VANCOUVER, Aug. 3, 2016 /CNW/ - Sandstorm Gold Ltd.
("Sandstorm" or the "Company") (NYSE MKT: SAND, TSX: SSL) has
released its results for the second quarter ended June 30, 2016 (all figures in U.S. dollars).
— SECOND QUARTER HIGHLIGHTS
- Attributable gold equivalent ounces sold1 of 12,517
ounces (Q2 2015 – 12,901 ounces);
- Revenue of $15.7 million (Q2 2015
- $15.4 million);
- Average cash cost per attributable gold equivalent ounce of
$261 resulting in cash operating
margins1 of $994 per ounce
(Q2 2015 - $304 per ounce and
$892 per ounce respectively);
- Operating cash flow of $8.9
million (Q2 2015 – $9.5
million);
- Net income of $5.2 million (Q2
2015 – $13.4 million loss);
- The Company amended its revolving credit facility, extending
the term to four years (maturing in July
2020). The revolving credit facility allows the Company to
borrow up to $110 million for
acquisition purposes, from a syndicate of banks including The Bank
of Nova Scotia, Bank of
Montreal, National Bank of
Canada and Canadian Imperial Bank
of Commerce; and
- Subsequent to quarter end, Sandstorm completed an equity
financing for aggregate gross proceeds of $57.5 million. Upon closing of the financing, the
majority of the net proceeds were used to reduce the balance of the
Company's revolving credit facility. As a result, the Company
currently has no bank debt and the entire $110 million revolving credit facility remains
available for acquisition purposes.
Sandstorm's President & CEO Nolan
Watson remarked, "During the first half of 2016, Sandstorm
has added 55 royalties to the Company's asset base, and has
generated $18.4 million in net income
and $18.6 million in cash flow from
operations. We have used the operating cash flow and the proceeds
from our recent equity raise to pay our debt down to zero and we
now have over $110 million in
available capital to pursue acquisitions. There are a wide range of
deals that we are working on presently, from small deals on
exploration stage assets to large transactions on cash flowing
mines."
— OUTLOOK
Based on the Company's existing gold streams and royalties,
attributable gold equivalent production for 2016
is forecasted to be between 43,000 – 50,000 ounces. The
Company is forecasting attributable gold
equivalent production of approximately 65,000 ounces per
annum by 2020.
— FINANCIAL RESULTS
Precious metals and diamonds accounted for 88% of the revenue
generated during the second quarter with the remainder coming from
base metals. Revenue ($15.7 million)
was slightly higher when compared to the second quarter of 2015,
due to a 5% increase in the average realized selling price of gold,
partially offset by a 3% decrease in the number of attributable
gold equivalent ounces sold.
Cash flow from operations of $8.9
million was lower and net income of $5.2 million was higher when compared to the same
period in 2015. The factors contributing to the changes included a
$6.0 million gain on the revaluation
of the Company's investments, a $3.0
million decrease in depletion expense, a $1.3 million increase in interest expense, as
well as certain items recognized during the second quarter of 2015
that did not recur in 2016.
— STREAMS & ROYALTIES: Q2 UPDATES
The Company's revenue was generated by 19 producing assets
during the second quarter of 2016. Of the gold equivalent ounces
delivered to Sandstorm, 77% were from operations run by major and
mid-tier mining companies. Approximately 40% of the ounces were
produced at mines located in Canada, 34% from the rest of North America and 26% from South America and other countries.
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Three months ended June 30,
2016
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Revenue (in
millions)
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Gold Equivalent
Ounces
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Canada
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$ 6.29
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5,055
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North America ex
Canada
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$ 5.34
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4,203
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South America &
Other
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$ 4.07
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3,259
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Total
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$ 15.71
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12,517
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Canada
Gold equivalent ounces attributable to Canadian mines made up 40%
of the Company's total ounces in Q2 2016 and was 18% lower when
compared to the second quarter of 2015. The decline was due to
timing of shipments that affected gold ounces sold from the Ming
Mine in Newfoundland, the Bachelor
Lake mine in Quebec and the Black
Fox mine in Ontario ("Black Fox").
Specifically, 1,400 gold ounces were received as at June 30, 2016 but were sold subsequent to quarter
end.
Primero Mining Inc. ("Primero") operates Black Fox and has
focused its recent exploration efforts at the Froome zone target.
The Froome zone is located approximately 800 metres west of Black
Fox and Primero has delineated long intervals with significant gold
mineralization at the target. Primero is evaluating the deposit as
a medium term alternative to complement Black Fox ore in order to
fill the mill beyond the end of 2017.
North America ex
Canada
Gold equivalent ounces from the rest of North America (excluding Canada) increased by 26% compared to 2015 and
accounted for 34% of the ounces sold during the second quarter. One
of the factors driving the increase was an 11% rise in gold ounces
sold from the Santa Elena mine in
Mexico ("Santa Elena") operated by
First Majestic Silver Corp. ("First Majestic").
First Majestic is continuing the development of the new
San Salvador ramp at Santa Elena. This new ramp is scheduled to
connect to the Main Vein area by the end of 2016. Once completed,
the transportation of ore via trucks is expected to reduce haulage
bottlenecks and increase underground production capacity.
South America &
Other
Attributable gold equivalent ounces from South America and the rest of the world was
consistent with the ounces sold during Q2 2015, and made up
approximately 26% of Sandstorm's total gold equivalent production
during the quarter. The addition of copper and silver from the
streams on Yamana Gold Inc.'s Chapada and Minera Florida mines ("Yamana Streams") during
the quarter more than offset the loss of gold ounces due to the
temporary closure of the Aurizona mine in Brazil.
Metal deliveries under the Yamana Streams are subject to monthly
maximums and therefore prone to significant volatility with respect
to the timing of shipments. Contractually, there is an annual
true-up mechanism which takes into account the timing and shipment
of these monthly deliveries. The Company is currently anticipating
a true-up for these timing differences.
— WEBCAST AND CONFERENCE CALL DETAILS
A conference call will be held on Thursday, August 4, 2016 starting at 8:00am 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:
Local/International: 416-764-8609
North American Toll-Free: 888-390-0605
Conference ID: 68945360
Webcast URL: http://ow.ly/1gB9302FIWx
The Sandstorm Management Discussion and Analysis (MD&A) and
Financial Statements for the second 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/edgar.shtml.
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 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.
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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 131 streams and
royalties, of which 20 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
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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.
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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.
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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,
2015 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.
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SOURCE Sandstorm Gold Ltd.