Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sandstorm Gold Ltd (SAND, Financial) reported record operating margins for the third consecutive quarter, driven by strong commodity prices.
- The company achieved higher revenues of $44.7 million in Q3 2024, supported by increased prices for gold, silver, and copper.
- Sandstorm Gold Ltd (SAND) has successfully reduced its debt from $640 million to $369 million, with plans for further reduction.
- The Greenstone project has reached commercial production, contributing positively to Sandstorm Gold Ltd (SAND)'s future production outlook.
- Sandstorm Gold Ltd (SAND) anticipates significant production growth over the next five years, potentially doubling current production rates to 155,000 ounces per annum.
Negative Points
- Gold equivalent ounces were lower than budgeted due to higher gold prices affecting the conversion of copper and silver streams.
- The Greenstone project experienced a slower ramp-up than expected, impacting production figures.
- There is a perceived knowledge gap among investors regarding Sandstorm Gold Ltd (SAND)'s key development assets, affecting market valuation.
- Legacy debt perception and concerns about potential equity offerings have contributed to Sandstorm Gold Ltd (SAND) trading at a discount.
- The MARA project timeline remains uncertain, with potential delays in triggering the stream option affecting future cash flow projections.
Q & A Highlights
Q: Earlier in the call, you mentioned a material investing knowledge gap in the market. How can Sandstorm and the analyst community address this issue?
A: Nolan Watson, CEO, explained that Sandstorm plans to address this by speaking more about their projects, providing clarity on their stages, and offering more materials for both institutional and retail investors. They are considering an investor day in 2025 to focus on these aspects with graphics and updates to help the market understand better.
Q: Given the recent election win in the US, has there been any change in Sandstorm's internal risk assessment or discount rates?
A: Nolan Watson, CEO, stated that in the short term, there are no changes as they do not plan on making material deals in the next year or two. They are focusing on debt reduction and share buybacks. However, he is more bullish on gold in the long term due to increased US deficits.
Q: How will Sandstorm balance capital allocation between debt reduction and share repurchases, especially in a falling interest rate environment?
A: Erfan Kazemi, CFO, mentioned that while falling interest rates have a long-term effect, their primary focus remains on debt reduction. They expect debt reduction to accelerate to close to $30 million per quarter by Q1, with share buybacks ranging from $0 to $5 million per quarter.
Q: Is Sandstorm considering any transactions within $100 million, or is the focus solely on debt repayment and share buybacks?
A: Nolan Watson, CEO, clarified that while they are always looking at potential deals to ensure they don't miss opportunities, their primary focus is on debt reduction and share buybacks. The only exception is the MARA project, which is already priced out and considered a significant opportunity.
Q: Can you provide an update on the situation with Entree and its impact on Sandstorm?
A: Erfan Kazemi, CFO, explained that Entree is continuing arbitration proceedings with Rio Tinto regarding license transfers. This process can take time, but it should not impact Sandstorm's expected cash flows. Recent drill results from Entree suggest more gold and copper production than previously anticipated.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
