Sandstorm Gold Ltd. (TSX: SSL) (NYSE: SAND), has released its results for the second quarter ended June 30, 2023 (all figures in U.S. dollars).

SECOND QUARTER HIGHLIGHTS

• Record revenue of $49.8 million (Q2 2022 — $36.0 million);
• Attributable gold equivalent ounces¹ of 24,504 ounces (Q2 2022 — 19,276 ounces);
• Cash flows from operating activities, excluding changes in non-cash working capital¹ of $38.0 million (Q2 2022 — $21.9 million);
• Average cash cost per attributable gold equivalent ounce¹ of $228 resulting in cash operating margins¹ of $1,744 per ounce (Q2 2022 — $273 per ounce and $1,593 per ounce respectively);
• Net income of $2.7 million (Q2 2022 — $39.7 million);
• Sale of Antamina NPI and closing of Horizon Copper transaction: In June, Sandstorm closed the final component of its previously announced arrangement with Horizon Copper Corp. (“Horizon Copper”) to sell a portion of the Company’s Antamina royalty in consideration for a silver stream, debt, equity, and cash. The transaction furthers Sandstorm’s strategy to acquire precious metal streams on high-quality copper assets. With the closing of the Antamina sale, Horizon Copper is positioned as a competitive copper company with a portfolio of high-quality cash-flowing and development stage copper assets.
• Share buybacks: During the six months ended June 30, 2023 and under the Company’s normal course issuer bid, the Company purchased and cancelled approximately 2.8 million common shares for total consideration of $14.2 million.

OUTLOOK

Based on the Company’s existing streams and royalties, attributable gold equivalent ounces for 2023 are forecasted to be between 90,000 and 100,000 ounces. The Company’s production forecast is expected to reach approximately 125,000 attributable gold equivalent ounces within the next five years, with a sustainable average annual production of approximately 110,000 attributable gold equivalent ounces over the next 15 years.

RECORD REVENUE AND OPERATING CASH FLOW

For the three months ended June 30, 2023, the Company realized record quarterly revenue of $49.8 million compared with $36.0 million for the comparable period in 2022. The increase in revenue is largely attributable to a 27% increase in attributable gold equivalent ounces sold.

The Company had record cash flows from operating activities of $42.1 million and net income of $2.7 million for the three month period, compared with cash flows from operating activities of $33.2 million and net income of $39.7 million for the comparable period in 2022. The change is due to a combination of factors, including a $22.9 million gain that was recognized during the three months ended June 30, 2022, related to the sale of a portfolio of royalties to Sandbox Royalties Corp., and a $12.5 million gain on the sale of the Company’s equity interest in Entrée Resources Ltd. to Horizon Copper that was also recognized during the comparable period in 2022. Other contributing factors to the change include a $10.8 million increase in depletion expense partly driven by an increase in attributable gold equivalent ounces sold and a $9.1 million increase in finance expense, primarily related to interest paid on the Company’s credit facility that was drawn down to finance acquisitions made in 2022. The change in net income and cash flows from operating activities was partially offset by a $13.9 million increase in revenue and a $5.7 million decrease in income tax expense.

STREAMS & ROYALTIES

Of the attributable gold equivalent ounces sold by Sandstorm during the second quarter of 2023, approximately 11% were attributable to mines located in Canada, 30% from the rest of North America, 45% from South America, and 14% from other countries.

Canada

Streams and royalties on Canadian mines contributed 11% less gold equivalent ounces to Sandstorm when compared to the second quarter of 2022. The change is primarily due to a decrease in royalty revenue from the Diavik mine in the Northwest Territories, driven by the timing of sales, production rates, and diamond prices, as well as a decrease in royalty revenue from the Bracemac-McLeod mine in Quebec, which discontinued operations in the second half of 2022. The decrease was partially offset by an increase in gold equivalent ounces received and sold from the CEZinc smelter in Quebec, which was acquired in July 2022, and an increase in ounces received and sold from the Black Fox mine in Ontario.

North America Excluding Canada

Operations located within North America, but outside of Canada, contributed 71% more gold equivalent ounces when compared to the second quarter of 2022. The change was primarily driven by an increase in gold equivalent ounces received from streams on the Mercedes mine in Mexico, which were acquired in April and August of 2022, and an increase in ounces received and sold from the Relief Canyon mine in Nevada, primarily due to the timing of sales, whereby, 1,476 gold ounces were delivered by March 31, 2023, and sold in the subsequent quarter. The increase was partially offset by a decrease in ounces received from the Santa Elena mine in Mexico, largely due to mining activity on concessions not subject to the Company’s gold stream.

South America

Operations in South America contributed 18% more gold equivalent ounces when compared to the second quarter of 2022. The increase was largely driven by an increase in royalty revenue from the Antamina mine in Peru and the Caserones mine in Chile, both of which were acquired in the second half of 2022. The change was partially offset by a decrease in revenue attributable to the Chapada copper stream primarily due to a 39% decrease in the number of copper pounds sold as a result of planned lower recoveries, partially offset by higher throughput, as well as a decrease in the average realized selling price of copper when compared to the equivalent period in 2022.

Other

Streams and royalties on mines in other countries contributed 34% more attributable gold equivalent ounces when compared to the second quarter of 2022. This change is primarily due to an increase in gold equivalent ounces received and sold from the Bonikro mine in Côte d’Ivoire and the Blyvoor mine in South Africa, both of which were acquired in August 2022.

ABOUT SANDSTORM GOLD ROYALTIES

Sandstorm is a precious metals-focused royalty company that provides upfront financing to mining companies and receives the right to a percentage of production from a mine, for the life of the mine. Sandstorm holds a portfolio of 250 royalties, of which 40 of the underlying mines are producing. Sandstorm plans to grow and diversify its low cost production profile through the acquisition of additional gold royalties.