SSL, KRR
Sandstorm Gold Royalties aka SSL released their financial quarterlies, touting several records such as highest ever quarterly sales, at 18741 AuEq, and highest ever revenue, with cash costs of $283/oz, leaving a very healthy margin. But all this is somewhat moot due to the set of transformative transactions the company recently announced. The jury is still out on them.
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FWIW, in response TD issued a new analyst report seeing the the impact of this NR as Neutral and keeping SSL at Buy with a target of $13. Like everyone else watching SSL, they are waiting and watching.
We already knew that Q1 gold production from Karora Resources aka KRR's Australian mining complex was 27,489 oz Au; now we get the financial results. The bad news is that costs were up by about a third compared to both last quarter and Q1 2021 due primarily to Covid impacting labour force availability, higher costs from material purchased, and supply chain issues. Labour availability was only 60% during the quarter, forcing KRR to hire more expensive contractors to fill the gap. They do expect this to improve, and they are reiterating their 2022 guidance, albeit with plenty of 'hedgy' words attached. Overall this led to a loss of $11M during the quarter. They do still have a cash stash of $78M even after the tough quarter, and remain debt free.
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One thing that will help KRR stay afloat during the second half of this year will be restarting the mine of nickel on its properties, and to that end they also released an updated Resource Report. M&I Resources increased by 22% to 19,600t Ni, whiled Inferred Resource increased by 52% to 13,200t. They were already guiding to the production of 460-500t Ni in 2022, and PEA for increasing nickel production will be released this qaurter. There is also significant exploration potential for more nickel on their properties.
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BTW, GDX and HUI have lost about 25% of their value over the last month while gold itself has held up far better. Saville points out that similar conditions prevailed in April and May 2019 and in March 2020, and in both cases there was a sharp rally back to former levels. He and I both expect this to happen again this time. |
