VANCOUVER, Nov. 9, 2016 /PRNewswire/ - Sandstorm
Gold Ltd. ("Sandstorm" or the "Company") (NYSE MKT: SAND, TSX: SSL)
has released its results for the third quarter ended September 30, 2016 (all figures in U.S. dollars).
— THIRD QUARTER HIGHLIGHTS
- Attributable gold equivalent ounces sold1 of 12,588
ounces (Q3 2015 – 10,834 ounces);
- Revenue of $16.8 million (Q3 2015
- $12.1 million);
- Average cash cost per attributable gold equivalent ounce of
$255 resulting in cash operating
margins1 of $1,081 per
ounce (Q3 2015 - $307 per ounce and
$809 per ounce respectively);
- Operating cash flow of $10.3
million (Q3 2015 – $8.2
million);
- Net income of $6.9 million (Q3
2015 – $5.5 million loss); and
- The Company completed an equity financing for aggregate gross
proceeds of $57.5 million. 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.
"The first three quarters of 2016 have demonstrated the strength
of the Sandstorm business model as our ever increasing asset
diversification has led to strong revenue and cash flow growth,"
said Sandstorm's President & CEO Nolan
Watson. "Our Q3 net income figures have again been bolstered
by the strong performance of the Company's equity and debt
investments which we intend to liquidate in due course. With no
debt on the balance sheet, we have over $130
million in available capital to pursue acquisitions."
— OUTLOOK
Based on the Company's existing gold streams and royalties,
attributable gold equivalent production for 2016
is forecasted to be between 47,000 and 50,000 ounces. The
Company is forecasting attributable gold
equivalent production of approximately 65,000 ounces per
annum by 2020.
— FINANCIAL RESULTS
During the third quarter, 80% of the Company's revenue was
produced by precious metal streams and royalties with the balance
coming from base metal assets. Compared to the third quarter of
2015, there was a 39% increase in revenue, largely attributable to
a 20% increase in the average realized selling price of gold and a
16% increase in the number of attributable gold equivalent ounces
sold. The increase in ounces sold was driven by the approximately
3,000 gold equivalent ounces delivered by the silver and copper
streams from Yamana Gold Inc. ("Yamana") and the gold stream from
the Karma mine, operated by Endeavour Mining Corporation. The gains
in ounces sold compared to 2015 were offset by decreases from the
Aurizona mine and the Black Fox mine during the quarter.
Cash flow from operations of $10.3
million and net income of $6.9
million are higher when compared to the same period in 2015.
The factors contributing to the change in net income included a
$5.8 million gain on the revaluation
of the Company's investments and a $0.7
million decrease in depletion expense and were partially
offset by a $1.1 million impairment
charge relating to the Company's mineral royalties and a
$0.3 million increase in finance
expense on account of amounts drawn on the revolving credit
facility.
— STREAMS & ROYALTIES: Q3 UPDATES
The Company's revenue was generated by 21 producing assets
during the third quarter of 2016. Of the gold equivalent ounces
delivered to Sandstorm, 74% were from operations run by major and
mid-tier mining companies. Approximately 49% of the ounces were
produced at mines located in Canada, 23% from the rest of North America and 28% from South America and other countries.
|
Three months ended
September 30, 2016
|
Revenue (in
millions)
|
Gold Equivalent
Ounces
|
Canada
|
$ 8.13
|
6,081
|
North America ex
Canada
|
$ 3.89
|
2,916
|
South America &
Other
|
$ 4.80
|
3,591
|
Total
|
$ 16.82
|
12,588
|
Canada
Gold equivalent ounces attributable to Canadian mines made up close
to 50% of the Company's total ounces in Q3 2016 and was 17% higher
when compared to the third quarter of 2015. Due to timing of
shipments there were 813 gold ounces received from Canadian mines
which were sold subsequent to quarter end and will be included in
the Company's fourth quarter gold equivalent ounce figures.
North America ex
Canada
Gold equivalent ounces from the rest of North America (excluding Canada) increased by 5% compared to 2015 and
accounted for 23% of the ounces sold during the third quarter of
2016.
At the Santa Elena mine in
Mexico, First Majestic Silver
Corp. modified the production split between underground ore and the
reprocessing of ore from the heap leach pad due to achieving higher
production rates from the Alejandra vein underground. As a result,
production of underground ore increased to a rate of 1,750 tonnes
per day while reducing heap leach production to 1,000 tonnes per
day. This improved run rate is expected to increase production in
subsequent quarters due to the higher grades and recoveries of
underground ore.
South America &
Other
Attributable gold equivalent ounces from South America and the rest of the world was
28% higher than the third quarter of 2015, and made up
approximately 29% of Sandstorm's total gold equivalent production
during the quarter. The addition of copper and silver from the
streams on Yamana's Chapada and Minera
Florida mines as well as the contribution from the gold
stream on the Karma mine in Burkina
Faso drove the increase.
A portion of Sandstorm's projected growth is from the Cerro Moro
silver stream. Cerro Moro is a high grade gold and silver deposit
in the Santa Cruz province of
Argentina, currently in the
development stage with first production planned for 2018. Yamana,
the owner of Cerro Moro, has been ramping-up construction
activities, completing detailed engineering and advancing
underground mining at the project. Yamana's planned expenditures
for 2016 are expected to be approximately US$53 million, leaving US$224 million in total for 2017 and 2018, with
the majority of the capital being spent in 2017. Further
exploration drilling is planned in order to increase the size of
the Cerro Moro mineral resources, and to improve the current
mineral resource categorization.
— WEBCAST AND CONFERENCE CALL DETAILS
A conference call will be held on Thursday, November 10, 2016 starting at
8:30am PST to further discuss the
third 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: (+1) 416 764 8688
North American Toll-Free: (+1) 888 390 0546
Conference ID: 54352592
Webcast URL: http://ow.ly/vULe305NMve
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/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.
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 133 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,
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.
SOURCE Sandstorm Gold Ltd.