VANCOUVER, BC, Nov. 7, 2022
/CNW/ - Sandstorm Gold Ltd. ("Sandstorm Gold Royalties",
"Sandstorm" or the "Company") (NYSE: SAND) (TSX: SSL) has released
its results for the third quarter ended September 30, 2022 (all figures in U.S.
dollars).
THIRD QUARTER HIGHLIGHTS
- Record attributable gold equivalent ounces1
of 22,606 ounces (Q3 2021—15,514 ounces);
- Record revenue of $39.0
million (Q3 2021—$27.6 million);
- Cash flows from operating activities, excluding changes in
non-cash working capital1 of $31.3 million (Q3 2021—$20.8
million);
- Average cash cost per attributable gold equivalent
ounce1 of $323
resulting in cash operating margins1 of $1,383 per ounce (Q3 2021—$238 per ounce and
$1,541 per ounce respectively);
- Net income of $31.7
million (Q3 2021—$6.6 million); and
- Closing of Nomad and BaseCore transactions: In
July 2022, Sandstorm closed its
previously announced agreement to acquire nine royalties and one
stream from BaseCore Metals LP ("BaseCore"). In August 2022, the Company closed its previously
announced agreement to acquire all issued and outstanding common
shares of Nomad Royalty Company Ltd. ("Nomad"). With the closing of
both transactions, Sandstorm adds several high-quality and low-cost
assets to its portfolio, which contribute meaningful increases to
the Company's production in both the near and long term.
- Sale of Hod Maden interest to Horizon Copper: In
August 2022, the Company closed a
component of its arrangement with Horizon Copper Corp. ("Horizon
Copper") to spin out certain assets and retain precious metals
streams. In consideration for transferring Sandstorm's 30% interest
in Hod Maden and its equity interest in Entrée Resources Ltd.,
Sandstorm received a flagship gold stream on Hod Maden and a
portion of debt and equity in Horizon Copper. The transaction
further repositions Sandstorm as a pure-play precious metals
royalty and streaming company.
- Upsized credit facility and financing: In August 2022, Sandstorm amended its revolving
credit agreement allowing the Company to borrow up to $625 million. The credit facility maintains its
sustainability-linked performance targets. Subsequent to quarter's
end, the Company completed an equity financing for aggregate gross
proceeds of $92.1 million on
October 4, 2022. Upon closing of the
financing, the majority of net proceeds were used to reduce amounts
drawn under the Company's revolving credit facility.
OUTLOOK
Based on the Company's existing streams and royalties,
attributable gold equivalent ounces for 2022 are forecast to be
between 80,000 and 85,000 ounces. The Company is forecasting
attributable gold equivalent production to be over 150,000 ounces
in 2025.
FINANCIAL RESULTS
During the three months ended September
30, 2022, the Company realized record revenue of
$39.0 million compared to
$27.6 million for the comparable
period in 2021. The increase is attributable to a 46% increase in
attributable gold equivalent ounces sold, partially offset by a 4%
decrease in the average realized selling price of gold. In
particular, the increase in revenue was driven in part by several
new assets acquired in the Nomad and BaseCore transactions,
including revenue attributable to the Antamina NPI royalty and
Bonikro gold stream and an increase in revenue attributable to the
Mercedes mine which commenced making deliveries in April 2022, with Sandstorm also receiving
deliveries in the period from the newly acquired assets that were a
part of the Nomad acquisition. Additionally, there was an increase
in revenue attributable to the Vatukoula gold stream, which
commenced making deliveries in December
2021 and an increase in revenue attributable to the Yamana
silver stream primarily due to a 122% increase in the number of
silver ounces received and sold in the period, which was partially
offset by a decrease in the average realized selling price of
silver. The increase in revenue for the third quarter was partially
offset by a decrease in revenue attributable to the Chapada copper
stream primarily due to a decrease in the average realized selling
price of copper, and a decrease in the number of gold ounces sold
attributable to the Relief Canyon stream primarily due to the
timing of sales.
Net income was higher during the third 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
$24.9 million gain resulting from the
sale of the Company's Hod Maden investment to Horizon Copper, a
decrease in tax expense largely driven by the recognition of
previously unrecognized tax attributes arising from the sale of Hod
Maden, and an increase in the gains recognized on the
revaluation of the Company's investments. The increase in net
income was partially offset by an increase in finance expense
related to interest paid on the Company's credit facility and an
increase in depletion largely due to an increase in attributable
gold ounces sold and certain one-time adjustments arising from the
Nomad acquisition.
STREAMS & ROYALTIES
Of the gold equivalent ounces sold by Sandstorm during the third
quarter of 2022, approximately 18% were attributable to mines
located in Canada, 22% from the
rest of North America, 46% from
South America, and 14% from other
countries.
|
Revenue
(in Millions)
|
Gold Equivalent
Ounces
|
Canada
|
$6.9
|
4,054
|
North America excl.
Canada
|
$8.5
|
5,001
|
South
America
|
$18.1
|
10,375
|
Other
|
$5.5
|
3,176
|
Total
|
$39.0
|
22,606
|
Canada
Streams and royalties on Canadian mines contributed 64% more
gold equivalent ounces to Sandstorm when compared to the third
quarter of 2021. The change is primarily due to the addition of the
Highland Valley royalty and CEZinc stream acquired in the BaseCore
transaction, 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 gold ounces received from the Black Fox mine in Ontario. 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 39% more gold
equivalent ounces when compared to the third quarter of 2021. The
change was primarily driven by an increase in gold equivalent
ounces received and sold from the Mercedes mine in Mexico, which commenced making deliveries to
Sandstorm in April 2022, with
Sandstorm also receiving deliveries in the period from the newly
acquired Mercedes assets that were a part of the Nomad acquisition.
The increase was partially offset by a decrease in gold ounces
received from the Santa Elena mine
driven in part by mining activity on concessions not subject to the
gold stream, and a decrease in gold equivalent ounces received and
sold from Relief Canyon, largely driven by the timing of sales.
South America
Operations in South America
contributed 26% more gold equivalent ounces sold when compared to
the third quarter of 2021. The increase was driven in part by
royalty revenue attributable to the Antamina mine in Peru and the Caserones mine in Chile; both royalties were recently acquired
as part of the BaseCore and Nomad transactions, respectively. The
increase in revenue was also attributable to a 122% increase in the
number of silver ounces received and sold from the Cerro Moro mine
under the Yamana silver stream, partially offset by a decrease in
the average realized selling price of silver. The increase in gold
equivalent ounces was partially offset by a decrease in ounces
received under the Chapada copper stream agreement primarily driven
by a decrease in the average realized selling price of copper and a
decrease in the number of copper pounds sold, as well as a decrease
in royalty revenue attributable to the Vale royalties and the Fruta
del Norte mine, partially driven by a decrease in the average
realized selling price of iron and gold, respectively.
Other
Streams and royalties on mines in other countries contributed
164% more gold equivalent ounces sold when compared to the third
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 the
addition of streams on the Blyvoor mine in South Africa and the Bonikro mine in Côte
d'Ivoire, both of which were acquired as part of the Nomad
acquisition. 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 Tuesday, November 8, 2022 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:
International: (+1) 416-764-8688
North American Toll-Free: (+1) 888-390-0546
Conference ID: 98780754
Webcast URL: https://bit.ly/3gLkfmk
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, less revenue attributable to
non-controlling shareholders 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 41–44 of the
Company's MD&A for the period ended September 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.
|
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. Sandstorm holds 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; 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.