(Sandstone Gold, 2.May.2024) — Sandstorm Gold Ltd. (NYSE: SAND) (TSX: SSL) has released its financial results for the first quarter ended 31 Mar. 2024 (all figures in U.S. dollars).
First Quarter Highlights
- Revenue of $42.8 million (Q1 2023 — $44mn);
- Attributable gold equivalent ounces1 of 20,316 ounces (Q1 2023 — 28,368 ounces);
- Cash flows from operating activities, excluding changes in non-cash working capital1 of $32.9mn (Q1 2023 — $42.7mn, which included a $10mn, one-time contractual payment from the Company’s Mt. Hamiltonroyalty);
- Record cash operating margins1 of $1,782 per attributable gold equivalent ounce (Q1 2023 — $1,652 per ounce).
- Balance sheet and capital allocation update: The company has continued to focus on de-levering its balance sheet and made $20mn in net repayments on its revolving credit facility during the first quarter. Subsequent to quarter end, the company announced the sale of select non-core, non-precious metals assets for $21mn in cash as well as the renewal of its Normal Course Issuer Bid.
- Sale of select non-core, non-precious metals assets: In May, the Company announced it had signed a definitive purchase agreement with Evolve Strategic Element Royalties Ltd. to sell a package of royalties (including Highland Valley Copper, Seymour Lake, and any future royalty proceeds exceeding $10mn from Copper Mountain) (the “Evolve Transaction”) for cash consideration of $21mn. The Evolve Transaction is expected to close within the second quarter of 2024. Upon completion of the Evolve Transaction, Sandstorm will have completed the sale of over $50mn of non-core royalty and equity investments since the third quarter of 2023, which includes cash consideration of approximately $40mn. While further monetization of the company’s investment portfolio is possible, subject to market conditions, the company does not intend to monetize further royalty or stream assets. For further details about the Evolve Transaction, see the company’s press release dated 2 May.
- Renewal of Normal Course Issuer Bid: In conjunction with accelerated deleveraging driven by recent non-core asset sales and the current commodity price environment, Sandstorm announced in May that the Board of Directors has approved the use of the renewed Normal Course Issuer Bid, which allows the Company to purchase up to 20 million of its common shares from time to time when management believes the common shares are undervalued by the market.
Outlook
Based on the company’s existing streams and royalties, attributable gold equivalent ounces for 2024 are forecasted to be between 75,000 and 90,000 ounces. The company’s production forecast is expected to reach approximately 125,000 attributable gold equivalent ounces within the next five years.
Financial Results
For the three months ended 31 Mar., the company realized quarterly revenue of $42.8mn compared with $44mn for the comparable period in 2023. The change in revenue is largely attributable to a 12% decrease in attributable gold equivalent ounces sold, excluding attributable ounces related to contractual payments, partially offset by a 10% increase in the average realized selling price of gold.
Cash flows from operating activities were $32.4mn and the company realized a net loss of $3.9mn, compared with $39.9mn in cash flows from operating activities and net income of $15.6mn for the comparable period in 2023. The change is due to a combination of factors including a $10mn decrease in other income related to a one-time contractual payment from the Company’s Mt. Hamilton royalty received during the three months ended 31 Mar. 2023, and a $9.2mn increase in losses recognized on the revaluation of the company’s investments driven by the changes in the fair value of investments in debentures.
Streams & Royalties
Of the gold equivalent ounces sold by the company during the first quarter of 2024, approximately 13% were attributable to mines located in Canada, 15% from the rest of North America, 46% from South America, and 26% from other countries.
| 31 MAR. 2024 | ||
| Revenue (in mns) | Gold Eq. Ounces | |
| Canada | $ 5.5 | 2,652 |
| North America excl. Canada | $ 6.4 | 3,103 |
| South America | $ 19.7 | 9,122 |
| Other | $ 11.2 | 5,439 |
| Total | $ 42.8 | 20,316 |
Canada
Streams and royalties on Canadian mines contributed approximately the same number of gold equivalent ounces to Sandstorm when compared to the first quarter of 2023. An increase in gold equivalent ounces sold from the Black Fox mine in Ontario was partially offset by a decrease in gold equivalent ounces received and sold from the CEZinc smelter in Québec and a decrease in royalty revenue attributable to the Diavik mine in Northwest Territories. Gold equivalent ounces from Canadian mines are expected to accelerate in the latter half of 2024 with the ramp-up of deliveries from the company’s Greenstone stream.
North America Excluding Canada
Gold equivalent ounces sold from operations located within North America, but outside of Canada, contributed 65% less gold equivalent ounces when compared to the first quarter of 2023. The change was primarily driven by a decrease in gold equivalent ounces attributable to a one-time contractual payment related to the Mt. Hamilton royalty that was received in the first quarter 2023 as well as a decrease in the number of gold equivalent ounces received and sold from the Santa Elena mine in Mexico where, as expected, production has transitioned to deposits not covered under Sandstorm’s royalty claim. The decrease was partially offset by an increase in gold equivalent ounces sold from the Relief Canyon mine in Nevada, due to the timing of sales, and an increase in royalty revenue from the Cosalá mine in Mexico.
South America
Operations in South America contributed 34% less gold equivalent ounces sold when compared to the first quarter of 2023. The change was driven by a decrease in royalty revenue attributable to the Antamina mine in Peru following the partial disposition of the royalty to Horizon Copper Corp. in the second quarter of 2023, which reduced the Company’s royalty entitlement, as well as a one-time adjustment to the asset retirement obligation at the Antamina mine to reflect updates related to a recently approved mine plan and other working capital adjustments. The change was also due to a decrease in revenue attributable to the Cerro Moro silver stream primarily due to grade sequencing at the mine, as well as a decrease in the average realized selling price of silver during the three months ended 31 Mar., compared to the equivalent period in 2023. The decrease was partially offset by an increase in revenue related to the Caserones mine in Chile, primarily due to the timing of sales.
Other
Streams and royalties on mines in other countries contributed 88% more gold equivalent ounces sold when compared to the first quarter of 2023. This change was driven by an increase in attributable gold equivalent ounces sold from the Bonikro mine in Côte d’Ivoire, partially due to the timing of sales, as well as an increase in royalty revenue attributable to the Ivrindi royalty in Türkiye.
Webcast & Conference Call Details
A conference call will be held on 3 May starting at 8:30am PDT to further discuss the first 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: 45071219
Webcast URL: https://app.webinar.net/8rgZJmKlkYo
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 Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards” or “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.
(i) 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 and ability to generate cash flow in comparison to other streaming and royalty companies in the precious metals mining industry.
(ii) 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.
(iii) 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 and ability to generate cash flow in comparison to other streaming and royalty companies in the precious metals mining industry who present results on a similar basis.
(iv) 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 and ability to generate cash flow in comparison to other streaming and royalty companies in the precious metals mining industry that present results on a similar basis.
(v) Cash flows from operating activities excluding changes in non-cash working capital is a non-IFRS financial measure that 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 31–33 of the company’s MD&A for the quarter ended March 31, 2024, which is available on SEDAR+ at www.sedarplus.ca, 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.
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