Sandstorm Metals & Energy
(6 pages of text)
A buy-side analyst for an investment company that has a company-specific, fundamentals-based investing philosophy is considering whether to include a small-cap Canadian company engaged in commodity streaming contracts in the mining sector as a significant investment. The analyst must first learn what commodity streaming involves to better understand whether the company has a viable business model. He also has to research the copper and natural gas industry outlooks. He must then develop a net asset value model to determine an appropriate valuation for the company.
- To provide details on commodity streaming contracts (novel financing tools in the mining sector) and to examine these contracts using option theory.
- To discuss the pros and cons of different contracts, including consideration of moral hazard effects.
- To determine how a net asset value (discounted cash flow) firm valuation can be obtained.
Mining, Quarrying, and Oil and Gas Extraction
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