisition of a royalty company as well, so we now have 25, I believe, royalties around the world, and those royalties a number of them are paying cash flow as well. So it's a good place to be to have positive cash flow in this environment.
FutureMoneyTrends.com: Yeah, how does it work when gold collapses the way it has, from 1900 down to 1200? How does that affect your agreements? Do you have something in there? What if the mining companies who you've loaned money to, they're not even profitable... How is their obligation then to you? How does that work?
Nolan Watson: Yeah, so right now 84% of our production comes from assets that have cash costs in the 600 dollar range and all in sustaining costs when you include exploration and GNA and all those types of things in the sort of thousand to thousand fifty dollars an ounce. So, even in today's gold price, which has come all the way down to 1300 dollars an ounce, the vast majority of our partners are producing quite a bit of profit actually. And that's actually fundamentally what we're trying to do when we go and do these deals. We get calls every week from companies that we have to say no to because we know that they're going to be high cost operations. What we are looking for, what our technical teams are looking for, what our corporate development guys are looking for are what's going to be low cost producers. So that's what we focus on.
FutureMoneyTrends.com: How about the capital markets in general for the junior resource sector? How are the mining companies doing as far as money and cash on hand.
Nolan Watson: Generally speaking, they're doing terrible. It is absolutely brutal out there. There is almost no cash to be had, there's a number of mining companies trying to raise money that cannot raise money. There's been a record low number of financings, it's a record low amount of financing rates this year. It is very very dire circumstances. A lot of companies are going insolvent. Even this morning actually as I was walking through this conference here, I received an email from a bankruptcy firm that is putting various gold assets up for auction and wanting people to bid on insolvent gold mines. It's really really bad out there. Now having said that, I think there is positive signs for bottom-feeding investors who recognize that valuations are low, and right now there are deals to be had in the mining industry, it's just nobody wants to be first. They don't want to try to catch the falling knife.