Sandstorm Gold Ltd. (“Sandstorm Gold Royalties”, “Sandstorm” or the “Company”) (NYSE: SAND, TSX: SSL) is pleased to provide a summary of the results from the Hod Maden Feasibility Study (“FS”). All figures are in U.S. dollars and are on a 100% project basis unless otherwise stated. Sandstorm has a 30% interest in the Hod Maden project.
FEASIBILITY STUDY HIGHLIGHTS
Pre-tax net present value (“NPV”) (5% discount rate) of $1.3 billion and an internal rate of return (“IRR”) of 41%
Post-tax NPV (5% discount rate) of $1.05 billion and an IRR of 36%
Estimated all-in sustaining costs (“AISC”) of $334 per ounce on a by-product basis1 and $595 per ounce on a co-product basis1
Upfront capital cost of $309 million
Proven and Probable Mineral Reserves of 2.45 million ounces of gold and 287 million pounds of copper
13-year mine life with annual mill design capacity of 800,000 tonnes
Annual average production of approximately 195,000 gold equivalent (“AuEq”) ounces
Average head grade of 11.1 grams per tonne (“g/t”) AuEq
“The release of the Hod Maden Feasibility Study is a major turning point for not only the project, but for Sandstorm as well,” commented Nolan Watson, President and CEO of the Company. “When we purchased the stake in Hod Maden back in 2017, we knew that it would be a major growth catalyst for Sandstorm, and the positive results of this study spell out just how transformational it will be once in production. Along with the granting of the Environmental Impact Assessment that was previously announced, the Feasibility Study launches Hod Maden into the next stage of development. As a management team we’re excited to see this incredibly robust project make a big leap towards production.”
KEY PARAMETERS & PROJECT ECONOMICS SUMMARY
Mill Design Capacity 800,000 tonnes per annum
Mine Life 13 years
Average Annual Production Gold: 156,000 ounces
Copper: 19.6 million pounds
Total Production Gold: 2,027,000 ounces
Copper: 255 million pounds
Average Recovery Rate Gold: 85%
Average Head Grade Gold: 8.8 g/t
All-in Sustaining Cost1 By-product1: $334/oz Au
Co-product1: $595/oz Au
Upfront Capital $309 million
Base Case Commodity Prices $1,599/oz Au
NPV (5% discount rate) Pre-tax: $1.3 billion
Post-tax: $1.05 billion
IRR Pre-tax: 41%
Payback Period (from start of production) Post-tax: 2.0 years
Mining & Processing
The FS contemplates Hod Maden as an underground mine divided into two distinct mining zones with a modified drift and fill (“DAF”) technique applied to the upper mine area and a long hole stoping (“LHS”) technique applied to the lower mine area. The bulk of the mineralization is located in the lower mine area, which will be accessed through a single portal north of the deposit. The upper mine will be accessed through two shallow shafts located north and south of the mineralization. The mine capacity is 800,000 tonnes per annum with a total of 8.7 million tonnes of ore produced during the 13-year mine life.
The ore to be processed is classified into two main categories: regular ore and a pyrite ore with a flowsheet reconfiguration when processing pyrite ore to maximize gold recovery. Ore processing contemplates a single stage crush, milling, a bulk flotation concentrate, regrind through a secondary milling and a secondary flotation, ultimately producing a saleable copper concentrate and a saleable pyrite concentrate. The concentrates will be transported to a port located on the Black Sea in Turkey for shipment to smelting facilities.
Infrastructure & Capital Costs
The majority of the proposed project infrastructure, including the process plant, paste plant, water treatment facility, transformer station and mining offices, will be located in the Maden Valley near the deposit. The tailings facility, mining waste dump, and quarry will be located to the north in the Salicor Valley. A tunnel will be constructed to connect the Maden Valley to the Salicor Valley. Grid power is available on site and some workforce can be based out of Artvin city nearby.
The upfront capital cost estimate of $309 million includes a contingency of $31 million.
Mining Predevelopment Costs $63
Mining Surface Infrastructure 2
Other Site Infrastructure 78
Process Plant Infrastructure 56
EPCM Fees, Indirect Costs & Construction Facilities 37
Owners’ Costs 42
Project Contingency 31
Total Upfront Capital Expenditure $309
The post-tax NPV of $1.05 billion, using a 5% discount rate, has an IRR of 36% and payback period of 2 years. The AISC1 for gold with copper as a by-product credit is $334 per ounce.
BY-PRODUCT BASIS US$/OZ
Mining Operating Cost $230
Processing Operating Cost 104
TC/RCs (net of credits & penalties) & Transport Costs 95
G&A Operating Cost & Other 55
Revenue from Sales of Payable Copper (401)
C1 Cost1 $84
Sustaining Capital Depreciation 57
Corporate Costs 13
Closure Costs 8
With the release of the FS, the Hod Maden project moves into the next stage of development. The operator, Lidya Madencilik Sanayi ve Ticaret A.S. (“Lidya”), commenced the application process for the forestry permit after receiving the final approval of the Environmental Impact Assessment (“EIA”) from the Ministry of Environment, Urbanization and Climate Change of Turkey in November 2021. Production from Hod Maden is currently expected in the second half of 2024.
MINERAL RESERVES AND RESOURCES
Mr. Simon Kusabs of AMC Consultants Pty Ltd is the Qualified Person for reporting of the Mineral Reserve estimates. The Mineral Reserve is reported in accordance with the disclosure standards of Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and Canadian Institute of Mining (CIM) Definition Standards for Mineral Resources and Mineral Reserves (2014).
Proven 1,899 19.4 16.7 1.7% 1,186 1,021 71
Probable 6,798 8.8 6.5 1.4% 1,928 1,431 216
Proven & Probable 8,696 11.1 8.8 1.5% 3,114 2,452 287
CIM Definitions Standards (2014) were used in the preparation of the Mineral Reserve estimates.
The Mineral Reserve is estimated using metal prices of US$1,300 per oz Au and US$3.00 per lb Cu.
Effective Date of Mineral Reserve is 31 July 2020.
Errors in the totals are due to rounding.
Mineral Reserves are reported on the basis of mined ore to be delivered to the plant as mill feed.
The estimation was carried out using a breakeven cut-off value of USD82/t and incremental cut-of values of USD63/t for stopes and USD40/t for development.
The average mining recovery and dilution factors applied were 94% and 10% respectively.
Process recovery and payable factors averaged 85% and 98% respectively for gold and 93% and 95% respectively for copper.
Probable reserve gold grade and contained metal is higher than the indicated resource grade and contained metal due to the inclusion of measured resource from the modified DAF mining area above the 783m elevation.
Calculation of the gold equivalent grade (AuEq) is by the following formula: AuEq = [(Au Ounces + (Cu Pounds x 3/1300)) x 31.10348]/Tonnes
Mr. Chris Arnold of AMC Consultants Pty Ltd is the Qualified Person for reporting of the Mineral Resource estimates. The Mineral Resource is reported in accordance with NI 43-101 and CIM Definition Standards for Mineral Resources and Mineral Reserves (2014). The Mineral Resource estimate, reported above an NSR cut-off of $63/tonne, is shown below.
Measured 2,461 24.3 20.7 2.3% 1,920 1,634 124
Indicated 5,683 8.8 6.2 1.7% 1,608 1,133 206
Measured & Indicated 8,143 13.5 10.6 1.8% 3,530 2,768 330
CIM Definitions Standards (2014) were followed for Mineral Resources.
Mineral Resources are inclusive of Mineral Reserves.
Effective Date of Mineral Resource is 27 July 2019.
Mineral Resources are estimated at NSR cut-offs of $63/t for gold/copper zones.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
Totals may not match due to rounding.
Metal prices used as input into the NSR cut-off calculation are US$1,300/oz for gold, and US$6,614/tonne for copper.
Calculation of the gold equivalent grade (AuEq) is by the following formula: AuEq = [(Au Ounces + (Cu Pounds x 3/1300)) x 31.10348]/Tonnes
YR1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10 YR11 YR12 YR13 Total
Ore processed (kt) 449 560 800 800 802 800 800 787 722 720 599 480 378 8,696
Copper grade (%) 1.5 1.5 1.5 1.5 1.5 1.4 1.4 1.6 1.4 1.6 1.4 1.8 1.5 1.5
Gold grade (g/t) 12.6 13.0 8.7 7.5 6.4 5.9 5.3 7.7 8.3 9.5 9.6 13.9 13.4 8.8
Concentrate mass (kt, dmt) 26 33 47 48 47 46 44 48 41 43 34 30 21 508
Copper grade (%) 24 23 23 23 24 23 23 25 24 24 23 26 25 24
Gold grade (g/t) 158 176 108 96 81 81 70 98 118 123 137 169 182 115
Concentrate mass (kt, dmt) 31 23 41 35 47 32 41 41 27 39 20 54 33 461
Gold grade (g/t) 17 15 15 15 13 13 13 14 13 15 14 15 11 14
Copper (Mlb) 13 16 23 23 24 22 22 25 21 22 16 17 11 255
Gold (koz) 147 193 178 159 135 127 110 162 162 184 154 184 132 2,027
Site Cost (Life of Mine Average)
Site subtotal 89.01/t
OffSite Cost (Life of Mine Average)
Freight $62.50/wmt $35.50/wmt
Treatment charge $90.00/dmt $125.00/dmt
Copper refining $0.09/lb –
Gold refining $6.50/oz $8.00/oz
CAPEX BREAKDOWN INITIAL SUSTAINING CLOSURE TOTAL
Year -2 $71M – – $71M
Year -1 $151M – – $151M
Year 0 $87M – – $87M
Year 1–5 – $80M – $80M
Year 6–10 – $35M – $35M
Year 11+ – $9M $16M $25M
$71M $309M $124M $16M $449M
The Hod Maden FS was prepared in accordance with NI 43-101 by GR Engineering Services Limited (Perth, Australia), AMC Consultants Pty Ltd. (Perth, Australia), and Hacettepe Mineral Teknolojileri Ltd. ?ti. (Ankara, Turkey).
Sandstorm will file or furnish, as applicable, a Technical Report prepared in accordance with NI 43-101 for the FS entitled “Hod Maden Project Feasibility Study NI 43-101 Technical Report” (the “Technical Report”). The Technical Report will be filed within 45 days on SEDAR at www.sedar.com, on EDGAR at www.sec.gov and on Sandstorm’s website at www.sandstormgold.com, in accordance with NI 43-101. Readers are encouraged to read the Technical Report in its entirety, including all qualifications, assumptions and exclusions that relate to the details summarized in this press release. The Technical Report is intended to be read as a whole, and sections should not be read or relied upon out of context.
Mr. Simon Kusabs of AMC Consultants Pty Ltd is a Fellow (FAusIMM (Mining)) of the Australasian Institute of Mining and Metallurgy and a Qualified Person as defined by NI 43-101. He has reviewed and approved the Mineral Reserves and scientific and technical information in this press release.
Mr. Chris Arnold of AMC Consultants Pty Ltd is a Chartered Professional (FAusIMM CP (Geology)) of the Australasian Institute of Mining and Metallurgy and a Qualified Person as defined by NI 43-101. He has reviewed and approved the Mineral Resources in this press release.
Mr. Peter Allen of GR Engineering Services Ltd is a Member (MAusIMM CP) of the Australasian Institute of Mining and Metallurgy and a Qualified Person as defined by NI 43-101. He has reviewed and approved the scientific and technical information in this press release.
Dr. Zafir Ekmekçi of Hacettepe Mineral Teknolojileri Ltd. ?ti. is a Registered Member (418810RM) of the Society for Mining, Metallurgy, and Exploration, Inc. and a Qualified Person as defined by NI 43-101. He has reviewed and approved the scientific and technical information in this press release.
Mr. Stan Kagiannis formerly of GR Engineering Services Ltd. is a Fellow (FAusIMM (Processing)) of the Australasian Institute of Mining and Metallurgy and a Qualified Person as defined by NI 43-101. He has reviewed and approved the Operating Cost Estimate in this press release.
The Qualified Persons noted above have verified that the data disclosed have a reasonable basis, including sampling, analytical, and test data underlying the information contained in this news release. This includes geological studies, mine engineering, metallurgical results, and among other things, the life of mine plan, and capital and operating costs.
Additional supporting details regarding the information in this release, will be provided in the new technical report which will be available on SEDAR within 45 days of this release, including all qualifications, assumptions and exclusions that relate to the Feasibility Study.
Sandstorm has included certain measures in this press release that do not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS). With respect to the Hod Maden project, these measures include (i) all-in sustaining cost (“AISC”) per gold ounce on a co-product basis and AISC per gold ounce on a by-product basis, (ii) C1 costs on a by-product basis, and (iii) attributable gold equivalent ounce. As Sandstorm’s operations are primarily focused on precious metals, the Company presents these measures as it believes that certain investors use this information to evaluate the Company’s performance in comparison to other mining companies in the precious metals mining industry who present results on a similar basis. Other companies may calculate these measures differently as a result of differences in the underlying accounting principles, policies applied and in accounting frameworks, such as in IFRS. The presentation of these 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.
With respect to the Hod Maden project, AISC has been calculated on a co-product basis for gold and copper. The calculation for each metal is based on adding costs specific to each metal to costs allocated to each metal on a proportionate value basis. For gold, AISC per gold ounce on a co-product basis is calculated by summing certain costs (operating costs, royalties, treatment, refining & transport costs, sustaining capital depreciation, G&A, and other costs) associated with the gold produced. The resulting figure is then divided by the payable gold ounces produced. AISC per gold ounce on a by-product basis is calculated by deducting copper revenue from the summation of certain costs (operating costs, royalties, treatment, refining & transport costs, sustaining capital depreciation, G&A, and other costs). The resulting figure is then divided by the payable gold ounces produced.
AISC Co-Product Basis: [(Operating Costs ($543 million) + Royalties ($296 million) + Treatment, Refining and Transport Costs ($151 million) + Sustaining Capital Depreciation ($93 million) + G&A ($77 million) + Other Costs ($46 million)] / Payable Gold Ounces (2,027,000 oz) = $595 AISC per ounce].
AISC By-Product Basis: [(Operating Costs ($678 million) + Royalties ($349 million) + Treatment, Refining and Transport Costs ($193 million) + Sustaining Capital Depreciation ($116 million) + G&A ($96 million) + Other Costs ($57 million) - Copper Revenue ($812m)] / Payable Gold Ounces (2,027k oz) = $334 AISC per ounce].
With respect to the Hod Maden project, C1 Cash Cost on a by-product basis is calculated by deducting copper revenue from the summation of certain costs (operating costs, treatment, refining & transport costs, G&A, and other costs) associated with the gold produced. The resulting figure is then divided by the payable gold ounces produced.
The Company’s estimated royalty and other commodity stream income is converted to an attributable gold equivalent ounce basis by dividing the estimated royalty and other commodity stream income for the period by the estimated gold price per ounce for the same respective period. These attributable gold equivalent ounces when combined with the estimated gold ounces from the Company’s gold streams equal total attributable gold equivalent ounces and may be subject to change.
Numbers may not sum due to rounding.
For more information about Sandstorm Gold Royalties, please visit our website at www.sandstormgold.com or email us at email@example.com.
NOLAN WATSON KIM BERGEN
PRESIDENT &CEO CAPITAL MARKETS