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Sandstorm Gold Ltd. (SAND - Free Report) recently announced that it has closed the first tranche of its $30 million Vatukoula stream and royalty agreement with Vatukoula Gold Mines PTE Limited (“VGML”). This pertains to the gold stream on the Vatukoula Mine in Fiji. Per the terms, the company will receive 25,920 ounces of fixed gold deliveries, beginning in January 2022 and will be delivered over a span of 5.5 years. This will be followed by a variable stream for the life of the mine.
The Vatukoula Mine is an underground gold mine located on the main island Viti Levu in Fiji. The mine has produced more than 7 million ounces of gold over more than eight decades. Since 2013, mine production has averaged 30,000-40,000 ounces per year. VGML plans to expand underground operations with a production target of 50,000-70,000 ounces per year in the next three to five years.
Sandstorm Gold believes the property has significant growth potential based on optimizing current reserves and operations, expanding known deposits with increased drilling and exploring new target areas within the current mine workings and adjacent areas. The company had announced the acquisition on Jun 29, 2021. Given the delay of closing the deal, the fixed delivery schedule has been duly amended from the previously stated six years to 5.5 years. During the first 1.5 years, SAND will receive 3,040 ounces of gold per year, which will thereafter increase to 5,340 ounces of gold per year for the next four years.
After the completion of this 5.5 years tenure, Sandstorm Gold will receive a variable proportion of gold production from the Vatukoula Mine for the life of the mine. The variable stream delivery rate will be 2.9% for the first 100,000 ounces of gold produced in a calendar year. For production above 100,000 ounces, the delivery rate will be 2.55%.
Sandstorm Gold will pay VGML 20% of the spot price for each ounce of gold deliveries from the VGML Stream. The company has funded $27 million in accordance with the terms of the stream agreement. The remaining $3 million is currently anticipated to be disbursed in the first quarter of 2022.
Earlier this month, Sandstorm Gold announced that it has entered into a $60 million financing package with Bear Creek Mining, which will help the latter acquire the Mercedes gold-silver mine in Mexico. The said financing package includes a $37.5 million gold purchase agreement from the mine and a $22.5 million convertible debenture. The company will receive 25,200 ounces of gold over 3.5 years, followed by 4.4% of the gold production from Mercedes for the balance life the mine. The company has increased its production guidance between 65,000 and 70,000 gold equivalent ounces for 2022.
Price Performance
Shares of Sandstorm Gold have lost 15.3% in the past year compared with the industry’s decline of 13.6%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Sandstorm Gold currently carries a Zacks Rank #3 (Hold).
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Sandstorm Gold (SAND) Closes Vatukoula Gold Stream Buyout
Sandstorm Gold Ltd. (SAND - Free Report) recently announced that it has closed the first tranche of its $30 million Vatukoula stream and royalty agreement with Vatukoula Gold Mines PTE Limited (“VGML”). This pertains to the gold stream on the Vatukoula Mine in Fiji. Per the terms, the company will receive 25,920 ounces of fixed gold deliveries, beginning in January 2022 and will be delivered over a span of 5.5 years. This will be followed by a variable stream for the life of the mine.
The Vatukoula Mine is an underground gold mine located on the main island Viti Levu in Fiji. The mine has produced more than 7 million ounces of gold over more than eight decades. Since 2013, mine production has averaged 30,000-40,000 ounces per year. VGML plans to expand underground operations with a production target of 50,000-70,000 ounces per year in the next three to five years.
Sandstorm Gold believes the property has significant growth potential based on optimizing current reserves and operations, expanding known deposits with increased drilling and exploring new target areas within the current mine workings and adjacent areas. The company had announced the acquisition on Jun 29, 2021. Given the delay of closing the deal, the fixed delivery schedule has been duly amended from the previously stated six years to 5.5 years. During the first 1.5 years, SAND will receive 3,040 ounces of gold per year, which will thereafter increase to 5,340 ounces of gold per year for the next four years.
After the completion of this 5.5 years tenure, Sandstorm Gold will receive a variable proportion of gold production from the Vatukoula Mine for the life of the mine. The variable stream delivery rate will be 2.9% for the first 100,000 ounces of gold produced in a calendar year. For production above 100,000 ounces, the delivery rate will be 2.55%.
Sandstorm Gold will pay VGML 20% of the spot price for each ounce of gold deliveries from the VGML Stream. The company has funded $27 million in accordance with the terms of the stream agreement. The remaining $3 million is currently anticipated to be disbursed in the first quarter of 2022.
Earlier this month, Sandstorm Gold announced that it has entered into a $60 million financing package with Bear Creek Mining, which will help the latter acquire the Mercedes gold-silver mine in Mexico. The said financing package includes a $37.5 million gold purchase agreement from the mine and a $22.5 million convertible debenture. The company will receive 25,200 ounces of gold over 3.5 years, followed by 4.4% of the gold production from Mercedes for the balance life the mine. The company has increased its production guidance between 65,000 and 70,000 gold equivalent ounces for 2022.
Price Performance
Shares of Sandstorm Gold have lost 15.3% in the past year compared with the industry’s decline of 13.6%.
Zacks Rank & Stocks to Consider
Sandstorm Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space include Univar Solutions Inc. , The Chemours Company (CC - Free Report) and AdvanSix Inc. (ASIX - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Univar has an expected earnings growth rate of 55.2% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 9% over the past 60 days.
Univar beat the Zacks Consensus Estimate for earnings in each of the four trailing quarters, the average surprise being 24.1%. UNVR’s shares have rallied 43.8% over a year.
Chemours has an expected earnings growth rate of 105.1% for the current year. The Zacks Consensus Estimate for CC’s earnings for the current year has been revised upward by 10% in the past 60 days.
Chemours beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 34.2%. CC has gained 22.8% over a year.
AdvanSix has an expected earnings growth rate of 197% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 14.1% over the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 47%. ASIX’s shares have soared 127.6% over a year.