In a Feb. 19 research note, analyst Andrew Kaip reported that BMO Capital Markets increased its target price on Sandstorm Gold Ltd. (SSL:TSX; SAND:NYSE.MKT) to US$6 per share from US$4.75 "to incorporate the more positive 2019 outlook." The company's stock, rated Market Perform, is currently trading below the peer average, at around US$5.80 per share.
Sandstorm's adjusted earnings per share for Q4/18 was $0.01, in line with BMO's estimate of $0.01 and the Street's projection of $0.02.
The company generated $10.6 million in cash flow in Q4/18, slightly below BMO's $11.1 million forecast. Free cash flow was $3.1 million, as a result of funding for Hod Maden and acquisitions.
As for Q4/18 sales, Sandstorm sold about 14,200 ounces of gold equivalent (14.2 Koz Au eq). In 2018, it achieved guidance for sales of 56–60 Koz Au eq with 57.6 Koz sold.
At the end of 2018, the company had $5.9 million in cash and cash equivalents. Its revolving credit facility is $225 million, having been increased in Q4/18. To date, Sandstorm purchased 7.2 million of the 9.2 million common shares available via its normal course issuer bid and that are expiring at the start of April 2019.
For 2019, Sandstorm guided to production of 63–73 Koz, which compares to BMO's expected 64 Koz. Further out, in 2023, the company is targeting nearly double that, 140-plus Koz.[NLINSERT]
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Disclosures from BMO Capital Markets, Sandstorm Gold, Feb. 19, 2019
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Sandstorm Gold and Lundin Gold within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Sandstorm Gold and Lundin Gold within the past 12 months.
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Sandstorm Gold.
Disclosure 6A: Sandstorm Gold and Lundin Gold is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6B: Sandstorm Gold is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: B) Non-Investment Banking Securities Related Services
Disclosure 6C: Sandstorm Gold is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 8A: BMO Capital Markets or an affiliate has a financial interest in 1% or more of any class of the equity securities of Sandstorm Gold.
Disclosure 8C: BMO Capital Markets or an affiliate has a financial interest in 0.5% or more in the issued share capital of Sandstorm Gold.
Disclosure 16: A research analyst has extensively viewed the material operations of Lundin Gold.
Disclosure 17: Lundin Gold has paid or reimbursed some or all of the research analyst's travel expenses.
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