(Sandstorm, 7.Nov.2022) — Sandstorm Gold Ltd. (NYSE: SAND) (TSX: SSL) has released its results for the third quarter ended 30 September 2022 (all figures in U.S. dollars).
THIRD QUARTER HIGHLIGHTS
- Record attributable gold equivalent ounces of 22,606 ounces (Q3 2021—15,514 ounces);
- Record revenue of $39mn (Q3 2021—$27.6mn);
- Cash flows from operating activities, excluding changes in non-cash working capital of $31.3 million (Q3 2021—$20.8mn);
- Average cash cost per attributable gold equivalent ounce of $323 resulting in cash operating margins of $1,383 per ounce (Q3 2021—$238 per ounce and $1,541 per ounce respectively);
- Net income of $31.7mn (Q3 2021—$6.6mn); 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. In August 2022, the Company closed its previously announced agreement to acquire all issued and outstanding common shares of Nomad Royalty Company Ltd. 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. 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 $625mn. 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 $92.1mn on 4 October 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 30 September 2022, the company realized record revenue of $39mn compared to $27.6mn 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 $24.9mn 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.
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