Sandstorm Gold Ltd (NYSEMKT:SAND) has offered several updates that have contributed to the stock going up as they signal bright prospects for the company. One of the updates concerns a stock buyback program the company announced earlier this year. The other updates concern various projects in which Sandstorm has stakes.
Buyback signals Sandstorm stock is undervalued
Sandstorm has embarked on buying back its stock, saying that it has bought back 545,977 shares of its common stock since December 15. The company has paid an average of C$4.56 a share for the repurchased stock. The decision to implement the buyback program hinged on the management of Sandstorm determining that the company’s shares are trading at a discount.
As a result, the update on the share buyback progress triggered a strong demand for the shares of Sandstorm, leading the stock to register a gain of almost 10% to close at $4.13 in the last session. The shares are up more than 57% since the beginning of 2016.
Given that Sandstorm has repurchased 545,977 shares in less than two weeks, the buyback activity appears to be at the maximum level allowed by Canadian regulators. The rules of the Toronto Stock Exchange limit daily common stock buyback to 49,211, which means that Sandstorm is unable to ramp up the buyback beyond the authorized limit and that is allowing investors who have got the clue to accumulate the stock while still cheap.
Sandstorm reported on the status of several projects in which it owns a stake. The company said that Coringa project in Brazil, which is majority-owned by Anfield Gold Corp, is progressing well and production is set to begin in late 2017. Sandstorm has a net smelter returns (NSR) royalty of 2.5% on Coringa project.
SAND further updated on the Hot Maden and Ergama projects in Turkey. Mariana Resources Limited owns the majority of Hot Maden and for that project Sandstorm said copper-gold intercepts continue to be reported. Sandstorm holds 2% NSR royalty on Hot Maden and Ergama projects.