VANCOUVER, BC, Feb. 17, 2022 /CNW/ - Sandstorm Gold Ltd.
("Sandstorm Gold Royalties", "Sandstorm" or the "Company") (NYSE:
SAND) (TSX: SSL) has released its results for the fourth quarter
and year ended December 31, 2021 (all
figures in U.S. dollars).
FOURTH QUARTER HIGHLIGHTS
- Attributable gold equivalent ounces1 of
16,586 ounces (Q4 2020 — 15,795 ounces);
- Revenue of $29.8 million
(Q4 2020 — $29.7 million);
- Cash flows from operating activities, excluding changes in
non-cash working capital1 of $22.1 million (Q4 2020 — $22.5 million)
- Net income of $7.4 million
(Q4 2020 — $10.5 million).
FULL YEAR HIGHLIGHTS
- Record attributable gold equivalent ounces1
of 67,548 ounces (FY 2020 — 52,176 ounces)
- Record revenue of $114.9
million (FY 2020 — $93.0
million);
- Record total sales, royalties and income from other
interests1 of $120.7
million (FY 2020 — $93.0
million)
- Average cash cost per attributable gold equivalent
ounce1 of $249
resulting in cash operating margins1 of $1,539 per ounce (FY 2020 — $269 per ounce and $1,514 per ounce respectively);
- Record cash flows from operating activities, excluding
changes in non-cash working capital1 of $83.5 million (FY 2020 — $68.3 million);
- Record net income of $27.6
million (FY 2020 — $13.8
million);
- Significant acquisitions: Over $150 million in transactions on cash flowing
assets
-
- Waterton Royalty Package: 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.
- Vale Royalties: In June
2021, the Company acquired a diverse package of Vale
Royalties, which provide holders with life of mine net sales
royalties on certain Vale 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.
- Vatukoula Gold Stream: 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 5.5-year period
and thereafter 2.55%–2.9% of the gold produced from the mine for
ongoing per ounce cash payments 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 royalty on certain prospecting
licenses.
- Mercedes Gold Stream: In
December 2021, the Company announced
a $60 million financing package with
Bear Creek Mining to facilitate its acquisition of the producing
Mercedes gold-silver mine in Mexico from Equinox Gold Corp. The financing
package includes a $37.5 million gold
stream and a $22.5 million
convertible debenture. The transaction is expected to close by
March 31, 2022 and gold deliveries to
Sandstorm will commence immediately thereafter.
- Hod Maden milestones and conversion to gold stream: With
Hod Maden's recent approval of the Environmental Impact Assessment
("EIA") and the release of the Feasibility Study, the Company has
entered into an agreement to sell its interest and receive a
flagship gold stream.
-
- In October 2021, the Hod Maden
project received the final approval of the EIA for the project from
the Ministry of Environment and Urbanization of Turkey. The approval marks the next
development phase and triggers several key catalysts including the
application for the final permits and initiating long-lead
construction items.
- In November 2021, the Company
announced the results of the Hod Maden Feasibility Study, for which
Sandstorm holds a 30% interest. The study projects a pre-tax net
present value (5% discount rate) of $1.3
billion and an internal rate of return of 41%. The study
also outlines total production of more than 2.5 million gold
equivalent ounces over a 13-year mine life and it is expected that
gold will be produced at an all-in sustaining cost on a by-product
basis of $334 per
ounce1.
- Subsequent to year end, the Company announced that it had
reached an agreement with Royalty North Partners Ltd. to sell its
30% interest in Hod Maden and its equity interest in Entrée
Resources Ltd. In consideration, Sandstorm will receive a flagship
gold stream on Hod Maden and a portion of debt and equity in the
resulting issuer. The transaction is subject to various closing
conditions and is expected to close in the second half of 2022.
With this transaction, Sandstorm intends to unlock additional value
in Hod Maden through the re-rating of the asset as a Gold Stream in
its portfolio and further repositions Sandstorm as a pure-play
precious metals royalty and streaming company.
- Other corporate highlights:
-
- Expanded Credit Facility: Sandstorm amended its
revolving credit agreement allowing the Company to borrow up to
$350 million, and incorporated
sustainability-linked performance targets to become the first
royalty company to establish an Environment, Social, and Governance
("ESG") linked credit facility. The ESG revolving facility
incorporates sustainability-linked incentive pricing terms that
allow Sandstorm to reduce borrowing costs as the Company's
sustainability performance targets are met. The tenure of the
facility is four years and is extendable by mutual consent of
Sandstorm and the banking syndicate.
- Inaugural Dividend: On December
15, 2021 Sandstorm declared its inaugural dividend of
C$0.02 per share, paid on
January 28, 2022 and each quarter
thereafter, subject to annual increases.
- Normal Course Issuer Bid: The Company purchased and
cancelled approximately 5.5 million common shares for total
consideration of $34.2 million.
OUTLOOK
Based on the Company's existing royalties, attributable gold
equivalent ounces for 2022 is forecast to be between 65,000 and
70,000 ounces. Subject to the conversion of the Hod Maden interest
into a gold stream, the Company is forecasting attributable gold
equivalent production to be over 100,000 ounces in 2025.
FINANCIAL RESULTS
During 2021, the Company realized record annual revenue of
$114.9 million compared with
$93.0 million for the comparable
period in 2020. The increase is largely attributable to a 29%
increase in attributable gold equivalent ounces sold.
Net income was higher during 2021 when compared to the same
period in 2020 primarily due to the increase in revenue. Higher net
income was also due to factors such as an $8.5 million decrease in non-cash impairment
charges and a $5.9 million gain on
the revaluation of the Company's financial instrument related to
the Vale Royalties. The year-over-year increase in net income was
partially offset by an increase in tax expense resulting from
higher net income and a decrease in the gains recognized on the
revaluation of the Company's investments.
STREAMS & ROYALTIES
Of the gold equivalent ounces sold by Sandstorm during the
fourth quarter of 2021, approximately 27% were attributable to
mines located in Canada, 15% from
the rest of North America, 53%
from South America, and 5% from
other countries.
|
THREE MONTHS ENDED
Dec 31, 2021
|
YEAR ENDED DEC 31,
2021
|
|
Revenue
(in millions)
|
Gold Equivalent
Ounces
|
Revenue
(in millions)
|
Gold Equivalent
Ounces
|
Canada
|
$ 8.1
|
4,506
|
$ 22.2
|
12,370
|
North America excl.
Canada
|
$ 4.5
|
2,502
|
$ 21.6
|
12,088
|
South
America
|
$ 15.9
|
8,829
|
$ 62.2
|
38,111
|
Other
|
$ 1.3
|
749
|
$ 8.9
|
4,979
|
Total
|
$
29.8
|
16,586
|
$
114.9
|
67,548
|
Canada
Streams and royalties on Canadian mines contributed 88% more
gold equivalent ounces to Sandstorm when compared to the fourth
quarter of 2020. The change is primarily due to an increase in
royalty revenue from the Diavik mine in the Northwest Territories, driven by diamond price
increases, the receipt of previously unrecognized royalty payments,
and the timing of sales.
North America Excluding Canada
The gold equivalent ounces sold from operations located within
North America, but outside of
Canada, contributed 12% less gold
equivalent ounces when compared to the fourth quarter of 2020. The
change was primarily driven by a decrease in ounces received from
the Relief Canyon mine in Nevada.
South America
Operations in South America
contributed 17% more gold equivalent ounces sold when compared to
the fourth quarter of 2020. The change is primarily due to an
increase in royalty revenue from the Vale Royalties and an increase
in gold equivalent ounces sold from the Chapada mine in
Brazil. The increase was partially
offset by a decrease in gold equivalent ounces sold from the Cerro
Moro mine in Argentina.
Other
Streams and royalties on mines in other countries contributed
75% less gold equivalent ounces sold when compared to the fourth
quarter of 2020. This change is primarily due to a decrease in
royalty revenue from the Houndé mine in Burkina Faso, driven by mine sequencing
whereby Endeavour Mining plc is currently mining areas of the
Houndé Mine not subject to the Company's royalty.
WEBCAST & CONFERENCE CALL DETAILS
A conference call will be held on Friday,
February 18, 2022 starting at 8:30am
PST to further discuss the Hod Maden gold stream, fourth
quarter and annual 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
Conference ID: 16995658
Webcast URL: https://bit.ly/3AlH99g
Note 1
|
Sandstorm has
included certain performance measures in this press release that do
not have any standardized meaning prescribed by International
Financial Reporting Standards ("IFRS") including (i) average cash
cost per attributable gold equivalent ounce, (ii) total sales,
royalties and income from other interests, (iii) average realized
gold price per attributable gold equivalent ounce, (iv) cash
operating margin, (v) cash flows from operating activities
excluding changes in non-cash working capital, and (vi) all-in
sustaining cost ("AISC") per gold ounce on a by-product basis.
Average cash cost per attributable gold equivalent ounce is
calculated by dividing the Company's cost of sales, excluding
depletion by the number of attributable gold equivalent ounces. The
Company presents average cash cost per attributable gold equivalent
ounce as it believes that certain investors use this information to
evaluate the Company's performance in comparison to other streaming
and royalty companies in the precious metals mining industry who
present results on a similar basis. Total sales, royalties and
income from other interests is calculated by taking total revenue
which includes sales and royalty revenue, and adding contractual
income relating to royalties, streams and other interests excluding
gains and losses on dispositions. Refer to page 49 of the MD&A
for a numerical reconciliation of the total sales, royalties, and
income from other interests. The Company presents total sales,
royalties, and income from other interests as it believes that
certain investors use this information to evaluate the Company's
performance in comparison to other streaming and royalty companies
in the precious metals mining industry. Average realized gold price
per attributable gold equivalent ounce is calculated by dividing
the Company's total sales, royalties, and income from other
interests by the number of attributable gold equivalent ounces. The
Company presents average realized gold price per attributable gold
equivalent ounce as it believes that certain investors use this
information to evaluate the Company's performance in comparison to
other streaming and royalty companies in the precious metals mining
industry that present results on a similar basis. Cash operating
margin is calculated by subtracting the average cash cost per
attributable gold equivalent ounce from the average realized gold
price per attributable gold equivalent ounce. The Company presents
cash operating margin as it believes that certain investors use
this information to evaluate the Company's performance in
comparison to other companies in the precious metals mining
industry who present results on a similar basis. The Company has
also used the non-IFRS measure of cash flows from operating
activities excluding changes in non-cash working capital. This
measure is calculated by adding back the decrease or subtracting
the increase in changes in non-cash working capital to or from cash
provided by (used in) operating activities. The Company presents
cash flows from operating activities excluding changes in non-cash
working capital as it believes that certain investors use this
information to evaluate the Company's performance in comparison to
other streaming and royalty companies in the precious metals mining
industry that present results on a similar basis. Sandstorm has
included attributable gold equivalent ounces as a performance
measure in this press release which does not have any standardized
meaning prescribed by IFRS. The Company's royalty and other
commodity stream revenue, including adjustments for contractual
income relating to those interests, is converted to an attributable
gold equivalent ounce basis by dividing the royalty and other
commodity revenue, including adjustments for contractual income
relating to those interests, for that period by the average
realized gold price per ounce from the Company's gold streams for
the same respective period. These attributable gold equivalent
ounces, when combined with the gold ounces sold from the Company's
gold streams, equal total attributable gold equivalent ounces and
may be subject to change. The Company has also used the non-IFRS
measure of all-in sustaining cost per gold ounce on a by-product
basis. With respect to the Hod Maden project, all-in sustaining
cost per gold ounce on a by-product basis is calculated by
deducting copper revenue from the summation of certain costs
(operating costs, royalties, treatment, refining & transport
costs, sustaining capital, G&A, and other costs). The resulting
figure is then divided by the payable gold ounces produced. The
Company presents all-in sustaining cost per gold ounce on a
by-product basis as it believes that certain investors use this
information to evaluate the Company's performance in comparison to
other companies in the precious metals mining industry that present
results on a similar basis. The calculation of the measure is as
follows: [Operating Costs ($678 million) + Royalties ($349 million)
+ Treatment, Refining and Transport Costs ($193 million) +
Sustaining Capital ($116 million) + G&A ($96 million) + Other
Costs ($57 million) - Copper Revenue ($812 million)] / Payable Gold
Ounces (2,027k oz) = $334 AISC per ounce.
|
|
The presentation of
these non-IFRS measures is intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. Other companies may calculate these non-IFRS measures
differently.
|
CONTACT Information
For more information about Sandstorm Gold Royalties, please
visit our website at www.sandstormgold.com or email us at
info@sandstormgold.com.
ABOUT SANDSTORM GOLD ROYALTIES
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 230 royalties, of which 29 of the underlying mines are
producing. Sandstorm plans to grow and diversify its low cost
production profile through the acquisition of additional gold
royalties. For more information visit: www.sandstormgold.com.
CAUTIONARY STATEMENTS TO U.S. SECURITYHOLDERS
The financial information included or incorporated by reference
in this press release or the documents referenced herein has been
prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards
Board, which differs from US generally accepted accounting
principles ("US GAAP") in certain material respects, and thus are
not directly comparable to financial statements prepared in
accordance with US GAAP.
The disclosure and information contained or referenced herein
uses mineral reserve and mineral resource classification terms that
comply with reporting standards in Canada, and mineral reserve and mineral
resource estimates are made in accordance with Canadian NI 43-101
and the Canadian Institute of Mining, Metallurgy and Petroleum —
CIM Definition Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council, as amended (the "CIM Definition
Standards"). These standards differ significantly from the mineral
reserve disclosure requirements of the United States Securities
Exchange Commission (the "SEC") set forth in Industry Guide 7.
Consequently, information regarding mineralization contained or
referenced herein is not comparable to similar information that
would generally be disclosed by U.S. companies under Industry Guide
7 in accordance with the rules of the SEC. Further, the SEC has
adopted amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are
registered with the SEC under the Securities Exchange Act of 1934
("Exchange Act"). These amendments became effective February 25, 2019 (the "SEC Modernization Rules")
and, commencing for registrants with their first fiscal year
beginning on or after January 1,
2021, the SEC Modernization Rules replaced the historical
property disclosure requirements included in SEC Industry Guide
7. As a foreign private issuer that files its annual report
on Form 40-F with the SEC pursuant to the multi-jurisdictional
disclosure system, the Company is not required to provide
disclosure on its mineral properties under the SEC Modernization
Rules and will continue to provide disclosure under NI 43-101 and
the CIM Definition Standards. The SEC Modernization Rules include
the adoption of terms describing mineral reserves and mineral
resources that are "substantially similar" to the corresponding
terms under the CIM Definition, but there are differences in the
definitions under the SEC Modernization Rules and the CIM
Definition Standards. Accordingly, there is no assurance any
mineral reserves or mineral resources that the Company may report
as "proven mineral reserves", "probable mineral reserves",
"measured mineral resources", "indicated mineral resources" and
"inferred mineral resources" under NI 43-101 would be the same had
the Company prepared the mineral reserve or mineral resource
estimates under the standards adopted under the SEC Modernization
Rules. U.S. investors are also cautioned that while the SEC
recognizes "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources" under the Modernization
Rules, investors should not assume that any part or all of the
mineralization in these categories will ever be converted into a
higher category of mineral resources or into mineral reserves.
Mineralization described using these terms has a greater amount of
uncertainty as to its existence and feasibility than mineralization
that has been characterized as reserves. Accordingly, investors are
cautioned not to assume that any measured mineral resources,
indicated mineral resources, or inferred mineral resources that the
Company reports are or will be economically or legally mineable.
Further, "inferred mineral resources" have a greater amount of
uncertainty as to their existence and as to whether they can be
mined legally or economically. Therefore, U.S. investors are also
cautioned not to assume that all or any part of the "inferred
mineral resources" exist. Under Canadian securities laws, estimates
of "inferred mineral resources" may not form the basis of
feasibility or pre-feasibility studies, except in rare cases.
For the above reasons, information contained or referenced herein
regarding descriptions of our mineral reserve and mineral resource
estimates is not comparable to similar information made public by
U.S. companies subject to reporting and disclosure requirements of
the SEC under either Industry Guide 7 or SEC Modernization
Rules.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This press release contains "forward-looking statements", within
the meaning of the U.S. Securities Act of 1933, the U.S. Securities
Exchange Act of 1934, the Private Securities Litigation Reform Act
of 1995 and "forward-looking information" within the meaning of
applicable Canadian securities legislation, concerning the
business, operations and financial performance and condition of
Sandstorm Gold Royalties. Forward-looking statements include, but
are not limited to, the expectation that the various closing
conditions of the Hod Maden transaction will be met, the
expectation that the Hod Maden transaction with Royalty North
Partners Ltd will close, the expectation that the transaction will
close in the second half of 2022, the transformation of the
Company's interest in Hod Maden into a gold stream being integral
to the Company's corporate strategy of unlocking hidden value in
Sandstorm's portfolio; Sandstorm repositioning itself as a
pure-play precious metals streaming and royalty company, while
still retaining long-term exposure to the robust economics and
potential growth of Hod Maden. The future price of gold, silver,
copper, iron ore and other metals, the estimation of mineral
reserves and resources, realization of mineral reserve estimates,
the timing and amount of estimated future production.
Forward-looking statements can generally be identified by the use
of forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "continue", "plans",
or similar terminology.
Forward-looking statements are made based upon certain
assumptions and other important factors that, if untrue, could
cause the actual results, performances or achievements of Sandstorm
Gold Royalties to be materially different from future results,
performances or achievements expressed or implied by such
statements. Such statements and information are based on numerous
assumptions regarding present and future business strategies and
the environment in which Sandstorm Gold Royalties will operate in
the future, including the receipt of all required approvals, the
price of gold and copper and anticipated costs. Certain important
factors that could cause actual results, performances or
achievements to differ materially from those in the forward-looking
statements include, amongst others, failure to receive necessary
approvals, changes in business plans and strategies, market
conditions, share price, best use of available cash, gold and other
commodity price volatility, discrepancies between actual and
estimated production, mineral reserves and resources and
metallurgical recoveries, mining operational and development risks
relating to the parties which produce the gold or other commodity
the Company will purchase, regulatory restrictions, activities by
governmental authorities (including changes in taxation), currency
fluctuations, the global economic climate, dilution, share price
volatility and competition.
Forward-looking statements are subject to known and unknown
risks, uncertainties and other important factors that may cause the
actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or
implied by such forward-looking statements, including but not
limited to: the impact of general business and economic conditions,
the absence of control over mining operations from which the
Company will purchase gold, other commodities or receive royalties
from, and risks related to those mining operations, including risks
related to international operations, government and environmental
regulation, actual results of current exploration activities,
conclusions of economic evaluations and changes in project
parameters as plans continue to be refined, risks in the
marketability of minerals, fluctuations in the price of gold and
other commodities, fluctuation in foreign exchange rates and
interest rates, stock market volatility, as well as those factors
discussed in the section entitled "Risks to Sandstorm" in the
Company's annual report for the financial year ended December 31, 2021 and the section entitled "Risk
Factors" contained in the Company's annual information form dated
March 30, 2021 available at
www.sedar.com. Although the Company has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking statements,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. The Company does not
undertake to update any forward-looking statements that are
contained or incorporated by reference, except in accordance with
applicable securities laws.
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SOURCE Sandstorm Gold Ltd.