What To Expect From Sandstorm Gold's Q4 Earnings
Feb. 4, 2015 1:38 PM ET | About: Sandstorm Gold Ltd. (SAND)
Disclosure: The author is long SAND. (More...)
Summary
Sandstorm Gold's quarterly earnings are easy to predict as most of the company's partners have already released production results for the quarter.
I expect a solid end to the year as production has bounced back nicely from the Aurizona mine and the Santa Elena Mine, although Bachelor Lake's production was weak.
Sandstorm remains an attractive stock to own in 2015.
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Sandstorm Gold (NYSEMKT:SAND) is expected to announce its fourth quarter results in February. One nice part of being a Sandstorm shareholder is the fact that its quarterly earnings are easy to figure out weeks in advance, as Sandstorm's mining partners have already released quarterly production results and you can plug in the numbers to come up with an estimate of earnings.
I'm expecting an overall solid fourth quarter and end to the year for Sandstorm Gold, but I think 2015 could be even stronger. Here's a recap of Sandstorm's partners production results for Q4 2014 and how it will effect Sandstorm's earnings.
Aurizona Mine
Luna Gold's (OTCQX:LGCUF) Aurizona Mine bounced back in Q4 nicely from a poor third quarter. For the quarter, the mine produced 20,758 ounces of gold to bring its full year total to 74,622 ounces.
Sandstorm Gold owns a 17% gold stream on the Aurizona Mine, at a cost of $404 per ounce. So Sandstorm will net 3,528 ounces of gold at a margin of approximately $821 per ounce ($1,225 gold price and $404 per ounce costs). This results in cash flow of $2.89 million to Sandstorm.
Luna Gold also recently announced the appointment of Marc Leduc to the position of President, CEO and Director. I still think Luna Gold will get taken over soon, which should lead to increased production in the years ahead, and the gold stream will likely be converted to a royalty, but this is just my own opinion.
Luna Gold has not given guidance for 2015, but I think it's safe to say that the mine should produce 65,000 to 75,000 ounces of gold, based on planned mining rates. This would net Sandstorm close to $10 million for the year, based on $1,225 gold.
The Bachelor Lake Mine
Metanor (OTCPK:MEAOF) was the worst performer out of Sandstorm's partners this quarter. The company produced 8,332 ounces of gold at the Bachelor Lake mine for the quarter. This was due to lower feed grade caused by higher than expected dilution from three stopes. However, management expects the feed grade to increase in the coming months, and the company has also guided for 43,000 ounces to 46,000 ounces of production for next year.
Sandstorm owns a 20% gold stream at Bachelor Lake at $500 per ounce delivered. This means Sandstorm received 1,666 ounces of gold. So at a price of $1,225 per ounce, Sandstorm's margins are $725 an ounce, and cash flow is $1.2 million.
The Black Fox Mine
Primero Mining (NYSE: PPP) announced 20,300 ounces of gold produced at Black Fox in the fourth quarter, and expects 75,000 to 85,000 ounces of gold production in 2015.
Sandstorm owns a 8% gold stream on the life of mine gold production from Black Fox at a price of $509 per ounce delivered. For the fourth quarter, Sandstorm received 1,624 ounces; at a gold price of $1,225, margins are $716 per ounce, and cash flow is $1.16 million.
The Santa Elena Mine
SilverCrest Mines (NYSEMKT:SVLC) continues to be one of Sandstorm's strongest partners. SilverCrest announced strong gold production of 8,983 ounces in the fourth quarter, a 3% decrease. However, the company gave strong forward guidance, with 36,000 to 39,000 ounces of gold expected for 2015.
Sandstorm owns a 20% gold stream on Santa Elena at a price of $350 per ounce, so Sandstorm nets 1,796 ounces. $At $1,225 gold, margins are $875 per ounce and Sandstorm should net approximately $1.57 million in cash flow.
The Ming Mine
Sandstorm owns a gold stream of 25% of the first 175,000 ounces of gold produced and 12% of the life of mine thereafter, at no ongoing cost, from Rambler Metals.
Rambler has guided to meet the low-end for its current full year guidance of 5,600 to 6,600 ounces as the company has implemented short-term cost cutting measures as the copper price has fallen.
Unfortunately, it's hard to get a clear figure on how much gold Ming produced in the fourth quarter as the company has not disclosed this information. To be on the conservative side, I will use 1,200 ounces as the figure for this quarter, based on the company's new guidance. This would net Sandstorm $1.47 million for the quarter, based on $1,225 gold.
Royalty Portfolio
The company's royalties continue to perform well, including the 1% Gualcamayo Royalty, the 1.5% Emigrant Spring Royalty, the 1% Thunder Creek royalty, and the 1% Sao Francisco and San Andres royalties.
For the fourth quarter of 2014, I'd expect similar results to what we saw in the third quarter: approximately 3,000 to 3,100 attributable ounces, or $3.79 million in cash flow.
Overall I think the fourth quarter should be another strong one for Sandstorm Gold. As the price of gold sits below $1,300 an ounce and mining companies struggle to produce free cash flow, Sandstorm's business model puts the company is a strong position to outperform its peers.
Feb. 4, 2015 1:38 PM ET | About: Sandstorm Gold Ltd. (SAND)
Disclosure: The author is long SAND. (More...)
Summary
Sandstorm Gold's quarterly earnings are easy to predict as most of the company's partners have already released production results for the quarter.
I expect a solid end to the year as production has bounced back nicely from the Aurizona mine and the Santa Elena Mine, although Bachelor Lake's production was weak.
Sandstorm remains an attractive stock to own in 2015.
This article was sent to 5,796 people who get email alerts on SAND.
Get email alerts on SAND »
Sandstorm Gold (NYSEMKT:SAND) is expected to announce its fourth quarter results in February. One nice part of being a Sandstorm shareholder is the fact that its quarterly earnings are easy to figure out weeks in advance, as Sandstorm's mining partners have already released quarterly production results and you can plug in the numbers to come up with an estimate of earnings.
I'm expecting an overall solid fourth quarter and end to the year for Sandstorm Gold, but I think 2015 could be even stronger. Here's a recap of Sandstorm's partners production results for Q4 2014 and how it will effect Sandstorm's earnings.
Mine Q4 Production (ounces) Attributable to SAND Cash Flow (Million)
Aurizona 20,758 3,528 $2.89
Bachelor Lake 8,332 1,666 $1.2
Black Fox 20,300 1,624 $1.16
Santa Elena 8,983 1,796 $1.57
Ming N/A 1,200 $1.47
Royalties N/A 3,100 $3.79
Total Estimated Ounces Attributable to Sandstorm: 12,914
Estimated Cash Flow: $12.08 million
Aurizona Mine
Luna Gold's (OTCQX:LGCUF) Aurizona Mine bounced back in Q4 nicely from a poor third quarter. For the quarter, the mine produced 20,758 ounces of gold to bring its full year total to 74,622 ounces.
Sandstorm Gold owns a 17% gold stream on the Aurizona Mine, at a cost of $404 per ounce. So Sandstorm will net 3,528 ounces of gold at a margin of approximately $821 per ounce ($1,225 gold price and $404 per ounce costs). This results in cash flow of $2.89 million to Sandstorm.
Luna Gold also recently announced the appointment of Marc Leduc to the position of President, CEO and Director. I still think Luna Gold will get taken over soon, which should lead to increased production in the years ahead, and the gold stream will likely be converted to a royalty, but this is just my own opinion.
Luna Gold has not given guidance for 2015, but I think it's safe to say that the mine should produce 65,000 to 75,000 ounces of gold, based on planned mining rates. This would net Sandstorm close to $10 million for the year, based on $1,225 gold.
The Bachelor Lake Mine
Metanor (OTCPK:MEAOF) was the worst performer out of Sandstorm's partners this quarter. The company produced 8,332 ounces of gold at the Bachelor Lake mine for the quarter. This was due to lower feed grade caused by higher than expected dilution from three stopes. However, management expects the feed grade to increase in the coming months, and the company has also guided for 43,000 ounces to 46,000 ounces of production for next year.
Sandstorm owns a 20% gold stream at Bachelor Lake at $500 per ounce delivered. This means Sandstorm received 1,666 ounces of gold. So at a price of $1,225 per ounce, Sandstorm's margins are $725 an ounce, and cash flow is $1.2 million.
The Black Fox Mine
Primero Mining (NYSE: PPP) announced 20,300 ounces of gold produced at Black Fox in the fourth quarter, and expects 75,000 to 85,000 ounces of gold production in 2015.
Sandstorm owns a 8% gold stream on the life of mine gold production from Black Fox at a price of $509 per ounce delivered. For the fourth quarter, Sandstorm received 1,624 ounces; at a gold price of $1,225, margins are $716 per ounce, and cash flow is $1.16 million.
The Santa Elena Mine
SilverCrest Mines (NYSEMKT:SVLC) continues to be one of Sandstorm's strongest partners. SilverCrest announced strong gold production of 8,983 ounces in the fourth quarter, a 3% decrease. However, the company gave strong forward guidance, with 36,000 to 39,000 ounces of gold expected for 2015.
Sandstorm owns a 20% gold stream on Santa Elena at a price of $350 per ounce, so Sandstorm nets 1,796 ounces. $At $1,225 gold, margins are $875 per ounce and Sandstorm should net approximately $1.57 million in cash flow.
The Ming Mine
Sandstorm owns a gold stream of 25% of the first 175,000 ounces of gold produced and 12% of the life of mine thereafter, at no ongoing cost, from Rambler Metals.
Rambler has guided to meet the low-end for its current full year guidance of 5,600 to 6,600 ounces as the company has implemented short-term cost cutting measures as the copper price has fallen.
Unfortunately, it's hard to get a clear figure on how much gold Ming produced in the fourth quarter as the company has not disclosed this information. To be on the conservative side, I will use 1,200 ounces as the figure for this quarter, based on the company's new guidance. This would net Sandstorm $1.47 million for the quarter, based on $1,225 gold.
Royalty Portfolio
The company's royalties continue to perform well, including the 1% Gualcamayo Royalty, the 1.5% Emigrant Spring Royalty, the 1% Thunder Creek royalty, and the 1% Sao Francisco and San Andres royalties.
For the fourth quarter of 2014, I'd expect similar results to what we saw in the third quarter: approximately 3,000 to 3,100 attributable ounces, or $3.79 million in cash flow.
Overall I think the fourth quarter should be another strong one for Sandstorm Gold. As the price of gold sits below $1,300 an ounce and mining companies struggle to produce free cash flow, Sandstorm's business model puts the company is a strong position to outperform its peers.
