start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)

4/23/15

Regarding stupid errors of precious metals streaming companies

The point is this: We all make mistakes, all of us, errare humanum est and all that jazz. I'm a fool, you're a fool, he's a fool and she's a fool over and over again. However, not all of us put ourselves into the position where your errors cost a lot of people a lot of money, which is why of course successful businesspeople who make it to CEO level earn and deserve rich salaries. When it comes to the errors of judgment made by streaming companies they are by no means confined to Sandstorm (SSL.to) (SAND) as noted in the post earlier this morning either, so by way of example...

Pierre Lassonde over at Franco Nevada (FNV) seems to have a weakness for the Cordillera del Condor in North Peru/East Ecuador. First he sponsored the lamentable and now defunct Dorato (ex-DRI.v), now he's getting hot and sticky over Odin and Lundin Gold. Of the three I'd give LUG a chance of becoming a winner, but no way do I buy at its current price. For another, his pop at diamond riches via Olivut turned into a moneypit of nasty. But the thing with Lassonde is that his high-risk punts may not turn out so well sometimes but he gets the big decisions right. You can tell by the FNV share price and market cap growth. The guy makes mistakes, he also makes a holy crapload of money for his backers and himself.

Moving on, let's talk about the way Silver Wheaton (SLW) has decided to sponsor the geological anomaly owned by Sandspring (SSP.v), which just today got its deal adjusted to give SSP more time and a bit more of SLW's money to play with. The thing here is that SLW started as a brilliant business plan and is a rock solid company, it can afford to throw a few risk dollars at a project or three these days and the amount of cash it has exposed to SSP isn 't much more than a rounding error.

However, that famous Seneca phrase "Errare humanum est" has a second part to it, "Sed in errare perseverare diabolicum" and that's the problem with Nolan Watson. If you make a few small errors, so be it. If you make a big one well that's not good as a CEO, but one in a singular can be forgiven if subsequent deals make it into the win column. But the way in which the SAND investments in Colossus Minerals, Luna Gold, Metanor and True Gold have turned out are ample evidence of serious and repeated strategic stupidity at the highest level at Sandstorm and when you're running a U$414m market cap these are major corporate damage mistakes too, not the SLW rounding errors on (I suppose) understandable higher-risk dicerolls. Ask yourself if you're going to trust Watson's judgment and the chances of success in the next deal he decides to make; trust him to the extent of putting your own money into his hands?

And one final thing: I'm 100% sure that Pierre Lassonde doesn't care a jot when this pissant blog (or anywhere else, often far less pissant) points the finger at his dealmaking errors. Perhaps, just perhaps, that attitude to criticism is one of the reasons why he's become so successful. As my Eng.Lit professor would say, "Discuss".