Sandstorm Gold Ltd.
SAND
recently closed the acquisition of nine royalties and one stream from BaseCore Metals LP. The total consideration for the deal comprised $425 million cash payment, partly funded by the previously-announced extended credit facility and issuance of 13.5 million shares amounting to $100 million.
A base metals-focused streaming and royalty company, BaseCore is equally owned by
Glencore
GLNCY
and Ontario Teachers’ Pension Plan Board (“OTPP”). The company provides long-term financing to mining operators to support mine exploration, expansions, M&A and a flexible balance sheet. BaseCore was created in 2017 and Glencore had contributed a portfolio of selected royalties, valued at $300 million at the inception of the partnership. Following the sale of its stake in BaseCore, GLNCY will receive approximately $300 million in cash and Sandstorm shares.
Sandstorm entered into the agreement with BaseCore on May 2. Simultaneously, SAND teamed up with Royalty North Partners Ltd. to sell a portion of a copper royalty acquired in the BaseCore Transaction and retain a silver stream on the asset.
On May 2, Sandstorm entered into an agreement with Nomad Royalty Company Ltd. to acquire its issued and outstanding shares for $590 million.
These deals will strengthen Sandstorm’s portfolio with immediate and long-term growth while positioning it as the highest-growth streaming and royalty company. The company’s management stated that precious metals and copper would likely outperform the market in the coming years. It will provide its investors with long-life, high quality and low-cost assets focused on gold, silver and copper.
Recently, Sandstorm announced preliminary record gold equivalent ounces (GEOs) sold and revenues in the second quarter of 2022. It sold nearly 19,200 attributable GEOs in the quarter, marking a 7% increase from 18,004 ounces GEOs sold in second-quarter 2021. The company generated preliminary revenues of $36 million in the quarter under discussion compared with the year-ago quarter’s $26.4 million.
Per the company’s guidance provided on May 11, attributable GEOs are expected to be between 80,000 and 85,000 for 2022. Nomad and BaseCore Transactions are likely to contribute to the current year GEOs. Attributable gold equivalent production is expected to be more than 155,000 ounces in 2025.
Sandstorm Gold is a gold royalty company that 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. After completing the Nomad deal, SAND will have more than 250 royalties, of which 39 of the underlying mines are producing now. SAND plans to grow and diversify its low-cost production profile by acquiring additional gold royalties.
Price Performance
Sandstorm Gold’s shares have declined 27.8% in the past year compared with the
industry
‘s fall of 16.4%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Sandstorm Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include
Albemarle Corporation
ALB
and
Cabot Corporation
CBT
.
Albemarle has a projected earnings growth rate of 231.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 26.5% upward in the past 60 days. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 6% in a year. The company flaunts a Zacks Rank #1.
Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT’s earnings for the current fiscal has been revised 6% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%. CBT has gained around 12.9% in the past six months.
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