VANCOUVER, Nov. 12, 2015 /CNW/ - Sandstorm Gold Ltd.
("Sandstorm" or the "Company") (NYSE MKT: SAND, TSX: SSL) has
released its results for the third quarter ended September 30, 2015 (all figures in U.S. dollars).
— THIRD QUARTER HIGHLIGHTS
- Attributable Gold Equivalent ounces sold1 of
10,834;
- Revenue of $12.1 million;
- Average cash cost per Attributable Gold Equivalent
ounce1 of $307 resulting
in cash operating margins1 of $809 per ounce;
- Operating cash flow of $8.2
million;
- Net loss of $5.5 million;
- On October 27, 2015, the Company
entered into three agreements with Yamana Gold Inc. ("Yamana") that
included commodity streams from up to five of Yamana's mining
projects. For consideration of $152
million in cash and 15 million warrants of the Company,
Sandstorm received a multi-asset silver stream that includes
production from Chapada, Minera
Florida and Cerro Moro, a
copper stream on Chapada, and an early deposit gold stream on Agua
Rica;
- On October 26, 2015, the Company
amended its revolving credit agreement, to allow the Company to
borrow up to $110 million for
acquisition purposes. As part the Yamana transaction, the Company
fully drew on the $110 million in
available credit; and
- On November 3, 2015, the Company
completed an equity financing for aggregate gross proceeds of
$28.8 million. Upon closing of the
equity financing, the majority of the net proceeds were used to
reduce the balance of the Company's revolving credit facility.
Sandstorm President & CEO Nolan
Watson commented, "The cash flow generated from our
diversified base of streams and royalties has enabled us to make a
number of acquisitions over the course of 2015. We are on track to
meet our 2015 attributable production guidance and with the recent
stream acquisition with Yamana, the Company's growth profile is
expected to increase by up to 55% over the next four years."
— FINANCIAL RESULTS
Revenue and Gold Sales
Revenue was $12.1 million in the
third quarter of 2015, generated from the sale of 10,834
Attributable Gold Equivalent ounces at an average realized selling
price of $1,116 per ounce. Revenue in
the third quarter of 2014 was $15.6
million, the 22% decrease in 2015 attributed to a 12%
decrease in the average realized selling price of gold and a 12%
decrease in the number of Attributable Gold Equivalent ounces
sold.
Costs and Expenses
The average cash cost per attributable ounce was $307 during the quarter, resulting in a cash
operating margin of $809 compared to
$308 and $959 respectively for the third quarter of 2014.
Project evaluation costs increased by $0.2
million compared to the third quarter of 2014 due to
increased corporate activity which was partially offset by a
$0.2 million decrease in corporate
administration expenses, largely driven by the Company's
implementation of a cost reduction program.
Earnings and Operating Cash Flow
For the three months ended September 30,
2015, the net loss and cash flow from operations were
$5.5 million and $8.2 million, respectively, compared with net
income and cash flow from operations of $2.1
million and $10 million for
the comparable period in 2014. The change is attributable to a
combination of factors including a $4.4
million non-cash loss on the revaluation of the Company's
investments.
— STREAMS AND ROYALTIES
The Company's stream and royalty segments for the three months
ended September 30, 2015 are
summarized in the table below:
|
|
|
|
|
|
|
In
$000's
|
Attributable
ounces
sold
|
Sales
and
royalty
revenues
|
Cost
of
sales
(excluding
depletion)
|
Depletion
|
Income
(loss)
before
taxes
|
Cash
flow
from
operations
|
Aurizona
|
2,527
|
$ 2,818
|
$ 1,031
|
$ 299
|
$ 1,488
|
$ 1,787
|
Bachelor
Lake
|
1,559
|
1,751
|
780
|
927
|
44
|
971
|
Black Fox
|
1,381
|
1,529
|
715
|
1,062
|
(248)
|
814
|
Diavik
|
1,228
|
1,370
|
-
|
1,342
|
28
|
2,054
|
Ming
|
425
|
481
|
-
|
507
|
(26)
|
481
|
Santa
Elena
|
2,226
|
2,476
|
795
|
1,503
|
178
|
1,681
|
Royalties
|
1,488
|
1,661
|
-
|
2,416
|
(755)
|
1,963
|
Corporate
|
-
|
-
|
-
|
-
|
(5,857)
|
(1,517)
|
Consolidated
|
10,834
|
$ 12,086
|
$ 3,321
|
$ 8,056
|
$ (5,148)
|
$ 8,234
|
Attributable Gold Equivalent ounces sold for the three months
ended September 30, 2015 was 10,834
ounces compared with 12,282 ounces for the comparable period in
2014. The 12% decrease from 2014 is largely attributable to a 35%
decrease in gold ounces sold from the Bachelor Lake Mine in
Quebec ("Bachelor Lake"), operated
by Metanor Resources Inc. ("Metanor"), and a 15% decrease in gold
ounces sold from Aurizona Mine in Brazil ("Aurizona"), operated by Luna Gold
Corp. ("Luna"). The aforementioned decreases in production were
partially offset by a 36% increase in gold ounces sold from the
Santa Elena Mine in Mexico ("Santa
Elena"), an operation run by First Majestic Silver Corp. ("First
Majestic").
Santa Elena Mine
Gold deliveries from Santa Elena
increased by 36% compared to the third quarter of 2014 primarily
attributable to solid production from the property and an
improvement in the mining of underground stopes. A pre-feasibility
study and open pit resource update was recently filed, showing 8
years of silver and gold production at Santa Elena. First Majestic recently closed
its previously announced transaction whereby it acquired
SilverCrest Mines Inc.
Sandstorm has a gold stream to purchase 20% of the gold produced
at Santa Elena at a per ounce
price of $357. When Sandstorm's
attributable production from Santa
Elena reaches 50,000 ounces of gold, the on-going per ounce
payments will increase to US$450.
Bachelor Lake Mine
Compared to the third quarter of 2014, there was a 15% decrease in
gold ounces sold from Bachelor Lake, primarily related to the mine
experiencing lower feed grade which was largely driven by higher
than expected dilution from some stopes. Metanor is conducting
exploration drilling at Bachelor Lake from underground and at
surface and has recently released positive drill results from its
activities. For detailed results refer to the Metanor website at
www.metanor.ca.
Sandstorm has a gold stream to purchase 20% of the gold
production at Bachelor Lake for US$500 per ounce.
Aurizona Mine
Gold ounces sold from the Aurizona mine was 15% lower when compared
to the third quarter of 2014. Luna ceased milling operations during
the quarter and finalized preparations to place the processing
plant into care and maintenance following the processing of the
stockpiled ore. Luna has initiated a pre-feasibility study for the
restart of the Aurizona Mine.
The Company has a 3% to 5% sliding scale net smelter returns
("NSR") royalty on the production from Aurizona. At gold prices
less than or equal to $1,500 per
ounce, the royalty is a 3% NSR.
— OUTLOOK
Based on the Company's existing gold streams and royalties,
production for 2015 is forecasted to be between 43,000 to 46,000
Attributable Gold Equivalent ounces. The Company is forecasting
Attributable Gold Equivalent production of approximately 65,000
ounces per annum by 2019.
— SUBSEQUENT EVENTS
Yamana Transaction
On October 27, 2015, the Company
entered into three agreements with Yamana that included commodity
streams from up to five of Yamana's mining projects. For
consideration of $152 million in cash
and 15 million warrants of the Company, Sandstorm received a
multi-asset silver stream that includes production from Chapada,
Minera Florida and Cerro Moro, a copper stream on Chapada, and an
early deposit gold stream on Agua Rica. The transaction
provides:
- Imminent Cash Flow: New silver and copper streams are expected
to contribute $10 million of cash
flow annually starting in 2016, increasing to $20 million annually by 2019 representing a 55%
increase in the Company's 2019 forecasted cash flow;
- Asset Diversification: Multi-asset silver stream that includes
production from Chapada, Minera
Florida and Cerro Moro, a
copper stream on Chapada, and an Early Deposit Gold Stream on Agua
Rica;
- Downside Protection: 24-month silver stream backstop from the
El Peñon mine if Cerro Moro does not
reach production by 2019;
- Asset Quality: The projects underlying the transaction are low
cost, economically robust assets with significant exploration
upside;
- Improved Counterparty Profile: Approximately 90% of Sandstorm's
cash flow to come from majors, mid-tiers and debt-free junior
mining companies by 2019; and
- Precious Metal Focus: Precious metals and diamonds to
contribute over 80% of the Company's cash flow by 2019.
Revolving Credit Facility
On October 26, 2015, the Company
amended its revolving credit agreement, allowing the Company to
borrow up to $110 million (the
"Revolving Loan") from a syndicate of banks including the Bank of
Nova Scotia, Bank of Montreal, National Bank of Canada, and Canadian Imperial Bank of
Commerce. The amounts drawn on the Revolving Loan remain subject to
interest at LIBOR plus 3.00% – 4.25% per annum, and the undrawn
portion of the Revolving Loan remains subject to a standby fee of
0.75% – 1.05% per annum, dependent on the Company's leverage ratio.
On October 26, 2015 and as part of
the Yamana transaction, the Company fully drew on its credit
facility.
Equity Financing
On November 3, 2015 the Company
completed a public offering of 10,087,800 units at a price of
$2.85 per unit, for gross proceeds of
$28.8 million. Each unit was
comprised of one common share of the Company and one-half of one
listed warrant. In connection with the offering, the Company paid
agent fees of $1.4 million,
representing 5% of the gross proceeds. The amount attributable to
common shares was $27.1 million,
with the remainder allocated to the warrants. As previously
announced, the net proceeds from the public offering were primarily
used to reduce the balance of the Company's Revolving Loan.
— OTHER
Normal Course Issuer Bid
On December 15, 2014, the Company
announced that it intended to proceed with a normal course issuer
bid ("NCIB"). Under the NCIB, the Company may, until December 16, 2015, purchase up to 5,882,879
common shares, representing 5% of the Company's issued and
outstanding common shares of 117,657,587 as of December 11, 2014. The NCIB provides the Company
with the option to purchase its common shares from time to time
when the Company's management believes that the Common Shares are
undervalued by the market.
During the nine months ended September
30, 2015 and pursuant to the NCIB, the Company purchased and
returned to treasury an aggregate of 518,123 common shares.
— WEBCAST AND CONFERENCE CALL DETAILS
A conference call will be held on Friday,
November 13, 2015 starting at 8:30am
PST to further discuss the Yamana transactions and the third
quarter results. To participate in the conference call, use the
following dial-in numbers and conference ID, or join the audio
webcast using the link below:
Local/International: 647-788-4916
North American Toll-Free: 877-214-4966
Conference ID: 79817661
Webcast URL: http://ow.ly/Uut8B
The Sandstorm Management Discussion and Analysis (MD&A) and
Financial Statements for the third quarter 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. Shareholders can request
a hard copy of the MD&A and Financial Statements by emailing
info@sandstormltd.com.
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
(individually and collectively referred to as "Attributable Gold
Equivalent") 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 76 streams and
royalties, of which 16 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,
2014 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.