Sandstorm-gold-investing-in-gold-streams-and-royalties https://goldinvestingnews.com/42791/sandstorm-gold-investing-in-gold-streams-and-royalties.html
GIN: That’s a positive way to end each year. Now, on the not so positive side, 2013 also brought the collapse of Colossus Minerals. What did Sandstorm learn from its investment in Colossus?
NW: I think we’ve had a number of takeaways. The number-one takeaway we’ve had from it is from a due diligence perspective. Most people refer to what they call fatal flaws — a thing that if it happens, then it’s not a mine at all. We were certainly looking for all types of fatal flaws, but then there’s also a second-level type of risk — things that you go, “yeah, that might happen. It could happen. If it does happen though, they’ll just be able to raise more money and fix it. ” For example, water was a problem. We said, “water is a problem. It can absolutely be dealt with. It just needs some more time. It needs more boreholes and more pumps to pump the water out and that will be fine. It might cost more money, but they’ll be able to raise it.”
Lo and behold, 2013 came along and no mining company in the world could raise any amount of money. Water became a problem and Colossus couldn’t raise the money. Water is still a solvable issue there, but they got killed because they needed the money during a time when no one could raise any money.
We decided that we no longer want to count on the capital markets when we make an investment decision. We want to invest only in assets that we think either have enough money to get into production or the potential risks are small enough that we can cover the difference.