Mr. Erfan Kazemi reports
SANDSTORM GOLD LTD.: SANDSTORM GOLD ROYALTIES ANNOUNCES 2018 THIRD QUARTER RESULTS
Sandstorm Gold Ltd. has released its results for the third quarter ended Sept. 30, 2018 (all figures in United States dollars).
Third quarter highlights:
Revenue of $17.3-million (Q3 2017 -- $17.9-million); Attributable gold equivalent ounces sold of 14,314 ounces (Q3 2017 -- 14,293 ounces); Average cash cost per attributable gold equivalent ounce of $248 resulting in cash operating margins of $960 per ounce (Q3 2017 -- $246 per ounce and $1,009 per ounce, respectively); Cash flows from operating activities, excluding changes in non-cash working capital, of $11.4-million (Q3 2017 -- $11.1-million);Net income of $2.1-million (Q3 2017 -- net income of $4.8-million).
Outlook
Based on the company's existing royalties, attributable gold equivalent ounces sold is forecasted to be between 56,000 to 60,000 for 2018 and between 63,000 to 73,000 ounces in 2019. The company is forecasting attributable gold equivalent production of 140,000 ounces in 2023.
Financial results
Sandstorm's revenue during the third quarter of 2018 was $17.3-million compared with $17.9-million for the comparable period in 2017. The decrease is largely attributable to a 4-per-cent decrease in the average realized selling price of gold.
Net income was lower when compared with the same period in 2017 partly due to certain non-recurring items that were recognized during the third quarter of 2017, including a $3.4-million gain primarily resulting from the Bachelor Lake gold stream amendment. The decrease in net income was partially offset by a $700,000 decrease in depletion expense and a $300,000 reduction in the administrative costs due to cost reduction strategies.
Streams and royalties: q3 updates
Of the attributable gold equivalent ounces sold by Sandstorm, approximately 39 per cent were attributable to mines located in Canada, 17 per cent from the rest of North America and 44 per cent from South America and other countries.
Three months ended Sept. 30, 2018 Revenue (in thousands) Gold equivalent ouncesCanada $6,665 5,521North America excluding Canada $3,005 2,491South America and other$7,619 6,302Total $17,28914,314
Canada
Streams and royalties on Canadian mines contributed 6-per-cent less gold equivalent ounces sold to Sandstorm when compared with the third quarter of 2017. The change is primarily attributable to a decrease in gold equivalent ounces sold from the Black Fox mine in Ontario and a decrease in royalty revenue from the Bracemac-McLeod mine in Quebec.
Black Fox stream
McEwen Mining Inc. reported in its third quarter results that its 2018 exploration budget at the Black Fox complex in Ontario, Canada, has increased to $19-million. The goals of the exploration program are to grow known deposits and make new discoveries that will contribute to near-term and mid-term gold production.
During the third quarter of 2018, surface exploration drilling at the Froome target area focused on evaluating the downplunge extension of the Froome deposit and assessing the potential of the mineralized footwall. Underground exploration drilling was dedicated to confirming and expanding known mineralized trends that are located close to current workings and could be brought into production quickly. For the remainder of the year, underground mining and exploration efforts will be dedicated to further understanding the depth potential at the mine's main ore system below the existing development.
Sandstorm has a gold stream agreement to purchase 8 per cent of the gold produced from Black Fox at a continuing cost of $540 per ounce.
North America excluding Canada
When compared with the third quarter of 2017, gold equivalent ounces coming from North America, excluding Canada, decreased by 35 per cent. The change was driven by a decrease in gold equivalent ounces sold attributable to the Santa Elena mine in Mexico and a decrease in royalty revenue from the Emigrant Springs mine in Nevada.
South America and other
Operations in South America and other countries contributed an additional 1,723 gold equivalent ounces sold when compared with the third quarter of 2017, representing a 38-per-cent increase. The recently acquired Hounde royalty contributed 1,399 of those attributable gold equivalent ounces.
Cerro Moro silver stream
Yamana Gold Inc. has provided Sandstorm with notification that it has met the contractual threshold for the commencement of commercial production at the Cerro Moro mine. Purchases under Sandstorm's silver stream agreement will begin on silver produced from ore mined starting on Jan. 1, 2019. Accordingly, the first attributable silver ounces are expected to be delivered to Sandstorm starting in the second quarter of 2019.
Sandstorm has a silver stream agreement to purchase an amount of silver from Cerro Moro equal to 20 per cent of the silver produced, up to a maximum of 1.2 million ounces of silver annually, until Yamana has delivered to Sandstorm 7.0 million ounces of silver, then 9.0 per cent of the silver produced thereafter for the life of the mine. Sandstorm will make continuing payments for each ounce of silver received, equal to 30 per cent of the spot price per ounce of silver.
Aurizona royalty
Equinox Gold Corp. announced that as of Sept. 30, 2018, overall project construction was 80 per cent complete at the Aurizona gold mine in Brazil. The project is on track to achieve commercial production around the end of the first quarter of 2019. At the end of the third quarter of 2018, more than four million tonnes of material had been moved and 270,000 tonnes of ore stockpiled.
Sandstorm has a 3-per-cent to 5-per-cent sliding-scale net smelter return royalty on the Aurizona project. At gold prices less than or equal to $1,500 per ounce, the royalty is a 3-per-cent NSR. In addition, Sandstorm holds a 2-per-cent NSR royalty on the Aurizona Greenfields property, a package of exploration ground adjacent to the Aurizona project.
Webcast and conference call details
A conference call will be held on Thursday, Nov. 15, 2018, starting at 8:30 a.m. PT to further discuss the third quarter results. To participate in the conference call, use the following dial-in numbers and conference ID.
Local/international: 1-201-389-0899
North American toll-free: 1-877-407-0312
Conference ID: 13684537
The Sandstorm management discussion and analysis and financial statements for the three and nine months ended Sept. 30, 2018, will be accessible on the company's website and on SEDAR. The company has also completed a Form 6-K filing with the SEC that will be accessible on EDGAR. Shareholders can request a hard copy of the MD&A and financial statements by e-mailing info@sandstormgold.com.
Qualified person
Keith Laskowski (MSc), Sandstorm's vice-president, technical services, is a qualified professional (No. 01221QP) of the Mining and Metallurgical Society of America, and a qualified person as defined by Canadian National Instrument 43-101. He has reviewed and approved the technical information in this press release.
About Sandstorm Gold Ltd.
Sandstorm is a gold royalty company that provides upfront financing to gold mining companies that are looking for capital and, in return, receives the right to a percentage of the gold produced from a mine, for the life of the mine. Sandstorm has acquired a portfolio of 188 royalties, of which 20 of the underlying mines are producing. Sandstorm plans to expand and diversify its low-cost-production profile through the acquisition of additional gold royalties.
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