Sandstorm Gold Ltd. (NYSEMKT:SAND)
This article is an update to my preceding article on Sandstorm Gold published on May 9, 2016 about the first-quarter 2016.
|Luna Gold (OTCPK:LGCUF) ||Aurizona||Brazil||$17.8 million + 1.1 m shares|
|Primero Mining (NYSE:PPP) ||Black Fox||Ontario Canada||$31.9 million|
|SilverCrest Mines (NYSEMKT:SVLC) ||Santa Elena||Sonora Mexico||$12 million + 700K shares|
|Metanor Resources (OTCPK:MEAOF) ||Bachelor Lake||Quebec Canada||$20 million|
|True Gold Mining (OTCQX:RVREF) ||Karma||Burkina Faso Africa||$25 million|
|Rambler Metals & Mining (OTC:RBMTF) ||Ming||Newfoundland Canada||$20 million|
|Entree Gold (NYSEMKT:EGI) ||Hugo North extension - Heruga||Mongolia||TBD|
|Doray Minerals||Deflector||Quebec Canada||$6 million|
|Glencore (OTCPK:GLCNF) ||Bracemac-McLeod Royalty||Australia||TBD|
|Yamana Gold (NYSE:AUY) ||Gualcamayo||Argentina||From Premier Royalty acquired in 2013|
|Newmont Mining (NYSE:NEM) ||Emigrant Springs ||Nevada USA||From Premier Royalty acquired in 2013|
|AngloGold Ashanti (NYSE:AU) ||MWS Royalty||South Africa||From Premier Royalty acquired in 2013|
|Orezone Gold (OTCPK:ORZCF) ||Bombore Royalty||Burkina Faso Africa||$3 million|
|Solitario Exp & Royalty (NYSEMKT:XPL) ||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. (OTC:PEXZF) ||3 Royalties||Canada||$0.5 million|
|Alexandria Minerals (OTCPK:ALXDF) ||Canada||C$300k|
|Yamana Gold||5 projects||-||$152 million in cash/15 million warrants|
|Chapada Copper Stream||Chapada||Brazil||-|
|Teck (TCK) Royalties package||55 royalties||-||$19 million|
2Q'16 Financial results snapshot
in $ million
|Attributable gold sold Oz||12,517||11,381||8,951||10,834||12,901||12,46||10,42|
Operating cash flow
Average cost per attributable
gold Oz Eq. $
|Cash operating margin $||994||909||844||809||892||904||890|
Gold price realized
Cash and cash equivalent
in $ million
Total long-term liabilities
59.5/0 as of July 6.
Total shares outstanding (diluted)
SAND explained in a few graphs
Recent financial news
On June 1, 2016, Sandstorm amended its revolving credit facility, extending the term to four years (maturing in July 2020). The revolving credit facility allows the Company to borrow up to $110 million for acquisition purposes, from a syndicate of banks including The Bank of Nova Scotia, Bank of Montreal, National Bank of Canada and Canadian Imperial Bank of Commerce.
On July 6, 2016, the Company completed an equity financing for aggregate gross proceeds of $57.5 million. Upon closing of the financing, the majority of the net proceeds were used to reduce the balance of the Company's revolving credit facility. As a result, the Company currently has no bank debt and the entire $110 million revolving credit facility remains available for acquisition purposes
Sandstorm Gold released its 2Q'16 on August 3, 2016. It was a solid quarter overall, helped by a realized gold price at $1,255/Oz. I was glad to see that the company passed again the 12K level in gold production, which is up nearly 10% quarter over quarter.
Everything was not perfect, and we could eventually talk about the disappointing production from Chapada mine owned by Yamana, or the ongoing problem with Luna Gold, which is not contributing to production.
Sandstorm posted a good operating cash flow again this quarter of $8.935 million; however, it was down 7.7% quarter over quarter. Same comment for the net income which was $5.199 million, but down from $13.159 million the preceding quarter.
The share dilution is still an important concern in my book. The shares outstanding are now nearly 151 million and increased basically 27% in a year. Yes, the debt has been repaid and the company has a brand new $110 million credit facility to use for another round of eventual acquisitions.
The stock price has increased from $2 in January to nearly $6 now. This is really an exceptional recovery, and I am sure SAND shareholders are extremely happy. However, the actual stock valuation requires some pretty high production numbers, and I sincerely do not see it in the last quarter results, albeit they can be considered as very solid.
The combination of increased production and bullish gold price has been fueling SAND momentum. I must admit, it took me by surprise.
Gold prices are now stabilizing and may eventually re-test $1,275/Oz.
Sincerely, I do not see a huge upside from here, and a multi-year resistance is around $6.50-$6.75, which means SAND is now a sell on valuation. The stock has gone too far too fast.
Important note: Do not forget to be one of my followers on SAND and the gold sector in general. Thank you.
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.