VANCOUVER, BC, Aug. 11,
2022 /CNW/ - Sandstorm Gold Ltd. ("Sandstorm Gold
Royalties", "Sandstorm" or the "Company") (NYSE: SAND) (TSX: SSL)
has released its results for the second quarter ended June 30, 2022 (all figures in U.S. dollars).
SECOND QUARTER HIGHLIGHTS
- Record attributable gold equivalent ounces1
of 19,276 ounces (Q2 2021—18,004 ounces);
- Record revenue of $36.0
million (Q2 2021—$26.4 million);
- Cash flows from operating activities, excluding changes in
non-cash working capital1 of $21.9 million (Q2 2021—$17.6
million);
- Average cash cost per attributable gold equivalent
ounce1 of $273
resulting in cash operating margins1 of $1,593 per ounce (Q2 2021—$227 per ounce and
$1,569 per ounce respectively);
- Record net income of $39.7
million (Q2 2021—$8.6 million); and
- Transformative transactions:
-
- Horizon Copper and Hod Maden Gold Stream: In
July 2022, the Company signed an
agreement with Royalty North Partners Ltd. (to be renamed Horizon
Copper) to spin out several assets and retain gold and silver
streams, including a flagship gold stream on Hod Maden (the "Hod
Maden Gold Stream"), along with a portion of debt and equity
interest in Horizon. These transactions further reposition
Sandstorm as a pure-play precious metals royalty and streaming
company. On closing, Horizon Copper will hold a portfolio of
high-quality cash-flowing and development stage copper assets with
the size and scale required to grow the company and strengthen the
strategic partnership opportunities with Sandstorm.
- BaseCore Royalty Package: In July
2022, the Company closed its previously announced agreement
to acquire nine royalties and one stream from BaseCore Metals LP
for $425 million in cash and
approximately 13.5 million common shares of Sandstorm. The royalty
package includes exposure to high quality, long-life assets of
which three are on currently producing interests.
- Nomad Royalty Acquisition: In August 2022, the shareholders of both the Company
and Nomad Royalty Company Ltd. ("Nomad") approved the previously
announced agreement whereby Sandstorm agreed to acquire all of the
issued and outstanding common shares of Nomad (the "Nomad
Acquisition"). Nomad is a high-growth precious metals-focused
royalty company with a portfolio of 20 royalty and stream assets,
of which seven are on currently producing mines. Through the Nomad
Acquisition, Sandstorm adds several high-quality and low-cost
assets. With several assets in active development, Nomad's
portfolio adds meaningful increases to Sandstorm's production in
both the near and long-term. The Nomad Acquisition is subject to
certain customary conditions and expected to close in August 2022.
- Unlocking value through creation of Sandbox Royalties:
In June 2022, the Company closed its
previously announced sale of a portfolio of royalties to Sandbox
Royalties Corp. ("Sandbox") for $65
million comprising common shares of Sandbox, cash, and a
convertible promissory note. With the creation of Sandbox, a
diversified royalty company, Sandstorm expects to surface value of
certain royalties that it believes are not receiving their
warranted value within Sandstorm's existing portfolio.
OUTLOOK
Based on the Company's existing royalties and contingent on the
completion of the Nomad Acquisition, attributable gold equivalent
ounces for 2022 is forecast to be between 80,000 and 85,000 ounces.
Subject to the conversion of the Hod Maden interest into a gold
stream and the closing of the Nomad Acquisition, the Company is
forecasting attributable gold equivalent production to be 155,000
ounces in 2025.
FINANCIAL RESULTS
During the three months ended June 30,
2022, the Company realized record revenue of $36.0 million compared with $26.4 million for the comparable period in 2021.
The increase is attributable to a 7% increase in attributable gold
equivalent ounces sold as well as a 4% increase in the average
realized selling price of gold. In particular, the increase in
revenue was driven by an increase in revenue attributable to the
Mercedes mine which commenced making deliveries in April 2022, and an increase in revenue
attributable to the Chapada copper stream due to an increase in the
average realized selling price of copper and an increase in the
number of copper pounds sold. Additionally, there was an increase
in revenue attributable to the Vale Royalties, which were purchased
in June 2021, and an increase in
revenue attributable to the Vatukoula God Stream, which commenced
making deliveries in December
2021.
Net income was higher during the second quarter of 2022 when
compared to the same period in 2021. The increase is attributable
to the increase in revenue (as described above) as well as a
$22.9 million gain on the disposal of
a portfolio of royalties to Sandbox for consideration of common
shares of Sandbox, cash, and a convertible promissory note.
Additionally, the increase in net income was attributable to a
$12.5 million gain resulting from the
sale of the Company's equity interest in Entrée Resources to
Horizon Copper. The year-over-year increase in net income was
partially offset by an increase in depletion largely due to an
increase in attributable gold ounces sold, a decrease in the gains
recognized on the revaluation of the Company's investments, and
certain items that were recognized during the three months ended
June 30, 2021 that did not occur
during the three months ended June 30,
2022, including the recognition of a $5.9 million gain on the revaluation of the
Company's financial instrument related to the Vale Royalties which
was both entered into and disposed of during the three months ended
June 30, 2021.
STREAMS & ROYALTIES
Of the gold equivalent ounces sold by Sandstorm during the
second quarter of 2022, approximately 16% were attributable to
mines located in Canada, 23% from
the rest of North America, 49%
from South America, and 12% from
other countries.
|
Revenue
(in Millions)
|
Gold Equivalent
Ounces
|
Canada
|
$5.8
|
3,109
|
North America excl.
Canada
|
$8.1
|
4,361
|
South
America
|
$17.6
|
9,410
|
Other
|
$4.5
|
2,395
|
Total
|
$36.0
|
19,276
|
Canada
Streams and royalties on Canadian mines contributed 31% more
gold equivalent ounces to Sandstorm when compared to the second
quarter of 2021. The change is primarily due to an increase in
royalty revenue from the Diavik mine in the Northwest Territories, driven by diamond price
increases and the timing of sales, and an increase in ounces
received from the Black Fox mine. The increase was partially offset
by a decrease in royalty revenues from the Bracemac-McLeod mine in
Québec, which is in the process of winding down operations.
North America Excluding Canada
The gold equivalent ounces sold from operations located within
North America, but outside of
Canada, contributed 32% more gold
equivalent ounces when compared to the second quarter of 2021. The
change was primarily driven by an increase in the ounces received
from the Mercedes mine, which commenced making deliveries to
Sandstorm in April 2022. The increase
was partially offset by a decrease in ounces received from the
Santa Elena mine, partly due to mining activity on concessions not
subject to the gold stream.
South
America
Operations in South America
contributed 15% less gold equivalent ounces sold when compared to
the second quarter of 2021. The decrease was driven, in part, by a
decrease in royalty revenue received from the Aurizona mine in
Brazil. As well, in the second
quarter 2021, the Company recognized a gain on the revaluation of
the financial instrument related to the Vale Royalties purchased in
June 2021, resulting in higher
attributable gold equivalent ounces for the comparative period in
2021. The decrease was partially offset by an increase in gold
equivalent ounces sold from the Chapada mine in Brazil, and an increase in royalty revenue
from the Fruta del Norte mine.
Other
Streams and royalties on mines in other countries contributed
87% more gold equivalent ounces sold when compared to the second
quarter of 2021. This change is primarily due to an increase in
ounces sold from the Vatukoula mine in Fiji, which commenced making deliveries to
Sandstorm in December 2021, and an
increase in royalty revenue from the Houndé mine in Burkina Faso. The increase was partially
offset by a decrease in gold equivalent ounces sold from the Karma
mine in Burkina Faso.
WEBCAST & CONFERENCE CALL
DETAILS
A conference call will be held on Friday,
August 12, 2022 starting at 8:30am
PDT to further discuss the second quarter results. To
participate in the conference call, use the following dial-in
numbers and conference ID, or join the webcast using the link
below:
International: (+1) 416-764-8688
North American Toll-Free: (+1) 888-390-0546
Conference ID: 03581019
Webcast URL: https://bit.ly/3yRtyWU
Note 1
|
Sandstorm has included
certain performance measures in this press release that do not have
any standardized meaning prescribed by International Financial
Reporting Standards ("IFRS") including (i) total sales, royalties,
and income from other interests, (ii) attributable gold equivalent
ounce, (iii) average cash cost per attributable gold equivalent
ounce, (iv) cash operating margin, and (v) cash flows from
operating activities excluding changes in non-cash working capital.
Total sales, royalties and income from other interests is a
non-IFRS financial measure and is calculated by taking total
revenue which includes sales and royalty revenue, and adding
contractual income relating to royalties, streams and other
interests excluding gains and losses on dispositions. The Company
presents total sales, royalties, and income from other interests as
it believes that certain investors use this information to evaluate
the Company's performance in comparison to other streaming and
royalty companies in the precious metals mining industry.
Attributable gold equivalent ounce is a non-IFRS financial ratio
that uses total sales, royalties, and income from other interests
as a component. Attributable gold equivalent ounce is calculated by
dividing the Company's total sales, royalties, and income from
other interests for the period by the average realized gold price
per ounce from the Company's gold streams for the same respective
period. The Company presents attributable gold equivalent ounce as
it believes that certain investors use this information to evaluate
the Company's performance in comparison to other streaming and
royalty companies in the precious metals mining industry that
present results on a similar basis. Average cash cost per
attributable gold equivalent ounce is calculated by dividing the
Company's cost of sales, excluding depletion by the number of
attributable gold equivalent ounces. The Company presents average
cash cost per attributable gold equivalent ounce as it believes
that certain investors use this information to evaluate the
Company's performance in comparison to other streaming and royalty
companies in the precious metals mining industry who present
results on a similar basis. Cash operating margin is calculated by
subtracting the average cash cost per attributable gold equivalent
ounce from the average realized gold price per ounce from the
Company's gold streams. The Company presents cash operating margin
as it believes that certain investors use this information to
evaluate the Company's performance in comparison to other companies
in the precious metals mining industry who present results on a
similar basis. The Company has also used the non-IFRS financial
measure of cash flows from operating activities excluding changes
in non-cash working capital. This measure is calculated by adding
back the decrease or subtracting the increase in changes in
non-cash working capital to or from cash provided by (used in)
operating activities. The Company presents cash flows from
operating activities excluding changes in non-cash working capital
as it believes that certain investors use this information to
evaluate the Company's performance in comparison to other streaming
and royalty companies in the precious metals mining industry that
present results on a similar basis. Refer to pages 36–39 of the
Company's MD&A for the period ended June 30, 2022, which is
available on SEDAR at www.sedar.com, for a numerical reconciliation
of the non-IFRS financial measures described above. The
presentation of these non-IFRS financial measures is intended to
provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. Other companies may calculate these
non-IFRS financial measures differently.
|
For more information about Sandstorm Gold Royalties, please
visit our website at www.sandstormgold.com or email us at
info@sandstormgold.com.
ABOUT SANDSTORM GOLD ROYALTIES
Sandstorm is a gold royalty company that provides upfront
financing to gold mining companies that are looking for capital and
in return, receives the right to a percentage of the gold produced
from a mine, for the life of the mine. After the closing of the
Nomad Acquisition announced on May 2,
2022, Sandstorm will hold a portfolio of 250 royalties, of
which 39 of the underlying mines are producing. Sandstorm plans to
grow and diversify its low cost production profile through the
acquisition of additional gold royalties. For more information
visit: www.sandstormgold.com.
CAUTIONARY STATEMENTS TO U.S.
SECURITYHOLDERS
The financial information included or incorporated by reference
in this press release or the documents referenced herein has been
prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards
Board, which differs from US generally accepted accounting
principles ("US GAAP") in certain material respects, and thus are
not directly comparable to financial statements prepared in
accordance with US GAAP.
This press release and the documents incorporated by reference
herein, as applicable, have been prepared in accordance with
Canadian standards for the reporting of mineral resource and
mineral reserve estimates, which differ from the previous and
current standards of the United
States securities laws. In particular, and without limiting
the generality of the foregoing, the terms "mineral reserve",
"proven mineral reserve", "probable mineral reserve", "inferred
mineral resources,", "indicated mineral resources," "measured
mineral resources" and "mineral resources" used or referenced
herein and the documents incorporated by reference herein, as
applicable, are Canadian mineral disclosure terms as defined in
accordance with Canadian National Instrument 43-101 — Standards of
Disclosure for Mineral Projects ("NI 43-101") and the Canadian
Institute of Mining, Metallurgy and Petroleum (the "CIM") — CIM
Definition Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council, as amended (the "CIM Definition
Standards").
For United States reporting
purposes, the United States Securities and Exchange Commission (the
"SEC") has adopted amendments to its disclosure rules (the "SEC
Modernization Rules") to modernize the mining property disclosure
requirements for issuers whose securities are registered with the
SEC under the Exchange Act, which became effective February 25, 2019. The SEC Modernization Rules
more closely align the SEC's disclosure requirements and policies
for mining properties with current industry and global regulatory
practices and standards, including NI 43-101, and replace the
historical property disclosure requirements for mining registrants
that were included in SEC Industry Guide 7. Issuers were required
to comply with the SEC Modernization Rules in their first fiscal
year beginning on or after January 1,
2021. As a foreign private issuer that is eligible to file
reports with the SEC pursuant to the multi-jurisdictional
disclosure system, the Corporation is not required to provide
disclosure on its mineral properties under the SEC Modernization
Rules and will continue to provide disclosure under NI 43-101 and
the CIM Definition Standards. Accordingly, mineral reserve and
mineral resource information contained or incorporated by reference
herein may not be comparable to similar information disclosed by
United States companies subject to
the United States federal
securities laws and the rules and regulations thereunder.
As a result of the adoption of the SEC Modernization Rules, the
SEC now recognizes estimates of "measured mineral resources",
"indicated mineral resources" and "inferred mineral resources." In
addition, the SEC has amended its definitions of "proven mineral
reserves" and "probable mineral reserves" to be "substantially
similar" to the corresponding CIM Definition Standards that are
required under NI 43-101. While the SEC will now recognize
"measured mineral resources", "indicated mineral resources" and
"inferred mineral resources", U.S. investors should not assume that
all or any part of the mineralization in these categories will be
converted into a higher category of mineral resources or into
mineral reserves without further work and analysis. Mineralization
described using these terms has a greater amount of uncertainty as
to its existence and feasibility than mineralization that has been
characterized as reserves. Accordingly, U.S. investors are
cautioned not to assume that all or any measured mineral resources,
indicated mineral resources, or inferred mineral resources that the
Company reports are or will be economically or legally mineable
without further work and analysis. Further, "inferred mineral
resources" have a greater amount of uncertainty and as to whether
they can be mined legally or economically. Therefore, U.S.
investors are also cautioned not to assume that all or any part of
inferred mineral resources will be upgraded to a higher category
without further work and analysis. Under Canadian securities laws,
estimates of "inferred mineral resources" may not form the basis of
feasibility or pre-feasibility studies, except in rare cases. While
the above terms are "substantially similar" to CIM Definitions,
there are differences in the definitions under the SEC
Modernization Rules and the CIM Definition Standards. Accordingly,
there is no assurance any mineral reserves or mineral resources
that the Company may report as "proven mineral reserves", "probable
mineral reserves", "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources" under NI 43-101 would
be the same had the Company prepared the reserve or resource
estimates under the standards adopted under the SEC Modernization
Rules or under the prior standards of SEC Industry Guide 7.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING INFORMATION
This press release contains "forward-looking statements", within
the meaning of the U.S. Securities Act of 1933, the U.S. Securities
Exchange Act of 1934, the Private Securities Litigation Reform Act
of 1995 and "forward-looking information" within the meaning of
applicable Canadian securities legislation, concerning the
business, operations and financial performance and condition of
Sandstorm Gold Royalties. Forward-looking statements include, but
are not limited to, the impact of general business and economic
conditions; the properties underlying the Nomad Acquisition, the
mines underlying the BaseCore Transaction; the expectation that the
various closing conditions of the Hod Maden transaction will be
met; the expectation that the Hod Maden transaction with Horizon
will close; the expectations regarding whether the proposed Nomad
Acquisition will be consummated, including whether conditions to
the consummation of the Nomad Acquisition will be satisfied, or the
timing for completing the Nomad Acquisition; the expectations
regarding the potential benefits and synergies of the proposed
Nomad Acquisition and the BaseCore Transaction (collectively "The
Transactions") and the ability of Sandstorm post-completion of the
Transactions to successfully achieve business objectives, including
integrating the companies or assets or the effects of unexpected
costs, liabilities or delays; the expectations regarding the growth
potential of Sandstorm including in scale and production and the
anticipated benefits of the Transactions; management's expectations
regarding Sandstorm's growth; the future price of gold, silver,
copper, iron ore and other metals, the estimation of mineral
reserves and resources, realization of mineral reserve estimates,
the timing and amount of estimated future production.
Forward-looking statements can generally be identified by the use
of forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "continue", "plans",
or similar terminology.
Forward-looking statements are made based upon certain
assumptions and other important factors that, if untrue, could
cause the actual results, performances or achievements of Sandstorm
Gold Royalties to be materially different from future results,
performances or achievements expressed or implied by such
statements. Such statements and information are based on numerous
assumptions regarding present and future business strategies and
the environment in which Sandstorm Gold Royalties will operate in
the future, including the receipt of all required approvals, the
price of gold and copper and anticipated costs. Certain important
factors that could cause actual results, performances or
achievements to differ materially from those in the forward-looking
statements include, amongst others, failure to receive necessary
approvals, changes in business plans and strategies, market
conditions, share price, best use of available cash, gold and other
commodity price volatility, discrepancies between actual and
estimated production, mineral reserves and resources and
metallurgical recoveries, mining operational and development risks
relating to the parties which produce the gold or other commodity
the Company will purchase, regulatory restrictions, activities by
governmental authorities (including changes in taxation), currency
fluctuations, the global economic climate, dilution, share price
volatility and competition.
Forward-looking statements are subject to known and unknown
risks, uncertainties and other important factors that may cause the
actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or
implied by such forward-looking statements, including but not
limited to: the impact of general business and economic conditions,
the absence of control over mining operations from which the
Company will purchase gold, other commodities or receive royalties
from, and risks related to those mining operations, including risks
related to international operations, government and environmental
regulation, actual results of current exploration activities,
conclusions of economic evaluations and changes in project
parameters as plans continue to be refined, risks in the
marketability of minerals, fluctuations in the price of gold and
other commodities, fluctuation in foreign exchange rates and
interest rates, stock market volatility, as well as those factors
discussed in the section entitled "Risks to Sandstorm" in the
Company's annual report for the financial year ended December 31, 2021 and the section entitled "Risk
Factors" contained in the Company's annual information form dated
March 31, 2022 available at
www.sedar.com. Although the Company has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking statements,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. The Company does not
undertake to update any forward-looking statements that are
contained or incorporated by reference, except in accordance with
applicable securities laws.
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SOURCE Sandstorm Gold Ltd.