Sandstorm Gold Ltd. (NYSE: SAND) (TSX: SSL) has released its financial results for the fourth quarter and year ended December 31, 2023 (all figures in U.S. dollars).

Full Year Highlights

• Record attributable gold equivalent ounces¹ of 97,245 ounces (FY 2022 — 82,376 ounces);
• Record revenue of $179.6 million (FY 2022 — $148.7 million);
• Record total sales, royalties, and income from other interests¹ of $191.4 million (FY 2022 — $148.7 million);
• Record cash flows from operating activities, excluding changes in non-cash working capital¹ of $151.1 million (FY 2022 — $109.8 million);
• Net income of $42.7 million (FY 2022 — $78.5 million);
• Average cash cost per attributable gold equivalent ounce¹ of $223 resulting in cash operating margins¹ of $1,706 per ounce (FY 2022 — $284 per ounce and $1,511 per ounce respectively);
• Debt Reduction and Monetization Efforts: De-levering remains a top priority for Sandstorm. As of February 15, 2024, the Company had $421 million drawn and outstanding on the credit facility. To further expedite debt repayment, the Company is undergoing a process to monetize between $40–$100 million of non-core assets by the end of 2024. Accordingly, in the fourth quarter of 2023, Sandstorm closed its previously announced agreement to sell the El Pilar and Blackwater Royalties for total consideration of $25.0 million comprised of cash and common shares. The Company anticipates that consideration from future monetization efforts will consist entirely of cash. Sandstorm’s financial position continues to strengthen, with current available capital totaling over $200 million.
• Credit Facility Renewal: In September 2023, Sandstorm renewed its revolving credit facility, allowing the Company to borrow up to $625 million for a four year term.
• Closing of Antamina Transaction: In June 2023, Sandstorm closed the final component of its previously announced arrangement with Horizon Copper Corp. to sell a portion of the Company’s Antamina royalty in consideration for a silver stream, debt, equity, and cash.
• Mercedes Stream Amendment: In January 2024, Sandstorm closed its previously announced transaction to amend its existing gold and silver stream agreements on the Mercedes mine with Bear Creek Mining Corporation and to refinance certain other debt investments of Bear Creek that it holds. In exchange for the stream amendments, Sandstorm received a 1.0% NSR on Bear Creek’s wholly-owned Corani project in Peru, one of the world’s largest fully permitted silver deposits, and $10 million of additional consideration in the form of a combination of Bear Creek common shares and debt.

Fourth Quarter Highlights

• Attributable gold equivalent ounces¹ of 23,250 ounces (Q4 2022 — 21,753 ounces);
• Revenue of $44.5 million (Q4 2022 — $38.4 million);
• Total sales, royalties, and income from other interests¹ of $46.3 million (Q4 2022 — $38.4 million);
• Cash flows from operating activities, excluding changes in non-cash working capital¹ of $36.5 million (Q4 2022 — $29.9 million);
• Net income of $24.5 million (Q4 2022 — net loss of $2.1 million).

Outlook

Based on the Company’s existing royalties, attributable gold equivalent ounces for 2024 are forecasted to be between 75,000 and 90,000 ounces. The Company’s production forecast is expected to reach approximately 125,000 attributable gold equivalent ounces within the next five years.

Annual Financial Results

During 2023, the Company realized record annual revenue of $179.6 million compared with $148.7 million for the comparable period in 2022. The Company also had record total sales, royalties, and income from other interests of $191.4 million during the year ($148.7 million for the comparable period in 2022). The increase in revenue is attributable to a 12% increase in attributable gold equivalent ounces sold², as well as a 7% increase in the average realized selling price of gold.

The Company had cash flows from operating activities of $152.8 million and net income of $42.7 million during 2023, compared with cash flows from operating activities of $106.9 million and net income of $78.5 million for the comparable period in 2022. The increase in cash flows from operating activities is largely driven by an increase in revenue and contractual payments relating to the Mt. Hamilton royalty. The decrease in net income is due to a combination of factors including:

• Certain gains recognized during 2022 which did not occur during 2023, including:

24. a $24.9 million gain resulting from the sale of the Company’s Hod Maden interest to Horizon Copper;
    ii. $25.8 million in gains on disposal of stream, royalty, and other interests, primarily related to the sale of a portfolio of royalties to Sandbox Royalties Corporation (“Sandbox Royalties”); and
    iii. a $12.5 million gain resulting from the sale of the Company’s equity interest in Entrée Resources Ltd. to Horizon Copper.

• A $22.2 million increase in finance expense in 2023 compared to 2022, primarily related to interest paid on the Company’s revolving credit facility, which was drawn down in the third quarter of 2022 to finance acquisitions made in 2022; and
• A $15.6 million increase in depletion expense in 2023 compared to 2022, partly driven by an increase in attributable gold equivalent ounces sold.

The decrease in net income was partially offset by:

• A $30.9 million increase in revenue, as described above;
• A $13.9 million increase in the gains recognized on the revaluation of the Company’s investments, mostly driven by an increase in the fair value of the Company’s Sandbox Royalties and Horizon Copper debentures;
• $11.8 million in other income primarily related to a one-time contractual payment from the Company’s Mt. Hamilton royalty; and
• A $4.0 million gain on the disposal of the Company’s Blackwater and El Pilar royalties to Sandbox Royalties.

Streams & Royalties

Of the gold equivalent ounces sold by Sandstorm during the fourth quarter of 2023, approximately 12% were attributable to mines located in Canada, 22% from the rest of North America, 44% from South America, and 22% from other countries.

Canada

Streams and royalties on Canadian mines contributed 9% more gold equivalent ounces to Sandstorm when compared to the fourth quarter of 2022. The change is primarily due to an increase in gold equivalent ounces from a number of different royalties within the Company’s portfolio.

North America Excluding Canada

Gold equivalent ounces sold from operations located within North America, but outside of Canada, contributed 16% less gold equivalent ounces when compared to the fourth quarter of 2022. The change was primarily driven by a decrease in gold equivalent ounces received and sold from the Mercedes mine in Mexico, largely due to the timing of sales, whereby, 600 gold ounces were delivered by December 31, 2023 but were sold in the subsequent quarter, and a decrease in gold equivalent ounces sold from the Relief Canyon mine in Nevada. The decrease was partially offset due to an increase in royalty revenue from the Cosalá mine in Mexico.

South America

Operations in South America contributed 11% more gold equivalent ounces sold when compared to the fourth quarter of 2022. The increase was driven by an increase in royalty revenue attributable to the Caserones mine in Chile, as a result of increased production rates and copper prices, and an increase in gold equivalent ounces received and sold from the Antamina mine in Peru.

Other

Streams and royalties on mines in other countries contributed 31% more gold equivalent ounces sold when compared to the fourth quarter of 2022. This change is primarily due to an increase in royalty revenue from the Houndé mine in Burkina Faso as well as an increase in revenue from several different royalties within the Company’s portfolio. The increase was partially offset by a decrease in gold equivalent ounces received and sold from the Bonikro stream in Côte d’Ivoire largely due to the timing of sales, whereby, 811 ounces were delivered by December 31, 2023, but sold in the subsequent quarter.

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 approximately 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.