Sandstorm Gold Q4 Profit Down

Sandstorm Gold (TSE: SSL) (NYSE: SAND), a financing provider for gold mining companies, reported lower fourth-quarter profits.

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Revenues & Earnings

Revenues came in at $29.8 million in the quarter ended December 31, 2021, compared to $29.7 million in the prior-year quarter.

Net profit amounted to $7.4 million in Q4 2021, down from $10.5 million in Q4 2020.

Sandstorm reported attributable gold equivalent ounces of 16,586 ounces in Q4 2021, up from 15,795 ounces in Q4 2020.

Cash flow from operating activities, excluding changes in non-cash working capital, was $22.1 million, down from $22.5 million a year ago.

Deal with RNP

After year-end, Sandstorm announced that it had entered into an agreement with Royalty North Partners Ltd. to sell its 30% stake in Hod Maden and its stake in Entree Resources Ltd.

In return, Sandstorm will receive a stream of flagship gold on Hod Maden and a portion of the resulting issuer’s debt and equity. The transaction is subject to various closing conditions and is expected to close in the second half of 2022.

Outlook

Based on Sandstorm’s existing royalties, attributable gold equivalent ounces for 2022 are expected to be between 65,000 and 70,000 ounces.

Wall Street’s Take

Following the results, Raymond James analyst Brian MacArthur upgraded SSL to Buy from Hold with a price target of $9.50 (C$12.06). This implies 40.5% upside potential.

MacArthur said in a research note that the transaction with Royalty North Partners is a first step in repositioning Sandstorm Gold as a pure-play precious metals streaming/royalty company.

Overall, SSL scores a Strong Buy consensus rating among analysts based on six Buys and two Holds. The average Sandstorm Gold price target of C$11.46 implies 33.5% upside potential to current levels.

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