Sandstorm Gold Ltd. (NYSEMKT:SAND)
This article is an update to my preceding article on Sandstorm Gold published on November 16, 2015 about the third-quarter 2015.
|Luna Gold||Aurizona||Brazil||$17.8 millon + 1.1 m shares|
|Primero Mining||Black Fox||Ontario Canada||$31.9 million|
|Silver Crest Mine||Santa Elena||Sonora Mexico||$12 million + 700K shares|
|Metanor Resources||Bachelor Lake||Quebec Canada||$20 million|
|True Gold Mining||Karma||Burkina Faso Africa||$25 million|
|Rambler Metals Mining||Ming||Newfoundland Canada||$20 million|
|Entre Gold||Hugo North extension - Heruga||Mongolia||TBD|
|Dore Minerals||Deflector||Quebec Canada||$6 million|
|Glencore XStrata||Bracemack-McLeod Royalty||Australia||TBD|
|Yamana Gold||Gualcamayo||Argentina||From Premier Royalty acquired in 2013|
|Newmont Mining||Emigrant Spring Royalty||Nevada USA||From Premier Royalty acquired in 2013|
|AngloGold Ashanti||MWS Royalty||South Africa||From Premier Royalty acquired in 2013|
|Orezone Gold||Bombore Royalty||Burkina Faso Africa||$3 million|
|Solitario Exp & Royalty||Mt Hamilton royalty||-||$10 million|
|Other Streams and Royalties||5 mines/37 projects||-|
|Gold Royalty||18 Royalties/13 projects||-||Shares swapped|
|Diamond Royalty||Diavik Mine A-21||Canada||$56.8 million including 3 million warrants|
|Pacific Ridge Expl.||3 Royalties||Canada||$0.5 million|
|Yamana Gold||5 projects||-||$152 million in cash/15 million warrants|
|Chapada Copper Stream||Chapada||Brazil||-|
|Teck Royalties package||55 royalties||-||$19 million|
2015 Financial results snapshot:
|Year 2015||4Q'15||3Q'15||2Q'15||1Q'15||Year 2014||4Q'14|
in $ million
|Attributable gold sold Oz||45,146||8,951||10,834||12,901||12,46||44,821||10,42|
Operating Cash flow
Average cost per attributable
gold Oz Eq. $
|Cash Operating margin $||867||844||809||892||904||939||890|
Gold price realized
Cash and Cash equivalent
in $ million
Total long-term liabilities
Total shares Outstanding
1 - As of December 31, 2015, the Company had cash and cash equivalents of $5.3 million (December 31, 2014 - $90.2 million) and working capital of $1.8 million (December 31, 2014 - $89.3 million).
2 - As of March 30, 2016, the Company had 137,930,795 common shares outstanding.
As disclosed previously, the funds from the issuance of share capital have been used to finance the acquisition of Gold Streams and royalties (recent acquisitions are described earlier in greater detail), with the net proceeds of the 2015 equity financing used to reduce the balance of the Company's Revolving Loan.
3 - SandStorm announced on March 31, 2015:
is pleased to announce that the Company has sold approximately 11,000 attributable gold equivalent ounces1 during the first quarter of 2016. The attributable gold equivalent ounces were delivered to the Company from 19 producing mines, with approximately 70% of the ounces coming from operations run by major and mid-tier mining companies.
Sandstorm Gold results were in-line with what I was expecting unfortunately and reflected a poor quarter. Revenue was $9.863 million for 4Q'15, down 18.4% quarter over quarter, but more importantly, attributable gold sold was 8,951 Oz, down 17.4% quarter over quarter.
A quick look at the graph below is showing a company struggling to increase revenue. However, the gold production numbers for 1Q'16 at 11 K oz is quite encouraging, and entices me to be more positive for 2016?
Note: I estimated 1Q'16 revenue based on 11 Koz of gold.
Recently, the company acquired many new assets using equity as a currency. I did not like this situation at all, because It is highly dilutive to shareholders.
However, I recognize that the company has limited options available and must expand to be able to survive. The problem is that the dilution is here, with a share count of approximately 139 million as I speak, whereas the possible positive effects on the gold production and revenues, will take time to appear in the balance sheet.
The gold price is of a paramount importance when it comes to investing in SAND, the recent gold rally is showing a tight correlation between SAND and the price of gold.
I still recommend SAND as a Hold on valuation this time, and I think it is prudent to take some profit now, if the price of gold cannot stay above $1,200/ Oz.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I trade SAND