Vancouver, British Columbia | Sandstorm Gold Ltd. (“Sandstorm Gold Royalties”, “Sandstorm” or the “Company”) (NYSE American: SAND, TSX: SSL) has released its results for the third quarter ended September 30, 2018 (all figures in U.S. dollars).
THIRD QUARTER HIGHLIGHTS
•Revenue of $17.3 million (Q3 2017 - $17.9 million);
•Attributable gold equivalent ounces1 sold of 14,314 ounces (Q3 2017 – 14,293 ounces);
•Average cash cost per attributable gold equivalent ounce1 of $248 resulting in cash operating margins1 of $960 per ounce (Q3 2017 - $246 per ounce and $1,009 per ounce respectively);
•Cash flows from operating activities, excluding changes in non-cash working capital1, of $11.4 million (Q3 2017 – $11.1 million);
•Net income of $2.1 million (Q3 2017 – net income of $4.8 million).
Based on the Company’s existing royalties, attributable gold equivalent ounces sold is forecasted to be between 56,000 – 60,000 for 2018 and between 63,000 – 73,000 ounces in 2019. The Company is forecasting attributable gold equivalent production of 140,000 ounces in 2023.
Sandstorm’s revenue during the third quarter of 2018 was $17.3 million compared with $17.9 million for the comparable period in 2017. The decrease is largely attributable to a 4% decrease in the average realized selling price of gold.
Net income was lower when compared to the same period in 2017 partly due to certain non-recurring items that were recognized during the third quarter of 2017, including a $3.4 million gain primarily resulting from the Bachelor Lake gold stream amendment. The decrease in net income was partially offset by a $0.7 million decrease in depletion expense and a $0.3 million reduction in the administrative costs due to cost reduction strategies.
STREAMS & ROYALTIES: Q3 UPDATES
Of the attributable gold equivalent ounces sold by Sandstorm, approximately 39% were attributable to mines located in Canada, 17% from the rest of North America and 44% from South America and other countries.
Streams and royalties on Canadian mines contributed 6% less gold equivalent ounces sold to Sandstorm when compared to the third quarter of 2017. The change is primarily attributable to a decrease in gold equivalent ounces sold from the Black Fox mine in Ontario and a decrease in royalty revenue from the Bracemac-McLeod mine in Quebec.
Black Fox Stream
McEwen Mining Inc. (“McEwen”) reported in their third quarter results that their 2018 exploration budget at the Black Fox Complex in Ontario, Canada has increased to $19 million. The goals of the exploration program are to grow known deposits and make new discoveries that will contribute to near-term and mid-term gold production.
During the third quarter of 2018, surface exploration drilling at the Froome target area focused on evaluating the down-plunge extension of the Froome Deposit and assessing the potential of the mineralized footwall. Underground exploration drilling was dedicated to confirming and expanding known mineralized trends that are located close to current workings and could be brought into production quickly. For the remainder of the year, underground mining and exploration efforts will be dedicated to further understanding the depth potential at the mine’s main ore system below the existing development.
For more information refer to www.mcewenmining.com and see the press release dated October 30, 2018.
Sandstorm has a gold stream agreement to purchase 8% of the gold produced from Black Fox at an ongoing cost of $540 per ounce.
North America Excluding Canada
When compared to the third quarter of 2017, gold equivalent ounces coming from North America, excluding Canada, decreased by 35%. The change was driven by a decrease in gold equivalent ounces sold attributable to the Santa Elena mine in Mexico and a decrease in royalty revenue from the Emigrant Springs mine in Nevada.
South America & Other
Operations in South America and other countries contributed an additional 1,723 gold equivalent ounces sold when compared to the third quarter of 2017, representing a 38% increase. The recently acquired Houndé royalty contributed 1,399 of those attributable gold equivalent ounces.
Cerro Moro Silver Stream
Yamana Gold Inc. (“Yamana”) has provided Sandstorm with notification that it has met the contractual threshold for the commencement of commercial production at the Cerro Moro mine (“Cerro Moro”). Purchases under Sandstorm’s silver stream agreement will begin on silver produced from ore mined starting on January 1, 2019. Accordingly, the first attributable silver ounces are expected to be delivered to Sandstorm starting in the second quarter of 2019.
Sandstorm has a silver stream agreement to purchase an amount of silver from Cerro Moro equal to 20% of the silver produced, up to a maximum of 1.2 million ounces of silver annually, until Yamana has delivered to Sandstorm 7.0 million ounces of silver, then 9.0% of the silver produced thereafter for the life of the mine. Sandstorm will make ongoing payments for each ounce of silver received, equal to 30% of the spot price per ounce of silver.
Equinox Gold Corp. (“Equinox Gold”) announced that as of September 30, 2018, overall project construction was 80% complete at the Aurizona gold mine in Brazil. The project is on track to achieve commercial production around the end of the first quarter of 2019. At the end of the third quarter of 2018, more than 4 million tonnes of material had been moved and 270,000 tonnes of ore stockpiled.
For more information refer to www.equinoxgold.com and see the press release dated October 31, 2018.
Sandstorm has a 3% - 5% sliding scale NSR royalty on the Aurizona project. At gold prices less than or equal to US$1,500 per ounce, the royalty is a 3% NSR. In addition, Sandstorm holds a 2% NSR royalty on the Aurizona Greenfields property, a package of exploration ground adjacent to the Aurizona project.
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SANDSTORM GOLD ROYALTIES BOARD APPROVES SHARE BUYBACK OF UP TO 18.3 MILLION SHARES
Vancouver, British Columbia | Sandstorm Gold Ltd. (“Sandstorm Gold Royalties”, “Sandstorm” or the “Company”) (NYSE American: SAND, TSX: SSL) is pleased to announce that the Company’s Board of Directors has approved the purchase of up to 18.3 million of its common shares (“Common Shares”), between now and the end of 2019, subject to Toronto Stock Exchange (“TSX”) approval (the “Buyback”). The 18.3 million shares represent approximately 10% of Sandstorm’s current shares outstanding and it is the Company’s current intention to complete the entire share buyback of 18.3 million shares.
Under the Company’s current Normal Course Issuer Bid (“NCIB”), Sandstorm has the option to purchase up to 9.2 million Common Shares until April 4, 2019. As of November 14, 2018, the Company has purchased 2.5 million Common Shares, leaving 6.7 million Common Shares still available to purchase under the current NCIB. After the current NCIB expires on April 4, 2019, the Company plans to seek approval for a new NCIB from the TSX. Subject to TSX approval, the new NCIB would provide Sandstorm the ability to purchase the remaining shares under the Buyback.