VANCOUVER, Feb. 21, 2017 /PRNewswire/ - Sandstorm Gold Ltd.
("Sandstorm" or the "Company") (NYSE MKT: SAND, TSX: SSL) has
released its results for the fourth quarter and twelve months ended
December 31, 2016 (all figures in
U.S. dollars).
— FOURTH QUARTER HIGHLIGHTS
- Record attributable gold equivalent ounces sold1 of
13,245 ounces (Q4 2015 – 8,951 ounces);
- Revenue of $16.5 million (Q4 2015
- $9.9 million);
- Average cash cost per attributable gold equivalent ounce of
$250 resulting in cash operating
margins1 of $993 per ounce
(Q4 2015 - $258 per ounce and
$844 per ounce respectively);
- Operating cash flow of $10.1
million (Q4 2015 – $5.0
million); and
- Net loss of $0.02 million (Q4
2015 – $25.0 million loss).
— FULL YEAR HIGHLIGHTS
- Record attributable gold equivalent ounces sold of 49,731
ounces (FY 2015 – 45,146 ounces);
- Revenue of $62.4 million (FY 2015
- $52.7 million);
- Average cash cost per attributable gold equivalent ounce of
$258 resulting in cash operating
margins of $996 per ounce (FY 2015 -
$300 per ounce and $867 per ounce respectively);
- Operating cash flow of $39.0
million (FY 2015 – $30.8
million);
- Net income of $25.3 million (FY
2015 – $43.1 million loss); and
- The Company acquired a royalty portfolio consisting of 52
royalties from Teck Resources Limited and its affiliates (the "Teck
Royalty Package") for consideration of $16.8
million, of which $1.4 million
was paid in cash and $15.4 million in
common shares of the Company. The transaction provides asset
diversification; immediate cash flow and significant cash flow
growth potential with estimated cash flow of over $10 million per year over the long term.
— SUBSEQUENT EVENTS
- On February 1, 2017, Luna Gold
Corp. ("Luna Gold" or "Luna") announced a merger with JDL Gold
Corp. ("JDL Gold"), which if completed will create a multi-asset
mining company with more than $70
million in cash. This would place the newly merged company
in a position to advance the Aurizona gold project wherein
Sandstorm holds a 3% to 5% sliding scale NSR royalty. Concurrent
with the closing of the transaction, the term debt facility that is
owed by Luna to Sandstorm, in the amount of $20 million plus accrued interest, is expected to
be settled in equity, or a combination of cash and equity of the
newly combined entity.
- On January 26, 2017, Orezone Gold
Corporation exercised its option to repurchase the royalty on the
Bomboré gold project for $3.6
million, representing a 20% premium to the original upfront
payment. Sandstorm retains a right of first refusal on any future
stream or royalty financings related to the Bomboré gold
project.
Sandstorm's President & CEO, Nolan
Watson remarked, "The stream and royalty acquisitions that
we made at the end of 2015 and during the 2016 year had a material
impact on our financial results, contributing to record gold
equivalent production numbers. We added 60 new royalties to the
portfolio in 2016 and many of the projects are in production or are
emerging as medium-term sources of cash flow growth." Watson added,
"We like the diversification in our producing assets, the expected
growth profile in the coming years and the optionality contained in
our 99 exploration properties, more than 30 of which have planned
exploration programs in 2017. We will continue to focus our efforts
on growing our stream and royalty portfolio this year."
— OUTLOOK
Based on the Company's existing gold streams and royalties,
attributable gold equivalent production for 2017
is forecast to be between 45,000 and 55,000 ounces. The
Company is forecasting attributable gold
equivalent production of over 65,000 ounces per annum by
2020.
— FINANCIAL RESULTS
The Company reported record attributable gold equivalent
production during the fourth quarter and twelve months of 2016,
translating to significant growth in revenue. Revenue for the full
2016 year was up 18% when compared to 2015 and revenue during the
fourth quarter increased by 67% when compared to Q4, 2015. The
marked increase in Q4 was a result of a 13% rise in the average
realized selling price of gold and a 48% increase in attributable
gold equivalent ounces sold. Contributions from the Yamana silver
stream, Chapada copper stream, Teck Royalty Package and Karma gold
stream were the main drivers of the growth in gold equivalent
ounces, all of which were not part of the asset mix in 2015.
Precious metal streams and royalties (including diamonds) accounted
for 82% of the Company's revenue during the year, with the other
18% coming primarily from base metal projects.
For both the fourth quarter and the full year, cash flow from
operations and net income were higher when compared to 2015. When
reviewing the annual numbers, the main drivers for the increase in
2016 were a gain on the revaluation of the Company's investments of
$22.1 million, primarily driven by
the change in fair value of the Luna convertible debenture and Luna
warrants, a $7.7 million decrease in
depletion expense, driven by a resetting of the number of ounces in
the depletable base, and certain non-recurring items that were
recognized in 2015 related to tax assets and mineral interests.
— STREAMS & ROYALTIES: Q4 UPDATES
Sandstorm's revenue was generated by 21 producing assets during
the fourth quarter of 2016. Of the gold equivalent ounces delivered
to Sandstorm, 73% were from operations run by major and mid-tier
mining companies. Approximately 48% of the ounces were attributable
to mines located in Canada, 20%
from the rest of North America and
32% from South America and other
countries.
|
Three months ended
Dec. 31, 2016
|
Year ended Dec. 31,
2016
|
Revenue (in
millions)
|
Gold Equivalent
Ounces
|
Revenue (in
millions)
|
Gold Equivalent
Ounces
|
Canada
|
$ 7.9
|
6,352
|
$ 28.3
|
22,541
|
North America excl.
Canada
|
$ 3.3
|
2,669
|
$ 18.0
|
14,410
|
South America &
Other
|
$ 5.3
|
4,224
|
$ 16.1
|
12,780
|
Total
|
$ 16.5
|
13,245
|
$ 62.4
|
49,731
|
Canada
Streams and
royalties on Canadian mines contributed 22% more gold equivalent
ounces to Sandstorm when compared to the fourth quarter of 2015.
The change is attributable to an increase in production from the
Bachelor Lake mine in Quebec
("Bachelor Lake"), operated by Metanor Resources Inc. ("Metanor"),
and from royalties on Canadian projects that were acquired as part
of the Teck Royalty Package.
North America excl.
Canada
When compared to Q4,
2015, gold equivalent ounces coming from North America, excluding Canada, increased by 14% during the fourth
quarter of 2016. The change was driven by increases in gold
equivalent ounces attributable to the Emigrant mine in the
USA and the San Andres mine in Honduras, offset by a 21% decrease in ounces
sold from the Santa Elena mine in
Mexico ("Santa Elena") due to
timing of shipments.
At Santa Elena, First Majestic
Silver Corp. is continuing the development of the new San Salvador ramp. Once completed, the
transportation of ore via trucks is expected to reduce haulage
bottlenecks and increase underground production capacity. For more
information refer to www.firstmajestic.com.
South America &
Other
Operations in South
America and other countries contributed 4,224 attributable
gold equivalent ounces during the fourth quarter of 2016. The
attributable ounces were significantly higher than the 1,419 ounces
reported in the same period in 2015 primarily due to an additional
2,441 ounces sold from the recently acquired Yamana silver stream
and Chapada copper stream and 833 ounces from the Karma mine in
Burkina Faso, offset by a decrease
in ounces from the Aurizona mine in Brazil, as the mine ceased mining operations
in 2015.
Yamana Silver Stream
The Yamana silver stream delivered ounces to Sandstorm from the
Minera Florida mine in Chile and
the Chapada mine in Brazil
("Chapada") during the 2016 year and beginning in 2019 Sandstorm
will begin to purchase silver from the Cerro Moro mine in
Argentina ("Cerro Moro"). Cerro
Moro is a high-grade gold and silver deposit currently in
construction and development by Yamana Gold Inc. ("Yamana"). Yamana
is forecasting first production for early 2018.
During the fourth quarter of 2016, Yamana completed the planned
underground mine development and the ramp-up of site construction
and engineering was reported to be ahead of schedule. Structural
steel, mechanical, and tailings dam construction contracts have
been awarded which will allow mobilization to take place in the
first quarter of 2017. Mechanical completion of the process plant
and mine infrastructure is scheduled for the fourth quarter of 2017
in preparation for the start of commissioning in early 2018.
The updated mine plan at Cerro Moro shows partial production in
2018 and the 2019 silver production is estimated to be
approximately 9,900,000 ounces at an average feed grade of 920
grams per tonne ("g/t"). For more information refer to
www.yamana.com.
Chapada Copper Stream
The Chapada operation produced 115.5 million pounds of copper in
2016 and Yamana has forecasted 120 million pounds of copper
production for the 2017, 2018 and the 2019 years. Yamana is focused
on improving operational performance at the asset, with targets to
increase recoveries and throughput. A processing optimization
initiative undertaken during the fourth quarter is showing good
results with increasing recoveries and mill throughput stability.
The project should be completed during the first quarter of 2017
with the commissioning of a fully integrated processing control
system.
Following the evaluation of further processing improvement
opportunities at Chapada, mine management expanded the cleaning
circuit by installing additional flotation cells by retrofitting
some key components of the existing cleaner circuit. The main
objective is to increase gold and copper recovery by increasing the
solution residency time during the flotation process. The cleaning
circuit expansion should be commissioned during the fourth quarter
of 2017. For more information refer to www.yamana.com.
Karma Gold Stream
During the fourth quarter of 2016, Endeavour announced that commercial production
at the Karma Mine had been achieved and that capacity at the
processing plant is expected to increase to 4 million tonnes per
annum by the second half of 2017. A 60,000 metre exploration
drilling program at Kao North was completed in 2016, the results of
which are expected to be compiled and released in early 2017. A
further 30,000 metre drill program is planned in 2017 to drill
near-mill targets such as Rambo West
and Yabonsgo.
Endeavour has projected 100,000
to 110,000 ounces of gold production from the Karma mine in 2017.
For more information refer to www.endeavourmining.com.
Aurizona Royalty
Earlier this month, Luna Gold
announced a merger with JDL Gold, which if completed will create a
multi-asset mining company with more than $70 million in cash. This would place the newly
merged company in a position to advance the Aurizona gold project
wherein Sandstorm holds a 3% to 5% sliding scale NSR. Concurrent
with the closing of the transaction, the term debt facility that is
owed by Luna to Sandstorm, in the amount of $20 million plus accrued interest, is expected to
be settled in equity, or a combination of cash and equity of the
newly combined entity. Sandstorm will continue to hold the
$30 million convertible debt facility
that is due from Luna Gold.
A Pre-feasibility Study for the Aurizona project, completed in
September 2016, has projected 150,000
ounces of gold per year for the first five years, with an initial
6.5-year mine life. Completion of a feasibility study for Aurizona
is expected around the end of Q1-2017 followed by an 18-month
construction period, with the first gold pour targeted for year-end
2018. For more information refer to www.lunagold.com.
— WEBCAST AND CONFERENCE CALL DETAILS
A conference call will be held on Wednesday, February 22, 2017 starting at
8:30am PST to further discuss the
fourth quarter and annual results. To participate in the conference
call, use the following dial-in numbers and conference ID, or join
the webcast using the link below:
Local/International: (+1) 416 764 8688
North American Toll-Free: (+1) 888 390 0546
Conference ID: 51266881
Webcast URL: http://ow.ly/Z5RU3094L8D
The Sandstorm Management Discussion and Analysis (MD&A) and
Financial Statements for the three months and twelve months ended
December 31, 2016 will be accessible
on the Company's website and on SEDAR at www.sedar.com. The Company
has also completed a Form 6-K filing with the SEC that will be
accessible on EDGAR at www.sec.gov/edgar.shtml. Shareholders can
request a hard copy of the MD&A and Financial Statements by
emailing info@sandstormltd.com.
QUALIFIED PERSON
Keith Laskowski (MSc),
Sandstorm's Vice President, Technical Services is a Qualified
Professional (#01221QP) of the Mining and Metallurgical Society of
America and a Qualified Person as defined by Canadian National
Instrument 43-101. Mr. Laskowski has not independently verified the
resource estimates contained in this disclosure. He has reviewed
and approved the technical information in this press release.
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
average cash cost per ounce of gold and cash operating margin.
Average cash cost per ounce of gold is calculated by dividing the
total cost of sales, less depletion, by the ounces sold. In the
precious metals mining industry, this is a common performance
measure but does not have any standardized meaning. The Company
believes that, in addition to conventional measures prepared in
accordance with IFRS, certain investors use this information to
evaluate the Company's performance and ability to generate cash
flow. Cash operating margin is calculated by subtracting the
average cash cost per ounce of gold from the average realized
selling price per ounce of gold. 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's royalty income is
converted to an attributable gold equivalent ounce basis by
dividing the royalty income for that period by the average realized
gold price per ounce from the Company's gold streams for the same
respective period. These attributable gold equivalent ounces when
combined with the gold ounces sold from the Company's gold streams
equal total attributable gold equivalent ounces sold. The
presentation of these non-IFRS 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 measures
differently.
ABOUT SANDSTORM GOLD
Sandstorm Gold Ltd. is a gold streaming and royalty company.
Sandstorm 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. Sandstorm has acquired a portfolio of 142 streams and
royalties, of which 21 of the underlying mines are producing.
Sandstorm plans to grow and diversify its low cost production
profile through the acquisition of additional gold streams and
royalties.
For more information visit: www.sandstormgold.com
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 applicable Canadian securities legislation, concerning
the business, operations and financial performance and condition of
Sandstorm. Forward-looking statements include, but are not limited
to, statements with respect to the future price of gold, the
estimation of mineral reserves and resources, realization of
mineral reserve estimates, and 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
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 will operate in the future,
including the price of gold 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, gold 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 Sandstorm 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
Sandstorm 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 Sandstorm
will purchase gold 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,
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 Sandstorm's annual report
for the financial year ended December 31,
2016 available at www.sedar.com. Although Sandstorm 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. Sandstorm does
not undertake to update any forward looking statements that are
contained or incorporated by reference, except in accordance with
applicable securities laws.
SOURCE Sandstorm Gold Ltd.