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Wednesday, May 24, 2017

Is this why Sandstorm Gold is dropping?


So Sandstorm's lost a third of its value since the story got out that it was buying Mariana.

Let's see if I understand this.

Mariana owns 30% of the Hot Maden project in Turkey, and Sandstorm is putting many eggs into one basket by taking Mariana's 30% in a buyout and then trying to convert that into a stream.

OK, so number one, if Sandstorm only wants a stream and not mine ownership, then I'd think they should have worked out the stream ahead of time. Otherwise, they're counting on their Maden partner's good nature to seal this deal after buyout. Otherwise, they'll be building a mine, which they don't have any expertise at, as the Colossus affair demonstrated. They're giving up stream negotiating power by buying into this project.

But hey, maybe their partners are good guys? Well, let's see what Google tells me.

Apparently, their partners are Lidya Madencilik Sanayi ve Ticaret A.S.?

They're a subsidiary of Çalık Holding A.S.?

Çalık Holding's CEO from 2007 to 2013 was Erdoğan's son-in-law, Berat Albayrak, now Turkey's Minister for Energy and Natural Resources? Apparently Wikileaks asserts they published a bunch of his private emails, alleging that he was helping smuggle Islamic State oil into Turkey? But Turks can't read about this because Erdoğan has banned the media from reporting any of it, which isn't hard since he and Albayrak have bought much of the media anyway, via Çalık? And by the way, Berat's brother is still on the Board at Çalık?

As a junior mining investor, at this point I give up. I don't bother trying to corroborate or disprove any of this stuff. I don't care whether the Islamic State stuff is true or the other allegations about Albayrak are true: I only care that Mariana's majority partner was once run by the son-in-law of the president of a third-world country aligned with Russia. Given typical third-world political economy, that alone is enough to give this deal the cooties.

I liked this movie better the first time I saw it, when it was called Simandou.

And so Sandstorm is buying 30% of a mining project in Turkey, thinking that these partners, i.e. possibly the family of president Erdoğan, are going to happily cut them a fair streaming deal. And that they'll actually get paid for the life of the deal.

I don't own Sandstorm now, and I guarantee you I won't after reading this.

Nolan, if you wise up and cancel this offer, which you should if you love your company and its future, then please send me $50,000 for my consulting contribution. It's money well earned, it'll save you millions personally, and your shareholders even more if you're into that sort of thing. You can get in touch with me thru Daniela Cambone.

It's funny that just two weeks ago a guy who should know something about third world governments and mining was calling Sandstorm cheap at $3.40 and the Mariana deal a good one.

1 comment:

  1. " thinking that these partners, i.e. possibly the family of president Erdoğan, are going to happily cut them a fair streaming deal. "

    That's usually the mistake Westerners make when dealing in areas like the Middle East with parties they think have a lot of clout.

    Very, very few of these parties act honorably.
    I too expect Sandstorm to get shafted.


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