Sandstorm Gold Ltd.
SAND
announced preliminary record gold equivalent ounces (GEOs) sold and revenues for full-year 2021.
The company sold nearly 16,600 attributable GEOs during fourth-quarter 2021. This marks a 5% increase from the 15,800 ounces GEOs sold in fourth-quarter 2020. The company generated preliminary revenues of $29.8 million during the quarter compared with the year-ago quarter’s $29.7 million.
The preliminary cost of sales, excluding the depletion for the December-end quarter, was $3.7 million, leading to cash operating margins of approximately $1,570 per attributable GEO. The company generated cash operating margins of $1,630 per GEO in the prior-year quarter.
In 2021, Sandstorm Gold sold approximately a record 67,500 attributable GEOs, up 29% from the prior year’s levels. The figure came within the company’s guidance of 64,000-69,000 ounces. The company reported preliminary record revenues of $114.8 million in 2021, up 23% from 2020 levels. The company realized preliminary total sales, royalties and income from other interests of $120.7 million during the year.
Last month, Sandstorm Gold increased its production guidance to 65,000-70,000 gold equivalent ounces for 2022. The move came with the acquisition of gold stream from Mercedes mine in Mexico. Sandstorm will receive 25,200 ounces of gold over the initial 3.5 years and a 4.4% gold stream thereafter from the mine. This is expected to increase its attributable gold equivalent ounces by 8% in 2022 and 11% in 2023/2024. The company anticipates the Mercedes Stream to be 13% accretive to average cash flow per share over the 2022 to 2024 period.
Recently, Sandstorm Gold closed the first tranche of its $30-million Vatukoula stream and royalty agreement with Vatukoula Gold Mines PTE Limited (“VGML”). This is associated with the gold stream on the Vatukoula Mine in Fiji. Per the terms, the company will receive 25,920 ounces of fixed gold deliveries beginning in January 2022 and will be delivered over 5.5 years.
Given its solid streams and royalties, Sandstorm Gold is on track to achieve 2022 production guidance. The company continues to expect its 2025 attributable gold equivalent production to be more than 125,000 ounces.
Sandstorm Gold is a gold royalty company, which provides upfront financing to gold miners who are looking for capital. In return, the company receives the right to a percentage of the gold produced from a mine for the life of the mine. It has a portfolio of 230 royalties, of which 29 of the underlying mines are producing now. Sandstorm Gold plans to grow and diversify its low-cost production profile through the acquisition of additional gold royalties.
In 2020, miners had to temporarily suspend mine operations per the government mandates to curb the spread of the coronavirus pandemic. Even though mines have resumed operations now, rising cases of COVID-19 Delta and Omicron variants across several parts of the world might lead to further restrictions and suspension of operations, consequently impacting Sandstorm’s results.
Price Performance
Sandstorm Gold’s shares have lost 15.2% in the past year compared with the
industry
’s decline of 16%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Sandstorm Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space include
The Chemours Company
CC
,
Haynes International, Inc.
HAYN
and
AdvanSix Inc.
ASIX
. While Chemours and Haynes sport a Zacks Rank #1 (Strong Buy), AdvanSix carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected earnings growth rate of 104% for the current year. The Zacks Consensus Estimate for CC’s earnings for the current year has been revised upward by 10% in the past 60 days.
Chemours beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 34.2%. CC has gained 22.8% over a year.
Haynes has an expected earnings growth rate of 298.6% for fiscal 2022. The Zacks Consensus Estimate for its fiscal 2022 earnings has been revised upward by 53.2% in the past 60 days.
Haynes beat the Zacks Consensus Estimate for earnings in three of the four trailing quarters, the average surprise being 83.1%. HAYN has rallied 76.7% over a year.
AdvanSix has an expected earnings growth rate of 194.5% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 14.1% in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 47%. ASIX has soared 127.6% over a year.
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