Sandstorm Gold Ltd. (NYSE: SAND) (TSX: SSL) has released its financial results for the second quarter ended June 30, 2024 (figures in U.S. dollars unless otherwise indicated).

Financial Highlights

• $41.4 million of revenue compared to $49.8 million in Q2 2023;
• 17,414 attributable gold equivalent ounces¹ compared to 24,504 ounces in Q2 2023;
• $32.6 million in cash flows from operating activities, excluding changes in non-cash working capital¹, compared to $38.0 million in Q2 2023;
• Cash operating margins¹ of $2,043 per attributable gold equivalent ounce, representing a new record for the Company, compared to $1,744 per ounce in Q2 2023;
• $10.5 million of net income compared to net income of $2.7 million in Q2 2023.

Corporate Updates

Greenstone Pours First Gold

On May 23, 2024, Equinox Gold Corp. announced that it had completed its first gold pour at its 100% owned Greenstone gold mine in Ontario, Canada. Sandstorm holds a gold stream on the Greenstone mine whereby the Company is entitled to purchase 2.375% of gold produced at the mine until 120,333 ounces are delivered, and then 1.583% of gold produced thereafter. Sandstorm will make ongoing payments equal to 20% of the spot price of gold per ounce plus an additional payment of up to $30 per ounce in ESG contributions. Subsequent to quarter end, Sandstorm received its first deliveries under the Greenstone stream. Deliveries are expected to ramp-up through the second half of 2024, with Equinox Gold targeting commercial production in the third quarter 2024.

Balance Sheet Deleveraging Continues

During the second quarter, the Company continued to focus on deleveraging its balance sheet and made $27 million in net debt repayments. As at August 1, 2024, the Company’s revolving credit facility had an outstanding balance of $383 million and the undrawn and available balance remaining is $242 million.

To further expedite this repayment schedule, the Company continued its strategy of monetizing non-core assets during the three months ended June 30, 2024. In May, the Company closed the first part of the previously announced transaction to sell a portfolio of non-core assets, including the Company’s Highland Valley Copper royalty, for cash consideration of $15.4 million. While further monetization of the Company’s investment portfolio is possible, subject to market conditions, the Company does not intend to monetize further royalty or stream assets.

Capital Allocation

As part of the Company’s commitment to returning capital back to shareholders, the Company purchased 457,125 common shares for total consideration of $2.5 million during the six months ended June 30, 2024. Subsequent to quarter end, the Company purchased and cancelled approximately 90,000 of its common shares.

In June 2024, the Company declared a dividend of C$0.02 per share, which was paid on July 26, 2024.

Outlook

Based on the Company’s existing streams and royalties, attributable gold equivalent ounces for 2024 are forecasted to be between 75,000 and 85,000 ounces. The Company’s production forecast is expected to reach approximately 125,000 attributable gold equivalent ounces within the next five years.

Financial Results

For the three months ended June 30, 2024, the Company realized quarterly revenue of $41.4 million compared to $49.8 million for the comparable period in 2023. Approximately 67% of the Company’s revenue in the second quarter was attributable to precious metals, 23% from copper, and 10% from other commodities.

When compared to the same period in 2023, the decrease in revenue was attributable to a 29% decrease in attributable gold equivalent ounces sold, partially offset by a 17% increase in the average realized selling price of gold. The decrease in revenue was driven by several factors including, (i) a $5.6 million decrease attributable to the Company’s Mercedes gold and silver streams as a result of the expected conclusion of the fixed gold delivery period at the end of 2023 and the restructuring of the gold and silver streams that closed in January 2024, (ii) a $2.7 million decrease in revenue attributable to the Cerro Moro silver stream due to a decrease in mine head grades and the corresponding decrease in silver stream sales, (iii) a $1.2 million decrease in revenue attributable to the Antamina mine following a reduction in the Company’s royalty entitlement as a result of the partial disposition of the royalty to Horizon Copper Corp. in the second quarter of 2023, and, (iv) a $1.3 million decrease in revenue attributable to the Company’s Aurizona royalty as a result of a geotechnical event at the mine leading to a pause in mining. The decrease in revenue was partially offset by a $1.6 million increase in revenue attributable to the Chapada copper stream primarily due to increases in the number of pounds of copper sold and the average realized selling price of copper.

Cash flows from operating activities for the three months ended June 30, 2024, were $34.4 million and the Company realized net income of $10.5 million, compared with $42.1 million in cash flows from operating activities and net income of $2.7 million for the comparable period in 2023. The change is due to a combination of factors including, (i) a $12.3 million increase in gains recognized on the revaluation of the Company’s investments including a $7.4 million gain recognized as a result of the settlement of the Company’s debenture due from Versamet Royalties Corporation (“Versamet”, previously named Sandbox Royalties) by way of conversion to common shares of Versamet, and (ii) a $7.3 million decrease in depletion expense, primarily due to a decrease in attributable gold equivalent ounces sold. The change was partially offset by an $8.5 million decrease in revenue and a $4.8 million increase in tax expense.

Stream & Royalty Portfolio

Of the gold equivalent ounces sold by the Company during the second quarter of 2024, approximately 17% were attributable to mines located in Canada, 22% from the rest of North America, 42% from South America, and 19% from other countries.

Canada

Streams and royalties on Canadian mines contributed approximately 8% more gold equivalent ounces to Sandstorm when compared to the second quarter of 2023. The increase was primarily driven by an increase in attributable gold equivalent ounces sold from the CEZinc smelter in Quebec and an increase in royalty revenue from the Copper Mountain mine in British Columbia. In May, Sandstorm announced the sale of its Copper Mountain royalty to Evolve Strategic Element Royalties Ltd. but retains the next $10 million of royalty revenues from the asset. The increase in attributable ounces sold was partially offset by a decrease in ounces sold from the Black Fox mine in Ontario and a decrease in royalty revenue attributable to the Diavik mine in Northwest Territories.

North America Excluding Canada

Gold equivalent ounces sold from operations located within North America, but outside of Canada, contributed 49% less gold equivalent ounces when compared to the second quarter of 2023. The change was primarily driven by a decrease in ounces attributable to the Company’s Mercedes gold and silver streams as result of the expected conclusion of the fixed gold delivery period at the end of 2023 and the restructuring of the gold and silver streams that closed in January 2024.

South America

Operations in South America contributed 33% less gold equivalent ounces sold when compared to the second quarter of 2023. The change was driven by a decrease in silver ounces received and sold attributable to the Cerro Moro mine in Argentina partially offset by the average realized selling price of silver, which increased from an average of $25.00 per ounce during the three months ended June 30, 2023, to an average of $27.76 per ounce during the equivalent period in 2024. The change was also due to a decrease in royalty revenue attributable to the Antamina mine in Peru following the partial disposition of the royalty to Horizon Copper Corp. in the second quarter of 2023, which reduced the Company’s royalty entitlement, partially offset by revenue related to the Antamina silver stream which was received as consideration for the partial disposition of the Antamina royalty in 2023. The decrease was partially offset by a 56% increase in the number of pounds of copper sold from the Chapada copper mine, as well as an increase in the average realized selling price of copper which increased from an average of $4.01 per pound during the three months ended June 30, 2023 to an average of $4.22 per pound during the equivalent period in 2024.

Other

Streams and royalties on mines in other countries contributed approximately the same number of gold equivalent ounces sold when compared to the second quarter of 2023. An increase in royalty revenue attributable to the Ivrindi mine in Türkiye and Houndé mine in Burkina Faso was partially offset by slight decreases in the number of attributable ounces sold from the Bonikro mine in Côte d’Ivoire and Blyvoor mine in South Africa.

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 over 230 royalties, of which 41 of the underlying mines are producing. Sandstorm plans to grow and diversify its low-cost production profile through the acquisition of additional gold royalties.