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, 2019 (all figures in U.S. dollars).
THIRD QUARTER HIGHLIGHTS
•Record attributable gold equivalent ounces sold1 of 17,289 ounces (Q3 2018: 14,314 ounces);
•Record revenue of $25.8 million (Q3 2018: $17.3 million);
•Record cash flows from operating activities, excluding changes in non-cash working capital1 of $18.2 million (Q3 2018: $11.7 million);
•Average cash cost per attributable gold equivalent ounce1 of $288 resulting in cash operating margins1 of $1,203 per ounce (Q3 2018: $248 per ounce and $960 per ounce respectively);
•Net income of $6.2 million (Q3 2018: $2.1 million);
•Normal Course Issuer Bid: Under Sandstorm’s normal course issuer bid, the Company purchased and cancelled approximately 2.4 million shares during the third quarter of 2019;
•Commercial production at Aurizona: On July 1, 2019, Equinox Gold Corp. achieved commercial production at the Aurizona mine. Sandstorm has a 3%-5% sliding scale net smelter returns (“NSR”) royalty on the project. At gold prices less than or equal to $1,500 per ounce, the royalty is a 3% NSR royalty. At gold prices between $1,500 and $2,000 per ounce, the royalty is a 4% NSR royalty.
OUTLOOK
Based on the Company’s existing royalties, attributable gold equivalent ounces sold for 2019 is forecasted to be between 63,000 and 70,000 ounces. The Company is forecasting attributable gold equivalent production of 140,000 ounces in 2023.
FINANCIAL RESULTS
During the third quarter of 2019, the Company realized quarterly records for both revenue and attributable gold equivalent ounces sold of $25.8 million and 17,289 ounces respectively. The record represents a 49% increase in revenue and a 21% increase in attributable gold equivalent ounces sold compared to the third quarter of 2018.
Net income was higher when compared to the same period in 2018 driven by an increase in revenue and a $2.0 million increase in gains recognized on the revaluation of the Company’s investments; whereby a gain of $2.1 million was recognized during the third quarter of 2019 largely driven by the change in fair value of the Americas Gold and Silver Corp. convertible debenture and Equinox Gold Corp. convertible debenture. The increase in net income was partially offset by a $0.5 million increase in finance expense related to the Company drawing on its revolving credit facility during the third quarter of 2019.
STREAMS & ROYALTIES: Q3 UPDATES
Of the gold equivalent ounces sold by Sandstorm during the third quarter of 2019, approximately 31% were attributable to mines located in Canada, 20% from the rest of North America, 35% from South America and 14% from other countries.
Three Months Ended September 30, 2019
Revenue
(in millions) Gold Equivalent, Ounces
Canada $8.1 5,397
North America excl. Canada $5.1 3,428
South America $8.9 5,987
Other $3.7 2,477
Total $25.8 17,289
Canada
Streams and royalties on Canadian mines contributed 5,397 of the attributable gold equivalent ounces sold during the third quarter of 2019, a 2% decrease compared to the third quarter of 2018. The change is primarily due to a decrease in royalty revenue from the Diavik mine in the Northwest Territories, partially offset by an increase in gold equivalent ounces sold from the Ming mine in Newfoundland.
North America Excluding Canada
The attributable gold equivalent ounces sold from operations located within North America, but outside of Canada, increased by 38% compared to the third quarter in 2018. The change was driven primarily by an increase in gold equivalent ounces sold from the Santa Elena mine in
North America Excluding Canada
The attributable gold equivalent ounces sold from operations located within North America, but outside of Canada, increased by 38% compared to the third quarter in 2018. The change was driven primarily by an increase in gold equivalent ounces sold from the Santa Elena mine in Mexico, largely related to the timing of sales and higher gold grades.
South America
Operations in South America contributed 88% more gold equivalent ounces when compared to the third quarter of 2018. The change was driven by the addition of royalty revenue from the Aurizona mine in Brazil and an increase in gold equivalent ounces sold from the Cerro Moro mine in Brazil. In July 2019, Sandstorm received its second quarterly silver delivery from Yamana Gold Inc.’s Cerro Moro mine. This delivery, which amounted to 300,000 silver ounces, represented the maximum quarterly amount under the stream agreement.
Other
Streams and royalties on mines in other countries contributed 20% less gold equivalent ounces sold when compared to the third quarter of 2018. The change is primarily due to a decrease in gold equivalent ounces sold from the Karma mine in Burkina Faso and a decrease in royalty revenue from the Houndé mine in Burkina Faso.
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