Q1 2021 Sandstorm Gold Ltd Earnings Call
Excuse me. This is the operator today's calling to schedule to begin momentarily. Until that time, your lines will be placed on. Hold. Thank you for your patience and please continue to hold off off off off.
Good morning. My name is Kavita and I'll be your conference operator. Today at this time, I would like to welcome everyone to the Sandstorm Gold. Royalties first quarter conference call, am I talking to place for me to prevent any background noise? Please be aware that some of the commentary may contain forward-looking statements, there can be no assurance that the forward-looking statements will prove to the Acura the actual results. In future events could differ materially from those anticipated, Insight statements, Africa, speakers remarks. There will be a question-and-answer session. If you would like to ask a quote on this time, simplify storm. Then the number one key on your telephone keypad. If you would like to withdraw your question, please. Press the pound key. Thank you. Mister Watson. You may begin your conference call. Thank you. Karina. Good morning, everyone. And thank you for calling Engineers first quarter earnings. Well for twenty Twenty-One as normal this morning, I'll provide a brief update on the company and inner van or CFO is dead.
Walking through the first quarter results and then they belong will provide an update on some of the assets after that will turn it over to the operator for a question man. Sir. And if anyone has any questions. But did not need to be part of the live Q&A, you can ask those questions to the web portal and will ensure that each question we get there, we'll get a direct response from you after this call. At this time, I'm going to be going through, prepare PowerPoint, presentation on the web portal. So if you're able to, please turn your attention there. Now, over all the first quarter for Samsung was fantastic, we had a record month ago because one else is sold of over 17,000 ounces. We had record revenue of 31 million dollars and we had record operating cash flows, excluding working capital changes of twenty-three million dollars. By all accounts, our business is performing well, and it's for this reason that were raising the bottom end of our annual production, guidance up to fifty, five thousand ounces so that our revised guidance range is between 55000 and 6 a.m.
I was in Gold equivalent ounces.
So we're still on track for another record year of annual sales. It's important to note that starting now in the second quarter, the Gold Stream that we have on a Deborah, my number Kina, Pasco is done to fix delivery. Of a contract. In advance are now has an effective 1.6% NSR for the deliveries from, are expected to be lower by about one thousand ounces per quarter going. However, many of you are aware, we have a number of other development assets at various stages of development and we're expecting more growth in annual production over the next year's in any of our other streaming and royalty Comission.
Now, sandstrom has record amounts of capital available to allocate to either New Deals, or dividends or share BuyBacks. And as we stand here today, Sandstorm has over a hundred and fifty million dollars US in the back. So if you have approximately sixty million dollars of equity and debt Investments, and other mining companies that can all be liquidated if need be on last quarter's earnings calls wage.
Excuse me, this is the operator please. Do not disconnect. The call will resume momentarily.
In today's conference will resume momentarily. Please hold it will resume momentarily.
you may resume your conference,
All right, thanks everybody for your patience here. We just had our work line of drop off here. So I'm filling in for my cellphone. We'll see how this goes, so I Think We're Alone. Now, I was talking about share BuyBacks, and when I was trying to articulate was that we are going to be allocated Capital to what what I mentioned on the last quarter earnings call log of all three Alternatives a new deals on dividends and share BuyBacks and we've got a a slide here that you can see the disgust is the share buyback part. We bought back and material number of our shares each year for four years running now, and during the first quarter were able to pick up on with the million of Sandstorm shares and have them canceled. So the value per share for our main shareholders is continuing to increase and that over the past four years are average cost per share and they're only $5.20 us. So I think we've done a very good job of picking our spots and think it's been a prudent.
Form of capital, allocation.
For us and we're going to continue in the spirit going forward. One of the things that makes us excited to buy background. Chairs is not only how well the portfolio is doing from a cash flow generating perspective. Also how incredibly well, the expiration up Side Story continues to unfold over time. We finally completed all the number crunching for the last year. It turns out that 2028 with the fifth straight year in a row, the more gold ounces have been found on a royalty grounds and if in mind, this is an amazing track record. That is exciting to us in the twenty20 pharmacy, 52,000 attributable, Golden Corral one after the production compared to $54,000, new ounces attributable to Sandstorm, being found through exploration. And what I find even more interesting is that the actual number of ounces attributable, the sandstorm that was found was even higher than 54000 ounces. And what we've done is, we've chosen to be conservative that how his show these figures because everyone wage
Stream to new technical team, has decided to take a more conservative set of assumptions on the rebirth calculation and has what we believe, temporarily decrease their houses on the books. And we committed those bounces off against the ounces bound so that the 54,000 house number represents a true. Net ounces found figure year after year. Our portfolios continuing to not only off the records and revenue and cash-flow but it also continues to replace the answers mind with new ounces. Found and before I handed over to Earth and I would like to remind everyone of a few important Catalyst that we see per Sam storm and twenty Twenty-One starting with one of our key assets. I bought it as I've said in the past 20 21 is expected to be a catalyst Rich here for the assets with both wage stability study. And an eia expected to be granted imminently with the granting of epcm contract, to build the Mind later in the year. It's still our expectations of both of these abilities. That God,
Brenton credit current second quarter. However this week due to COVID-19. The government of turkey is implemented. A Country-Wide lock down to contain the virus and we're still assessing what impact? This will have on the expected time lines. I think it's safe to say we're all tired of covet. We certainly want our partners, and their employees and stay safe. And we understand that this means a slight delay and timelines. Another important Catalyst, this year's potential deal. I won't belabor this point but I'm still expecting this year to be an above-average year for New Deals and likely the highest level of videos the past few years for us and said that deals aren't done until they're actually done. So I'll let the actual deals if any speak for themselves.
The next Catalyst, it's worth remembering in which I've already touched on the return of capital to shareholders to read or share BuyBacks or dividends. We've had the benefit of discussing this further. At the board level, recently bought a retargeting a decision one way or another. If not by the end of this year than early next year, we have an incredibly strong balance sheet, a fantastic and diversified portfolio wage, it's generating record cash flow. And so it's my belief of paying a small but sustainable and growing dividend is effectively internet and very pleased with how well if we're folios performing and the opportunity to grow the portfolio. And so with that, I'm going to hand it over to Urban
Great. Thank you, Nolan. Hello to everyone.
Yesterday, it's been a great quarter for Sandstone the zones mention, I'd like to take some time to walk through the financial results. More details, the chart on the left of this slide goes off trivial. Gold equivalent ounces, sold as well as sales and royalty revenue for the last 4 quarters. If you've been tuning into these conference calls for a while, you may recall at the end of 2019, Sandstorm forth, realizing quarterly records on a regular basis. At the time, I mentioned that we were excited for this record-breaking Trend to continue after a year of oil change and Global upheaval. I'm pleased to say the Samsung cuz once again a new quarterly record
Moving to the next slide, we can make a few comparisons between the first quarter of 2020 and 2021 Biometrics listed here. Sandstrom financial performance was stronger in the first quarter of this year compared to the first quarter of last year. Total revenue was a record Thirty 1 million dollars an increase of 45% compared to the same period in 2028. A trivial golden someone else is sold with a new quarterly record at $17,444 an increase of 30% compared to the same period in two thousand. Either results were supported by a relatively strong gold market in the first quarter with an average realized gold price of $1,777 per ounce.
For comparison, the average realized gold price in the first quarter of 2020 with just under $1,600 per hour.
Average cash cost was $307 per ounce, which translated to cash. Operating margins $1,470 per ounce and a new quarterly record wage twenty. Three point. Seven million dollars in cash flows from operating activities.
Net income came in at 5 million for the quarter compared to a net loss of 10.3 million in the first quarter of 2020.
The next slide provides a breakdown of the quarterly production results by cash flowing assets.
The amount of silverstream was once again, the leader with over 4,700, that real gold. Google else is sold this represents. A 12% increase in silver ounces. Soul be compared to the first quarter of 2020.
Cerro more in silverstream has benefited from an increase in the silver price.
Sandstrom realize an average selling price of approximately $25 per ounce during the quarter compared to approximately $18 per ounce of silver in the first quarter of last year.
A similar story, can be told for the chapada, or stream sandstrom received a 29% increase in the number of copper pounds from chapada during the quarter and realize 36% increase in the average selling price of copper compared to the first quarter of 2020.
The result.
Holt for the total of $2,588 triple gold from else is sold from the screen other notable changes in production. When compared to twenty twenty include the addition of the rep. Can you stream? Which began gold? Deliveries to Sandstorm? In May 2020.
An increase in production attributed to the fruta del Norte mine which commenced commercial production in February 2020 and an increase in royalty revenue from the brace Mac McCloud.
Production from the karma. Mine and Burkina Faso also increased in the first quarter compared to the previous year, partly related to timing of sales and that delay in delivery compared to the park or 20/20 the first quarter. Also marks the end of The Five-Year period under the karma Gold Stream that allows Samsung to purchase 25,000 pounds of gold for ongoing. Monthly payments equal to 20% of the spot price and it's only mentioned as of April. First bathrooms will stream agreement and time of South closer to 1.63% of gold produce the car, or mine for the same ongoing pronounce payment, the operator, Endeavor mining forecasting between eighty thousand, nine thousand dollars, an ounce of gold to be produced at Carmine in 2026.
The final slide depicts, the first quarter, revenues by region, a metal type.
Sandstorm for fully continues to be. Well Diversified with mines operating table jurisdictions around the globe.
in the first quarter, ninety percent of revenues came from mines, operating in the Americas was approximately one-third of revenues coming from North America by
The majority of revenues came from precious metals with nearly half attributed, gold operation, was another 27% from Silver, 17% of revenues came from Copper at this corner. Providing good exposure to Rising these metal prices.
Overall, it was a very good start to the year for Samsung shareholders. It's a quarter was over $140 billion in cash, over $52 billion in equity Den. Beste has been turned off strong and ready to support the next step for the company based on the company's distant screams and royalties. Again, we updated our Chromecast or trivial Golden Corral to 6 between 55000 and 62000 ounces and twenty Twenty-One and with that I'll turn things over to Dave. Dave off my acid update will be briefed his quarter as a focus on two projects that are back in the Limelight. After a couple of years of us, not talking much about the first project is the nation project with hudbay. This has that was once once an entree resources, but has fun out into its own vehicle and was eventually purchased by hudbay in twenty years.
Team fast forward, three years.
Clear along with a $2 pound for pound increase in copper price and we have one of the largest Greenfield copper projects in the Americas and potentially the third largest copper mine in the United States wage. They recently released the results of the PA on the 2.2 billion time measured and indicated resource at 3:10, and using a 10% discount rate, but it carries after-tax npv of almost $520. The current mind life is expected to be twenty-seven years, but they're still working on additional exploration. That could extend that out. Obviously, we're working on the outside and asked, which will need to be achieved by Hyundai, is expected to put it into the development pipeline. Once Rosemont, is is up and off, however, it does have the potential to almost double cut based copper out outside. So clearly it could be one of the most important group projects in the pipeline.
With our 0.4%. Dennis are on the project. Sandstorm could collapse collect up to $75 in proceeds based on the 2050 copper price, obviously that's going to be a lot higher. This is another great example of how Sandstorm has been affected that access to low-cost early-stage deals on the right assets and sometimes like this one, even we're surprised that it doesn't take nearly as much time time as we originally thought to show that great value for sandstorm.
The other projects I want to talk about it. Now our Barrymore, Roy and Gladiator, these are all now, part of what was originally, The Bachelor Lake gold mines, which provide us with a tremendous amount of cash flow over over the last ten years today, under montero's management. There are three projects quickly pushing forward, which we hold. 200 promised wanted to 4.9% Gladiator and Barry from the large lamp package within the windfall Lake District in Quebec fonterra has been approximately $10,000 per month on the very property and has been consistently getting great results. Some of the latest step of intercepts are 14.7 meters in 7.4 grams. In six point, eight plus three point. Eight grams per time in the age, saw the deposit still appears to be open along strike and
There's a large amount of joint plan. Very likely has more mineralization to be found. An updated resource is expecting to 2 and a PA is expected, before the end of June. We've also begun to receive payment for a royalty here, through the bulk. Sample taken underground last year, but hopefully this project will start entering the development stage in the not-too-distant future off. In order to the original of Bachelor of Lake minesite. Not only has continued proved it is chasing up on the obrien and 2000. Showing fonterra has made another Discovery. Within 2, kilometres of the bachelor Mill, two holes have begun to outline this new discovery with intercepts of 24.5 years of 1.4 grams and ten meters of one point. Three grams. Just goes to show you that combined with moroi Discovery only a few years ago this is very prospective ground. Yep.
Just beginning to be understood.
Of course, it's also good news on the mill expansion, the old Bachelor like mill is still able to operate eight hundred times per day. Permitted to increased twenty four hundred times per day. And as well, through that process, new tailings. Expansions are approved and bonterra can find themselves and abused in to start the expansion soon for sandstorm. That means the sooner we get the chance revenue from a 4.9% NSR on all these newly discovered areas. So that I'll pass it over the call back over to the operator for Q&A. If you please do feel free to ask any questions about our business dreams.
and as a reminder, for ask a question that star one on your telephone keypad and if you would like to ask the question and press * 1, and our first question comes from heiko bile with h fever in white,
Hey there, and thanks for taking my questions. I'm glad you made it back on the call me too. I know you're still working diligently on the feasibility study for Thursday then and the prior Outlook was straight to be completed in the first half of the Year. Obviously, with the production by the end of twenty-three and just timeline was affirmed in the mdna that you guys just took out in contrast. Early on the call, you said that turkey went into a locked cell and there may be a delay to this, but I mean just thinking ahead, not 30 days but, you know, months, six months, nine months, 12 months. How much the impact is this delay? Really posed to you getting first production by the end of twenty-three and building on that Community Pride? Same color on the longer lead-time issues that you're particularly concerned about.
Yeah, so the lockdown was just announced a couple of days ago so it's a bit early, press two to tell some of those answers cuz it's only been in effect for a couple of days at the moment. We do foresee it's changing when we think the asset will get into production, some of the long lead items which are still working their way through the system would be things like forestry permits off but also epcm contractors getting them signed up and ready to go. And that work is still ongoing full force. And and most of that work is digital work where where people are submitting their kids, and phone calls are being had and, and that's still going ahead. Irrespective a block down. So, a lot of these long, these items are, are not, in fact, slowing down. It's just, if, if we, I a permit was expected to be grown next month and nobody showing up at the desk of the government for the next month that might go down, but that was never really a long lead item. So we're we're just waiting to see how or if any it'll impact it and at the moment we're not dead.
Guidance cuz we don't think it'll be too material. Okay? Yeah, that's that's that's what I figured because I mean it's so far in the future and even if they locked down for 90 days, I just don't see how that could change a 2023 timeline. Yeah, and a lot of a lot of those work at the project is at
At the stage right now, things is at the desktop level. And so, people are still pushing that work forward at the same Pace even when it happened to be in their homes,
Got it. Second question. I'm not sure how much of this you're willing to say, I mean, you obviously renewed your ncib and I think that's the right move, especially when I saw the 520 average price that you paid over the past few years in that presentation, that you had. You actually use the program reasonably aggressively and in q1, have you done anything include in Q2 so far? I work third way through the quarter. I don't know if you're willing and able to comment on that.
In Q2, we have, it's mostly cutie so far. We were in black out cuz the preparing financial statements so we weren't allowed to legally anyway. So
Fair enough. I'll get back to you. Thank you.
Thank you, and our next question, Hillary track with canaccord genuity? Hi, thanks for taking my question. So I actually just had a question on trickled. I see that you've been increasing the size of the investment, and I was wondering, if you are able to speak about the rationale behind that, it's a question that we get off on that and, and answered, and I'm from work last called, did you have it is with me, phone of very significant percentage of their company already and based on the life liberty, selling that at a reasonable price is, is not very feasible at the moment. And we think that there's actually a tremendous amount of value there. We think that the companies worth a lot of trading at, we have not been trying to say that publicly in the past and so let me think that accumulate shares that are are well below value, give us a benefit wage.
Building stronger position. If someone wants to kind of wanted by them and making sure we get their value for our shares or if nobody buys them, then you'll need a loaner during the 25% of the company in a partially delivered basis and they get 25% of their, their dividends from their, their Equity interests and we'll see how it goes. So either way, whatever I am happy and we think it's intelligent Capital, allocation give it a notch Capital, we have available to us in the value. You see there?
Okay, thanks. That makes sense. And one last question on increased the bottom end of the guidance and based on q1 that implies an annual run about 68,000 ounces which is above the high end of guidance. I know you said that karma is expected to decrease in the coming quarters that are expecting any other efforts to Georgia line? Or is this just like a conservative estimate?
I would say to try to be a conservative in our estimate sometimes it's tough to tell we I wouldn't say that there is any imminent declines that were expecting from any of our other assets other than the car, man or fan. I don't know if you have anything to comment on on the conservativeness of our guidance. Yeah, I think our guidance is life are potentially on the conservative side but we have more than just one commodity in our mix and that impacts our guidance figured. So as the year goes on will provide more clarity John
Okay, awesome. Thanks
Bernie.
And our next question comes from Derek Maher, TD securities.
Thank you. My question, really chapada from pretty positive exploration, results of their earnings, maybe percent increase in its land decision. Looking at the map of the property is still covered, by the Stream area. But can you confirm that the South West near mine exploration? Areas are covered and more specifically, I guess the formiga area that they're looking at it.
Yeah it's under check out of the way we structured that agreement is that all the land that they had at the time I fell under our agreement. So if the discovery is on the landing Zone at the time, it comes into our Green. In addition to that, we have the concept of expanding area of interest for another 3 kilometres outside that border. So if they picked up new life that they did not previously have within three kilometers of the old land that they had back in 2015 that falls under our our dealer, as well. So we have like, think if memory serves me, correct, almost seven hundred thousand square kilometers. Atlanta covered by our stream.
That's good here. And I guess one more question. I'm chapada than
Should we expect from decreasing? The GEOS paid to stand firm in Q2 like the shutdown or are we through that?
I'm not expecting material, decreasing Google announces in Q2. Having said that, there is a cap in annual wage that we get in in Copper and there's a trip mechanism. So for example, if they hit the cap and 1/4 there under another quarter, then we get through up at the end of the year. So I do think we're both in our maximum number of council copper captured a year whether or not they get delivered to you later in the year.
Thank you very much.
Our next question comes from John Thomas first with John Thomas's theory in.
Good morning. It's John tumazos.
In earlier, presentations. There was a focus on the pending feasibility, study update for hot mutton wage has that been delayed with COVID-19 and
Other complications and the world or is that still do in a quarter or so? And what are some of the changes possibly, in capex, or, or grades recovery rates? Anything that you can comment?
Yeah.
Center that. So in terms of the feasibility study it is still tracking. Well it's still tracking fast. Most of the work is desktop works. So we don't think the office down in turkey that was just announced should have the material impact on timeline. Maybe it'll have a small impact on timeline so it's definitely still going to be in the first half of this year. In fact, last night actually got some of the first sections of the furniture that are on report. That's actually being drafted. I sent to me in my inbox and I've got to start reviewing that but Thursday, we're expecting a fairly similar number of total. Payable ounces as previous studies, when you take into account braids with a feasibility study covering Senate, grab some of them down, but net-net, I'm expecting the total number of payable office has to be to be pretty similar and, and wage.
incredible mind, an incredibly robust mine and, and based on the knowledge that I have so far with these studies to show that,
Thank you very much.
Thank you.
And our next question comes from Brian MacArthur with Raymond James. A good morning, just following up and John's question. Since you were kind enough to comment on the ounces of Madden, one of the things I was just curious about the original study was done with a Turkish lira rate of 3.8. I guess it's eight or something now. Can you just remind me or if their life changes any guidance, you can give on how that's going to impact your capital outlay and and just ongoing operating costs how much it was sent to the Turkish lira because of your announcements and everything for the same, you're getting a better Lehrer. It could have turned out to be a better-looking project. I don't know if you can comment on that.
Yeah, what I want too much specifically, but what we're seeing generally is there is some cost inflation in Europe at the value pack. Just going down and so are expected. Capital in u.s. dollars is is pretty similar.
Thank you. That's very helpful.
There are no further questions at this time. I'll turn the conference back over to mr. Nolan watch them.
Great. Well, thank you. And thank you, everyone for phoning in today's call, apologize for the little hiccup, but my cellphone held in there. And I hope everyone has a good day. And like, always, if you have any questions, feel free to give us a shout at the office. Thank you.
And there are no further questions at this time.
This does conclude today's conference call. Thank you for your participation. You may now disconnect
Joseph.