VANCOUVER, May 5, 2016 /PRNewswire/ - Sandstorm Gold Ltd.
("Sandstorm" or the "Company") (NYSE MKT: SAND, TSX: SSL) has
released its results for the first quarter ended March 31, 2016 (all figures in U.S. dollars).
- FIRST QUARTER HIGHLIGHTS
- Attributable gold equivalent ounces sold1 of 11,381
ounces (Q1 2015 – 12,460 ounces);
- Revenue of $13.4 million (Q1 2015
- $15.3 million);
- Average cash cost per attributable gold equivalent ounce of
$267 resulting in cash operating
margins1 of $909 per ounce
(Q1 2015 - $323 per ounce and
$904 per ounce respectively);
- Operating cash flow of $9.7
million (Q1 2015 – $8.1
million);
- Net income of $13.2 million (Q1
2015 – $0.8 million); and
- Acquired a royalty portfolio consisting of 52 royalties from
Teck Resources Limited for consideration of $16.8 million. The transaction provides asset
diversification, immediate cash flow and significant cash flow
growth potential.
Sandstorm's President & CEO Nolan
Watson remarked, "We are off to a great start in 2016 with
strong production and cash flow numbers. Over 70% of our
attributable production in Q1 was from mines operated by major and
mid-tier mining companies and we expect that percentage to increase
over the next few years as our production and cash flow increases
from the Yamana streams. With the recent commencement of production
at the Karma mine, Sandstorm's cash flow is being generated from 20
stream and royalty interests and there are a number of promising
development stage assets that we expect will provide growth in the
coming years." Watson added, "We continue to use our free cash flow
to pay down debt and have recently reduced the balance on the
credit facility to $64.5 million
since the end of the first quarter."
- OUTLOOK
Based on the Company's existing gold streams and royalties,
attributable gold equivalent production for 2016
is forecasted to be between 40,000 – 50,000 ounces. The
Company is forecasting attributable gold
equivalent production of approximately 65,000 ounces per
annum by 2020.
- FINANCIAL RESULTS
Precious metals and diamonds accounted for 86% of the revenue
generated during the first quarter with the remainder coming from
base metals. Revenue was 12% lower when compared to the first
quarter of 2015, due to a 4% decrease in the average realized
selling price of gold and a 9% decrease in the number of
attributable gold equivalent ounces sold.
Cash flow from operations ($9.7
million) and net income ($13.2
million) increased when compared to the same period in 2015.
The increase in cash flow is primarily attributable to changes in
non-cash working capital, partially offset by a decrease in both
the average realized selling price of gold and gold equivalent
ounces sold. The primary factors contributing to the increase in
net income included a $13.4 million
gain on the revaluation of the Company's investments and a
$3.6 million decrease in depletion,
partially offset by declines due to foreign exchange fluctuations,
a non-cash impairment charge relating to certain mineral royalties
and an increase in interest expense as the Company drew on its
revolving credit facility in October
2015.
- STREAMS & ROYALTIES: Q1 UPDATES
The Company's revenue was generated by 19 producing mines during
the first quarter of 2016. Of the gold equivalent ounces delivered
to Sandstorm, 44% came from operations in Canada, 36% from the rest of North America and 20% from South America and other countries.
|
Three months ended
March 31, 2016
|
Revenue (in
millions)
|
Gold Equivalent
Ounces
|
Canada
|
$ 5.95
|
5,056
|
North America ex
Canada
|
$ 4.76
|
4,056
|
South America &
Other
|
$ 2.67
|
2,269
|
Total
|
$ 13.38
|
11,381
|
Canada
Gold equivalent ounces attributable to Canadian mines made up 44%
of the Company's total ounces in Q1 2016 and were 17% lower when
compared to the first quarter of 2015. The decline was due to
decreased production at the Bachelor Lake mine in Quebec, operated by Metanor Resources Inc.
("Metanor"), and the Black Fox mine in Ontario, operated by Primero Mining Inc.
("Primero"). Both Metanor and Primero have released positive
exploration drill results during 2016 and Sandstorm has been
encouraged by the recent progress at Metanor's Moroy discovery and
Primero's Froome zone.
The Froome zone is part of the Black Fox complex and is located
approximately 800 metres west of the Black Fox mine. It continues
to be a priority for Primero with an additional 23,000 metres of
drilling expected in 2016, the purpose of which is to define and
delineate the Froome deposit. Recent drilling has continued to
delineate long intervals with significant gold mineralization with
highlights including 6.1 g/t gold over 43.7 metres true width
(16PR-G103), 6.2 g/t gold over 37.9 metres true width (16PR-G109),
and 5.0 g/t gold over 43.7 metres true width (16PR-G102). Primero
is evaluating the deposit as a medium term alternative to
complement Black Fox ore and Primero expects to be in a position to
make a production decision on the Froome Zone in Q2 2016. For more
information see the Primero news release dated May 4, 2016.
During the first quarter, there was an updated Reserve and
Resource statement released for the Diavik Diamond mine in the
Northwest Territories ("Diavik")
where Sandstorm has a 1% gross proceeds royalty. There were 6.41
million carats produced from Diavik in 2015, and the bulk of those
depleted reserves were replaced due to new data from surveying
along with the results of new samples taken in active mining areas
which were incorporated into the latest reserve and resource as at
December 31, 2015. Of note is the
A-154 North kimberlite which saw its probable reserves more than
double to approximately 4.7 million tonnes (2.4 ct/t containing
11.1 million carats). Dominion Diamond Corporation also reported
the addition of a new kimberlite at depth. The 29% increase in the
A-154 North reserves is significant because the diamonds produced
from that pipe have earned the highest average price per carat from
diamonds produced at Diavik. For the month of March 2016, the average price per carat from
A-154 North was $175. For more
information see the news release issued by Dominion Diamond
Corporation on March 8, 2016.
North America ex
Canada
Gold equivalent ounces from the rest of North America (excluding Canada) increased by 43% compared to 2015 and
accounted for 36% of the ounces sold during the quarter. One of the
factors driving the increase was a 30% rise in gold ounces sold
from the Santa Elena Mine in Mexico. The increase was largely attributable
to higher grade ore coming from the main vein, Alejandra vein and
the leach pad.
South America &
Other
Attributable gold equivalent ounces from South America and the rest of the world
decreased by 30% compared to Q1 2015 and made up approximately 20%
of Sandstorm's total gold equivalent production during the quarter.
The Company's first silver and copper deliveries were received from
the Chapada and Minera Florida
operations under the terms of the copper and silver stream
agreements with Yamana Gold Inc.
- CORPORATE DEVELOPMENT
The Company has added 55 new royalty interests since the
beginning of 2016. The projects underlying the royalties vary
from exploration to production stage and have provided immediate
cash flow, diversification and significant exploration optionality
to the Sandstorm portfolio. The key stream and royalty acquisitions
that were completed during the first quarter and subsequent to
quarter end are discussed below.
Teck Royalty Package: The Company agreed to acquire 52
royalties from Teck Resources Limited for $16.8 million. The royalty package is expected to
generate cash flow in 2016 of over $1.0
million with estimated growth to over $10 million in cash flow per year over the long
term.
Counterparty Acquisitions: A number of the projects
underlying Sandstorm's streams and royalties were acquired by
larger, better capitalized companies in 2015. This trend has
continued in 2016 with Tahoe Resources Inc. ("Tahoe") acquiring
Lake Shore Gold Corp. and Endeavour Mining Corporation
("Endeavour") acquiring True Gold Mining Inc. Prior to the Tahoe
deal, Lake Shore released an initial resource on the 144 Gap
deposit in Ontario, over which
Sandstorm has a 1% NSR royalty. Tahoe's Board of Directors recently
approved additional spending to accelerate exploration and
delineation of the 144 Gap area with commercial production expected
from the deposit in 2017. In the case of Endeavour, the acquisition of True Gold came
with the producing Karma mine in Burkina
Faso. Sandstorm has begun to receive gold payments from
Karma which will contribute to the Company's cash flow in Q2,
2016.
Altogether, Sandstorm currently owns 131 streams and royalties,
of which 20 of the underlying mines are producing.
- WEBCAST AND CONFERENCE CALL DETAILS
A conference call will be held on Friday,
May 6, 2016 starting at 8:00am
PDT to further discuss the first quarter results. To
participate in the conference call, use the following dial-in
numbers:
Local/International: 647-788-4916
North American Toll-Free: 877-214-4966
Conference ID: 6305038
Webcast URL: http://ow.ly/4nnLZw
The Sandstorm Management Discussion and Analysis (MD&A) and
Financial Statements for the first quarter will be accessible on
the Company's website and on SEDAR at www.sedar.com. The Company
has also completed a Form 6-K filing with the SEC that will be
accessible on EDGAR at www.sec.gov/edgar.shtml. Shareholders can
request a hard copy of the MD&A and Financial Statements by
emailing info@sandstormltd.com.
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
average cash cost per ounce of gold and cash operating margin.
Average cash cost per ounce of gold is calculated by dividing the
total cost of sales, less depletion, by the ounces sold. In the
precious metals mining industry, this is a common performance
measure but does not have any standardized meaning. The Company
believes that, in addition to conventional measures prepared in
accordance with IFRS, certain investors use this information to
evaluate the Company's performance and ability to generate cash
flow. Cash operating margin is calculated by subtracting the
average cash cost per ounce of gold from the average realized
selling price per ounce of gold. 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's royalty income is
converted to an attributable gold equivalent ounce basis by
dividing the royalty income 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 sold. 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.
QUALIFIED PERSON
Keith Laskowski (MSc),
Sandstorm's Vice President, Technical Services is a Qualified
Professional (#01221QP) of the Mining and Metallurgical Society of
America and a Qualified Person as defined by Canadian National
Instrument 43-101. Mr. Laskowski has not independently verified the
resource estimates contained in this disclosure. He has reviewed
and approved the technical information in this press release.
ABOUT SANDSTORM GOLD
Sandstorm Gold Ltd. is a gold streaming and royalty company.
Sandstorm 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 131 streams and
royalties, of which 20 of the underlying mines are producing.
Sandstorm plans to grow and diversify its low cost production
profile through the acquisition of additional gold streams and
royalties.
For more information visit: www.sandstormgold.com
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 applicable Canadian securities legislation, concerning
the business, operations and financial performance and condition of
Sandstorm. Forward-looking statements include, but are not limited
to, statements with respect to the future price of gold, the
estimation of mineral reserves and resources, realization of
mineral reserve estimates, and 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
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 will operate in the future,
including the price of gold 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, gold 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 Sandstorm 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
Sandstorm 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 Sandstorm
will purchase gold 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,
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 Sandstorm's annual report
for the financial year ended December 31,
2015 available at www.sedar.com. Although Sandstorm 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. Sandstorm does
not undertake to update any forward looking statements that are
contained or incorporated by reference, except in accordance with
applicable securities laws.
SOURCE Sandstorm Gold Ltd.