Sandstorm Gold (SAND) has seen its stock surge to a 52-week high following the early renewal of its normal course issuer bid (NCIB) and automatic share purchase plan (ASPP). The renewed NCIB allows Sandstorm to repurchase up to 20 million shares, about 7% of its public float, a strategy that aims to capitalize on market prices and enhance shareholder value. Since May 2024, nearly 4.83 million shares have already been repurchased under the previous program, returning capital to shareholders. The ASPP renewal further strengthens this initiative by permitting share buybacks during blackout periods. Sandstorm’s robust financial performance, marked by substantial cash flows and strong operating margins, supports this proactive capital management approach. Analysts have adjusted price targets, reflecting confidence in Sandstorm’s strategic direction and its growth potential.
Unlocking Shareholder Value
Sandstorm Gold primarily engages in acquiring royalty rights from global mining operations rather than operating mines directly. The company invests by making upfront payments to mining operators, securing a percentage of future revenues or gold output. This business model allows Sandstorm to build a diversified portfolio of mining royalties, which in turn generates stable financial streams and supports a strong growth trajectory.
The company has announced the early renewal of its share repurchase program, authorizing the buyback of up to 20 million common shares, representing approximately 7% of its outstanding shares. This move is indicative of the management’s belief that the company’s current market price is undervalued compared to its intrinsic worth. Since May 2024, the company has repurchased 4.83 million shares on the TSX and NYSE, returning capital to shareholders. One attractive feature of the Automatic Share Purchase Plan is that it enables continuous share repurchases during blackout periods, ensuring consistent buying support despite trading restrictions.
For 2024, the company reported an annual revenue of $176.3 million, with fourth-quarter revenue of $47.4 million, representing a slight decrease from the previous year. Production declined, with a total of 72,810 gold equivalent ounces produced annually, down from 97,245 ounces the previous year. Cash flows from operating activities were $139.0 million for the year, marginally lower than the $151.1 million reported in 2023. However, cash operating margins reached a record high of $2,097 per ounce annually and $2,396 for the fourth quarter, representing a substantial improvement from the previous year. Despite these strong margins, the annual net income decreased to $15.5 million from $42.7 million in 2023, reflecting challenges that extend beyond commodity prices.
Management’s 2025 production guidance projects a range of between 65,000 and 80,000 gold equivalent ounces, depending on commodity prices. By 2030, production is expected to reach approximately 150,000 attributable gold equivalent ounces, contingent upon existing streams and royalties, as well as the execution of an exclusive gold stream option on the MARA project in Argentina.
Analysts Remain Bullish
Analysts following the company are generally optimistic about its prospects. For instance, Scotiabank’s Tanya Jakusconek has increased the price target for the shares to $7.25 (from $6.75) while maintaining a Sector Perform rating after evaluating the company’s Q4 performance. In contrast, Raymond James’ Brian MacArthur has slightly lowered his price target for Sandstorm Gold from $8.50 to $8.25 but continues to rate it as Outperform. Both analysts acknowledge Sandstorm’s potential for profit from precious metals with lower exposure to operational and capital risks, based on the company’s financial flexibility and the growth of its royalty and streaming portfolio.
Sandstorm Gold is rated a Strong Buy overall based on the recent recommendations of eight analysts. The average price target for SAND stock is $7.88, which represents a potential upside of 6.92% from current levels.
