Sandstorm Gold Ltd. Q1 2023 Earnings Call
Speaker 1: Nine months ago we had over 625 million dollars of debt. By the end of this quarter we expect that to be down to 450 million and dropping rapidly.
Speaker 1: One year from now I expect our debt to be sufficiently reduced into the mid 300 millions range. And I also expect at the same time that our equity and debt investments in other mining companies to be in a similar 300 million dollars range. Such that next year our net of our investments in other mining companies should be effectively zero.
Speaker 1: I think it's worth noting that we're very proud of the company that Sandstorm has become. We're excited about our collective future. I would be remiss, however, if I didn't acknowledge that along the way in building this company that there have been some bumps along the road. I say it is to acknowledge that we're not perfect as a team and we recognize that we have a very intelligent investor base.
Speaker 1: that we value the feedback of. For our investors, it's worth noting that your opinions vary so greatly that many of you disagree with each other, so we can't follow everyone's advice. However, it doesn't mean that we don't want to hear that advice.
Speaker 1: Even when our own shareholders disagree with each other, hearing each shareholder's opinion is helpful to us.
Speaker 1: Having over 50,000 investors, it makes it impossible for me to hear and synthesize every individual investor's thoughts. But we have recently decided to do our best and to create a new portal on our website where you can fill out your thoughts and the feedback will be reviewed by a member of our team.
Speaker 1: Feedback that is considered both constructive and thoughtful will find its way specifically to my desk so I can review it and help our senior management team make decisions that take into account what we're hearing from shareholders.
Speaker 1: In the 18 years that I've been a C-level executive of New York listed streaming companies, I've received a lot of feedback and some of that feedback has improved and changed how I view the business. And we're proactively looking for more of that feedback.
Speaker 1: I myself am not only a significant Sandstorm shareholder, but over the past nine months I've purchased another $2.5 million worth of Sandstorm shares with my own money. Because I believe the share price will go up. Clearly I want the share price to be as high as possible and I'll be endeavoring to accomplish that.
Speaker 1: and to the extent that you can provide feedback that will help that objective come true, please do so.
Speaker 1: So for those of you who want to do that, the web address is sandstormgold.com forward slash feedback.
Speaker 1: And with that, I'll hand it over to Irfan for the detailed results.
Speaker 2: Thanks Nolan.
Speaker 2: In terms of financial results, Aspen had a very strong start to the year, setting a number of new quarterly records.
Speaker 2: Stenstrom sold over 28,000 of Trueville's gold equivalent ounces during the first quarter and realized revenues of approximately $44 million, both a quarterly record for the company and an increase of 24% for the comparable period in 2022.
Speaker 2: Early in the quarter, we received a one-time contractual payment of $10 million from a Mount Hamilton royalty. This resulted in a quarterly record of $54 million in total sales, royalties, and income from other interest.
Speaker 2: Larger macroeconomic conditions help drive the price of certain commodities higher. As a result, the average realized gold price per ounce for the company's gold stream was $1,882, which is comparable to the first quarter of 2022.
Speaker 2: We continue to see indicators for a strengthening gold market and Sandstorm Portfolio is well positioned to profit from these rising gold prices.
Speaker 2: Diving into the details of the financial results a bit further, revenue was comprised of $26.4 million from sales from our streaming contracts and $17.6 million from our royalty assets.
Speaker 2: Dansform's average cash cost was $230 per gold equivalent ounce, down approximately 20% from the comparable period in 2022.
Speaker 2: This resulted in cash operating margins of $1,652 per trivial ounce.
Speaker 2: These are impressive margins that are indicative of a quality set of assets and also low-cost mining operations underlying our portfolio.
Speaker 2: Cash flows from operating activities, including changes in non-cash working capital, was nearly $43 million for the quarter, a 60% increase from the first quarter in 2022.
Speaker 2: Net income was $15.6 million or $0.05 per share on a diluted basis.
Speaker 2: Looking at a breakdown of the assets that contributed this quarter, Ceramoro, Antimena and Chapada were the top performing assets, contributing approximately 35% of the trivial gold occurring on assets.
Speaker 2: Lundin Mining, the operator of Chapada, recently updated the Chapada mineral reserves and resources and reported that exploration success at Chapada has offset mine depletion since the previous mineral estimate.
Speaker 2: The operator also released a maiden estimate on the Suave deposit, which is located within Sastron streaming grounds.
Speaker 2: There were other positive operational updates to ASSETS, including the food to Del Norte and Catherine Onis's mind, which I'll let Dave speak to in a moment.
Speaker 2: As many of you will recall, Santharm purchased a net profit's interest on the Antamina copper mine in the second half of 2022, and we are encouraged to see strong results from this asset in the first quarter.
Speaker 2: In addition to Antimino, Bonacro, Casaronis, and Vlybor, and additional streaming contracts of the Mercedes-Mayan Mexico are new to this list when comparing to the same period in 2022.
Speaker 2: It's exciting to see these assets on this list generating meaningful cash flow to fans and shareholders.
Speaker 2: The other category, which includes production from the other 27 royalties not specifically listed here, contributed nearly 9,000 achievable gold equivalent ounces. Transstorm now has 40 cash flowing assets in the portfolio and many more in development. A truly diversified royalty company.
Speaker 2: From a jurisdictional perspective, San Frans production remains primarily focused in the Americas, with 41% of gold-u-quven production coming from North America.
Speaker 2: This increase in the Americas was primarily driven by the addition of some of the streams and royalties I mentioned earlier that were acquired in a no-man-and-base-core transaction, as well as an increase in attributable ounces from the Punta del Norte mine in Ecuador and the Arizona mine in Brazil.
Speaker 2: Finally, I'd like to make a quick mention of the progress on Verizon Copper and the transaction with Sandstorm relating to the Antamine MPI.
Speaker 2: Horizon is working diligently in the background to complete the transaction, which we expect to close over the coming months.
Speaker 2: With that, I'll turn it over to Dave for some further updates on our access.
Speaker 2: of welcoming the new partner into Habana. So that's going to be my lead in today's asset update. With SSR becoming the operating partner, we enter a new phase of projects execution on the asset. The same team that launched the pressure oxidation plant at Tripler to great success with both timing and budget.
Speaker 2: responsible for the development of the TRPLR expansion to start focusing on project optimization within the existing EIA that's been filed and accepted. A new technical report is expected in 2024 and construction is expected to start that year as well.
Speaker 2: It's important to note that SSR's track record of performance post merger with Lasser in 2020 with regards to Turpler is fantastic.
Speaker 2: It was a great performance on both budget and time, but what's most notable is their ability to consistently outperform on production costs and extending the mine life.
Speaker 2: The chart on slide 12 shows how since only 2020, the SSR team has increased life of line production by 82% and increased reserves net of depletion by 85%. It certainly feels like we're going to have the right operator on this asset.
Speaker 2: One of the best aspects of the new partnership is that our and SSR's partner Lydia Mediichilek is still part of that execution team.
Speaker 2: SSR has been partners with Lydia, Mitt and Chilik for 15 years now and their combined execution on multiple projects demonstrates the great working relationship already established.
Speaker 2: I was just on site last week where I was brought renewed excitement with how truly exceptional this project is. The early works on the projects are well underway and the site is starting to look like a mine. And the last land acquisitions are finalizing soon.
Speaker 2: However, what excites me the most is the untapped exploration potential that exists.
Speaker 2: It's been over two years since any drilling has occurred on the site, but still the Russian zone and the north offset drill targets are anxiously awaiting some additional work. Also, more drilling in the existing south zone resource is a good potential target for additional reserves. It's a great time to have an ambitious new partnership to work toward.
Speaker 2: Now, on the next slide, Kesaronis II has a new operating partner in our friends in Lundin Mining.
Speaker 2: Almost the same things I've said about SSR's efficiency could apply to Lundin. They've been very successful in revising and improving the operations that they're involved in.
Speaker 2: Looking at their history when taking over Candelaria, you see an amazing improvement in just over nine years of ownership. At Candelaria, Lundin has increased forecast production by 160%, and increased MNI by 175%.
Speaker 2: Amazing improvements when they assumed ownership of this remarkable Chilean asset.
Speaker 2: Combine that history of improvement with the synergies that Candelaria and Cassarones make, you have a real winning formula.
Speaker 2: During construction ramp up in the first few years of operation, Casa Ronas has seen little to no exploration done on the property, but with Casa Ronas being one of the final pieces in the consolidation of the Cucuna district in Chile and Argentina, we're looking forward to renewed focus on exploration in an area that is known to the pull back on Cucuna virtually until failure end inImaginehya. The span location of the situation's role and total land are customizable for up to 6 months from crack point earlier.
Speaker 2: Better by no other management team. More good news from Lundin, but this time from Lundin Gold at Fruite del Norte.
Speaker 2: The mine is consistently outperforming expectations quarter over quarter and the last update from the project highlighted the successful discovery of projects at the existing Fruta del Norte mine. This comes in addition to the conversion of the inferred resources in the south zone to reserves.
Speaker 2: For almost 17 years, observers have been awaiting potential results from other areas of the pulled apart basin, and now we seem to be finally finding them.
Speaker 2: Almost adjacent to the South Recruiter del Norte, new drilling has revealed grades very similar to FDM, along with similar textures and epithermal mineralization, with open targets along Strike and Dam Dip. Bonzasur is just south of this target.
Speaker 2: and covered by an extensive gold anomaly with some initial drill hole intercepts of 8.3 grams per ton. Gold over 39 meters and almost 47 grams per ton over 3.5 meters. The soil anomaly these drill holes are on extends over 1.2 kilometers.
Speaker 2: Castillo is another area of mineralization in the pull-apart basin where FDN-mineralized type of mineralization will be followed up on.
Speaker 2: Together, at least three drilled rigs will be utilized to continue a drill program near Mindjilling of 23,000 buters.
Speaker 2: and regional exploration of 12,500 meters. All this exploration drilling is in addition to the 7,600 meters expected drilling in the conversion program at Fruita del Norte.
Speaker 2: 2023 drilling has initial results that confirm the continuity grade and width of the resource areas.
Speaker 2: So we're very optimistic that the 1.58 million ounces added since the beginning of mining will continue to increase over the next few years.
Speaker 2: So with that, I'll pass the call back over to the operator, Joanne.
Speaker 2: for questions and answers. Please feel free to ask questions about any of the royalties stream.
Speaker 2: Please feel free to ask questions about any of the royalties in stream.
Speaker 3: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch tone phone. If you would like to withdraw your request, please press star followed by two.
Speaker 3: And if you are using a speakerphone, please lift the handset before pressing any keys.
Speaker 3: First question comes from Hi-Co Eley at HC Rain Right. Please go ahead.
Speaker 1: Hi everyone, this is Marcus Giannini calling in for HICO. Thanks for taking our questions.
Speaker 1: So given that SSR mining recently has taken operational control over on them, have you talked with them about any potential changes given a different development team now being there when it comes to deciding on priorities for the site going forward?
Speaker 1: and so far the plan is straight ahead. But Dave, you were just at site, so I'll turn it over to you if you have any other insights.
Speaker 2: start executing. Certainly they're going to put their SSR stamp on this, but of course being partners with Lydia for some time they've got a lot of experience doing that and they certainly are very pleased with the work that Lydia has put into the project thus far.
Speaker 2: and are happy really just to continue on. So you can expect something.
Speaker 2: Even with the updated technical report as it comes to be quite similar with the exception of some additional project optimizations within the existing plan.
Speaker 1: Okay, that makes sense. Thanks for the color there. And then just changing gears a bit. We were going through your quarterly and notice the Colossus severance lawsuit is still ongoing as per page 36 of the report. And obviously 8 million is not a huge amount of money, but regardless.
Speaker 1: meaningful enough to warrant asking if you have any idea when this might come to a conclusion.
Speaker 1: And to be clear, you're not forced to keep this money in Brazil in some sort of restricted account, like a bond, right?
Speaker 1: Yeah, that is correct. That has been a nuisance, totally unmerited lawsuit that was launched many, many, many years ago and nothing ever happens on it. So it's one of those accounting note things that we expected to have absolutely no effect in any way at all ever.
Speaker 3: Okay, perfect. Yeah, that's it for me. Thanks for taking my questions, guys. And as a reminder, if you have any questions, please press star 1 now. We have no further questions.
Speaker 1: please do go and fill out those feedback forms on the website. Thank you everybody, have a good day.
Speaker 3: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines.