Sandstorm Gold Ltd. (“Sandstorm Gold Royalties”, “Sandstorm” or the “Company”) (NYSE: SAND, TSX: SSL) has released its results for the second quarter ended June 30, 2021 (all figures in U.S. dollars).
SECOND QUARTER HIGHLIGHTS
•Record attributable gold equivalent ounces1 of 18,004 ounces (Q2 2020 — 10,920 ounces);
•Revenue of $26.4 million (Q2 2020 — $18.7 million);
•Record total sales, royalties, and income from other interests1 of $32.3 million (Q2 2020 — $18.7 million);
•Cash flows from operating activities, excluding changes in non-cash working capital1 of $17.6 million (Q2 2020 — $13.4 million);
•Average cash cost per attributable gold equivalent ounce1 of $227 resulting in cash operating margins1 of $1,569 per ounce (Q2 2020 — $257 per ounce and $1,458 per ounce respectively);
•Net income of $8.6 million (Q2 2020 —$7.1 million);
•Significant Acquisitions: During the quarter, the Company entered into over $140 million in stream and royalty transactions. The acquisitions provide the Company with immediate cash flow, exposure to quality assets, increased diversification, and exploration upside. ?In June 2021, the Company acquired a diverse package of Vale royalties which provide holders with life of mine net sales royalties on certain of Vale’s producing and exploration assets. The royalties provide exposure to several of Vale’s long-life, low-cost assets and are expected to contribute to Sandstorm’s portfolio for several decades.
- In June 2021, the Company agreed to acquire a gold stream on the operating Vatukoula gold mine in Fiji in exchange for a $30 million upfront deposit. The stream entitles Sandstorm to purchase 25,920 ounces of gold over a six-year period and thereafter 2.55%–2.9% of the gold produced from the mine for on-going per ounce cash payment equal to 20% of the spot price of the gold. In addition to the Gold Stream, Sandstorm will also receive an effective 0.45% NSR on certain prospecting licenses. The transaction is anticipated to close in the third quarter of 2021. Upon closing, the disbursement of the US$30 million will commence alongside the completion of various construction and expansion milestones.
- In May 2021, the Company acquired a package of royalties for consideration of $7 million. The package includes 21 royalties on development, advanced exploration and exploration stage projects located in Nevada and Montana.
OUTLOOK AND HOD MADEN UPDATE
Based on the Company’s existing royalties, attributable gold equivalent ounces for 2021 is forecast to be between 62,000 and 69,000 ounces.
The Hod Maden Feasibility Study is in the final stages and the Company expects it to be completed, along with receiving the Environmental Impact Assessment (“EIA”), by the end of September 2021. First production at Hod Maden is now projected for mid-2024.
Sandstorm has updated its long-term guidance and is forecasting attributable gold equivalent production to be over 125,000 ounces in 2025.
Sandstorm’s revenue during the second quarter of 2021 was $26.4 million compared with $18.7 million for the comparable period in 2020. Total sales, royalties, and income from other interests during the quarter was $32.3 million compared to $18.7 million for the comparable period in 2020. The increase is largely due to an increase in the attributable gold equivalent ounces, as well as a 5% increase in the average realized selling price of gold.
Net income was higher when compared to the same period in 2020 primarily due to the increase in revenue as well as a gain of $5.9 million on the revaluation of the Company’s financial instrument related to the Vale Royalties which was both entered into and disposed of during the second quarter. The increase in net income was partially offset by a $4.9 million decrease in gains recognized on the revaluation of the Company’s investments and an increase in tax expense of $3.0 million as a result of the increase in net income.
STREAMS & ROYALTIES
Of the gold equivalent ounces sold by Sandstorm during the second quarter of 2021, approximately 13% were attributable to mines located in Canada, 18% from the rest of North America, 61% from South America, and 8% from other countries.
Three Months Ended June 30, 2021
Gold Equivalent Ounces
North America excl. Canada 3,302
South America 11,053
Streams and royalties on Canadian mines contributed 94% more gold equivalent ounces to Sandstorm when compared to the second quarter of 2020. The change is primarily due to an increase in royalty revenue from the Diavik mine in the Northwest Territories and the Bracemac-McLeod mine in Québec, driven by commodity price increases.
North America Excluding Canada
The gold equivalent ounces sold from operations located within North America, but outside of Canada, contributed 101% more gold equivalent ounces when compared to the second quarter in 2020. The change was driven by an increase in gold equivalent ounces sold from the Relief Canyon mine in Nevada and the Santa Elena mine in Mexico.
Operations in South America contributed 117% more gold equivalent ounces when compared to the second quarter of 2020. The change is primarily due to an increase in gold equivalent ounces sold from the Cerro Moro mine in Argentina and an increase in royalty revenue from the Fruta del Norte mine in Ecuador. The increase was partially offset by a decrease in royalty revenue from the Aurizona mine in Brazil.
Streams and royalties on mines in other countries contributed 57% less gold equivalent ounces sold when compared to the second quarter of 2020. The change is primarily due to a decrease in gold equivalent ounces sold from the Karma mine in Burkina Faso. The decrease from Karma is primarily due to the conclusion of the five-year fixed delivery period in the first quarter of 2021, reducing Sandstorm’s gold stream entitlement to 1.625% of production. In contrast, in the second quarter of 2020, Sandstorm’s entitlement was 1,250 ounces per quarter.
WEBCAST & CONFERENCE CALL DETAILS
A conference call will be held on Friday, August 6, 2021 starting at 8:30am PDT to further discuss the second 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