Q1 2024 Sandstorm Gold Ltd Earnings Call

Speaker Change: [music].

Joanna: Good morning, my name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sandstorm Gold Royalties 2024 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. Please be aware that some of the commentary may contain forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, or actual results and future events could differ materially from those anticipated in such statements.

Good morning, My name is Joanna and I will be your conference operator today at.

Joanna: At this time I would like to welcome everyone to the Sandstorm gold royalties 2024 first quarter results conference call. All lines have been placed on mute to prevent any background noise.

Joanna: Be aware that some of the commentary may contain forward looking statements. There can be no assurance that forward looking statements will prove to be accurate.

Joanna: Actual results and future events could differ materially from those anticipated in such statements.

After the Speakers' remarks, there will be a question and answer session.

Joanna: I would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press Star then the number two thank you. Mr. Watson you may begin your conference.

Joanna: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star, then the number 2. Thank you. Mr. Watson, you may begin your conference.

Watson: Thank you Joanna.

Nolan Watson: Good morning, everyone, and thank you for calling into our Q1 earnings call. As usual, in a few minutes, I'll hand things over to Erfan, our CFO, to review our quarterly earnings highlights.

Watson: Good morning, everyone and thank you for calling into our Q1 earnings call.

CFO: As you will in a few minutes I'll hand things over to <unk> CFO to review our quarterly earnings highlights.

Nolan Watson: Before I do that, I would like to take the time to give an update on our business, with a specific emphasis on our capital allocation plans in this current high gold price environment. And in doing so, I want to talk about a few key points, those being, number one, how much cash flow we're making at these high gold prices, how much growth we have built into our portfolio, and therefore how much more cash flow we're expected to make in the future.

CFO: Before I do that I would like to take the time to give an update of our business with a specific emphasis on our capital allocation plans in this current high gold price environment and in doing so I wanted to talk about a few key points those being number one how much cash flow, we're making at these high gold prices how much growth, we have built into our portfolio and therefore, how much more cash.

CFO: We're expecting to make in the future.

Nolan Watson: Number two, how quickly our debt has been coming down and how that continued reduction in debt is accelerating, not only because of high gold prices but because of the non-core asset sales processes that we've completed.

CFO: Number two how quickly our debt has been coming down and how that continued reduction in debt is accelerating not only because of high gold prices, but because the noncore asset sales processes that we've completed.

CFO: Number three.

Nolan Watson: The status of the non-core asset sales process. I want to talk about where we are, what we've achieved, and what shareholders can expect going forward. Number four, I want to remind people of the growth that we have coming online now and over the next few years. Then finally, I want to talk about capital allocation priorities and specifically share buybacks versus additional growth. So starting with number one, and how much cash flow we're making, you can see from this slide that at today's gold prices, we're expecting our portfolio to generate close to $165 million in cash flow.

CFO: The status of the noncore asset sales processes I wanted to talk about where we are what we've achieved and what shareholders can expect going forward.

CFO: Number four I want to remind people of the growth that we have coming on line now and over the next few years and then finally I wanted to talk about capital allocation priorities and specifically share buybacks versus additional growth.

CFO: So starting with number one and how much cash flow, we're making you can see from this slide that at today's gold prices, we are expecting our portfolio to generate close to $165 million of cash flow.

Nolan Watson: And as other assets come online, like Greenstone, Flat Reef, Robertson, Odd Modern, and Mara, we expect that cash flow to grow to over a quarter of a billion dollars per year within five years. It's my belief that these new gold prices are, generally speaking, here to stay. And although there will certainly be more short-term volatility in the gold price, the fundamental forces that have been driving gold higher are generational themes of geopolitical tensions, wars, inflation, currency debasement, US dollar, de-dollarization of global trade, etc.

CFO: As other assets come online like greenstone flat reef Robertson bought Martin Mara we expect that cash flow to grow DAU over quarter of $1 billion per year, which in five years' time.

CFO: It's my belief that these new gold prices are generally speaking here to stay.

CFO: Although there will certainly be more short term volatility in the gold price that the fundamental forces that have been driving gold higher are generational themes.

CFO: Political tensions wars inflation currency Debasement U S dollar de dollarization of global trade et cetera.

Nolan Watson: And these themes, over the long term, will continue to push gold higher. And if I'm right, this means Sandstorm is making much more money than anticipated, and our shares are worth much more than they are trading at. That brings me to my second point.

CFO: Themes over the long term, we will continue to push goes higher.

CFO: I write this needs to sandstorm, making much more money than anticipated and our shares are worth much more than their trade again.

That brings me to my second point.

Nolan Watson: For a long time now, many of you know, I've been wanting to buy back our shares in the market. And as some of you may have noticed, we recently filed a CDI report showing that we recently bought back a few shares in the market. Our debt is now coming down so fast that we feel our balance sheet is now strong enough that we should be buying back some of our own shares. We've just announced the renewal of our normal course issuer bid, and our debt, as we sit here today, is already down to $408 million.

CFO: For a long time now many of you know I've been wanting to buyback our shares in the market.

CFO: Mr. <unk> you may have noticed we recently filed with SEDAR reports showing that we've recently bought back a few shares in the market. Our debt is now coming down so fast.

CFO: Balance sheet is now strong enough that we should be buying back some of our own shares.

CFO: We've just announced the renewal of our normal course issuer bid and our debt as we sit here today is already down to $408 million and we've just announced that we've signed an agreement to sell a few non core non precious metals royalties to a company called evolves for $21 million in cash and we expect this transaction to close in Q2.

Nolan Watson: And we've just announced that we've signed an agreement to sell a few non-core, non-precious metals royalties to a company called Evolve for $21 million in cash. And we expect this transaction to close in Q2. So these proceeds, combined with our anticipated cash flow for the remainder of Q2, mean that we expect to have our debt down to approximately $375 million by the end of this quarter. When you compare that $375 million to our substantial capital from our portfolio, I can now confidently say that we have low leverage, and that leverage is dropping rapidly as our debt evaporates. Because of this, we are not confident enough to resume repurchasing our own shares in the market.

CFO: So these proceeds combined with our anticipated cash flow for the remainder of Q2, we expect to have our debt down to approximately $375 million by the end of this quarter.

CFO: When you compare that $375 million towards substantial cash flow from our portfolio I can now comfortably say that we have low leverage and that leverage is dropping rapidly evaporates.

CFO: Because of this we are now confident enough to resume repurchasing our own shares in the market.

Nolan Watson: Having said that, our plan is still to use the bulk of our cash flow to continue paying down debt and recharging our balance sheet so that we can set the stage for our next leg of growth. I'm a big believer that gold prices are going to stay high and go higher, and therefore, we want to find more gold streams and royalties to purchase. I do think it's important to note, however, that we think our shares are worth so much more than what they're trading for. Therefore, we're not at all considering any growth that would require equity or convertible debentures or any other forms of dilution.

CFO: Having said that our plan is still to use the bulk of our cash flow to continue paying down debt and recharging their balance sheet. So that we can set the stage for our next leg of growth.

CFO: I'm, a big believer that gold prices are going to stay high and go higher and therefore, we want to find more gold streams and royalties to purchase I.

CFO: I do think it's important to note. However that we think our shares are worth so much more to where they're trading for therefore, we're not at all considering any growth that would require equity or convertible debentures or any other forms of dilution.

Nolan Watson: Our goal is to buy back shares and shrink our share flow so that any growth we have will be paid for from operating cash flow or from a revolver. We are also now proud that our balance sheet is once again strong, and we plan on keeping it that way. In the past, we have grown Sandstorms sometimes in jarring ways for shareholders, and we believe that those days are behind us and that our shareholders can expect smoother sailing going forward and growth that is more methodical and measured and that does not require equity.

Our goal is to buy back shares and shrink our share float.

CFO: Any growth we have will be paid for from operating cash flow or from our revolver.

CFO: We are also now proud that our balance sheet is once again strong and we plan on keeping it that way.

CFO: In the past, we have grown sandstorm, sometimes and jarring ways for shareholders. We believe that those days are behind us and that our shareholders can expect smoother sailing going forward and growth that is more of a thoughtful and measured that does not require equity.

Nolan Watson: I have to say, as a large Sandstorm shareholder myself, I'm excited for this next leg of growth, and I believe it will be done in a way that's rewarding for shareholders. That brings me to my third point.

Speaker Change: I have to say as a large sandstorm shareholder myself I'm excited for this next leg of growth and I believe it will be done in a way that's rewarding shareholders.

Speaker Change: That brings me to my third point, just briefly I'd like to provide a bit of color on the noncore asset sales process.

Nolan Watson: Just briefly, I'd like to provide a bit of color on the non-core asset sales process. As you know, we have guided the market that we would complete asset sales for a minimum of $40 million in cash proceeds. We have already completed $20 million of that.

Nolan Watson: And with this latest sale to evolve of $21 million in cash, we've now completed our minimum objective of $40 million. This latest and last sale of assets was the culmination of a many months process run by RBC involving many different royalty companies. Many of the offers we received during the bidding process were from non-conforming people bidding on assets that weren't for sale.

Speaker Change: You know we have guided the market that we would complete asset sales for a minimum of $40 million in cash proceeds we had already completed $20 million of that and with this latest sale to evolve with $21 million in cash. We've now completed our minimum objective of $40 billion.

Speaker Change: Latest and last sale of assets was the culmination of many months process run by RBC be involving many different royalty companies.

Speaker Change: Of the offers we received during the bidding process, where for nonconforming people bidding on assets if it weren't for sale and although it was flattering to see how much people wanted to pay for some of our core royalties in the end what it's achieved all of our core royalties and we only wanted to part with the copper MPI and a handful of others non precious metal royalties adult liberty deal for sandstorm shareholders.

Nolan Watson: And although it was flattering to see how much people wanted to pay for some of our core royalties, in the end, we wanted to keep all of our core royalties, and we only wanted to part with a copper MPI and a handful of other non-precious metal royalties that don't live with Sandstorm shareholders. For what it's worth, it's my view that we started this non-core asset sale process at lower commodity prices and when we had higher debt levels.

Speaker Change: For what it's worth it's my view that we started this non core asset sale process at lower commodity prices and higher debt levels and we are trying to be conservative with our balance sheet, but it's clear to me now that we're making so much money, we arent being served well by over conservatism that we do not need to sell any streams or royalties going forward. We anticipate that these are the last royalties that will consider selling.

Nolan Watson: And we were trying to be conservative with our balance sheet, but it's clear to me now that we're making so much money. We aren't being served well by over-conservatism, and we do not need to sell any streams or royalties going forward.

Nolan Watson: I anticipate that these are the last royalties that we'll consider selling, and that our portfolio is locked down. And the only things we're considering doing are adding to it for new gold streams and new royalties that will make our company stronger going forward. Having said that, we will continue, over time, to sell our non-core debt and equity investments that we have in other mining companies and use those proceeds to accelerate our debt repayment so that we can recharge our balance sheet and get ready for our next leg of growth in gold. This brings me to my fourth point, which is speaking about growth.

And that our portfolio is locked down and the only things we're considering doing is adding to it for new gold streams, new royalties that will make our company stronger going forward.

Speaker Change: Having said that we will continue.

Speaker Change: Overtime to sell our non core debt and equity investments that we have with other mining companies use those proceeds to accelerate our debt repayment. So we can recharge our balance sheet and get ready for our next leg of growth in gold.

Speaker Change: That brings me to my fourth point, which is speaking about growth.

Nolan Watson: I want to remind shareholders of the five great gold streams and royalties that we have coming online over the next several years, being the Greenstone mine, which should be pouring gold next month, the Platte Reef mine that our technical team just got back from, they should be pouring gold next year, the Barracks Robertson mine, SSR's Hadmoden mine, and Glencore's Mara mine. Sandstorm shareholders have a lot of built-in growth to look forward to, and at these gold prices, we plan on making lots of money for shareholders.

Speaker Change: But I remind shareholders the five great gold streams and royalties that we have coming online over the next several years being the greenstone mine, which should be pouring gold next month flat refine their technical team just got back from they should be pouring gold next year Barrick's Robertson mine ssrs have modern mining <unk> Mara mine.

Speaker Change: Shareholders have a lot of built in growth and look forward to that at these gold prices, we plan on making lots of money for shareholders.

Nolan Watson: It really is a good time to be a Sandstorm shareholder. We have a strong asset base and a number of key catalysts coming up, including evaporating bank debt, share buybacks, Greenstone and Platte Reef coming online, PodMod and getting into construction, and our corporate development team is once again out there trying to plant the seeds for our next leg of growth. The future is bright at Sandstorm, and with that, I'll hand it over to Erfan to review the quarterly details.

Speaker Change: It really is a good time to be sandstorm shareholder, we have a strong asset base and a number of key catalysts coming up including evaporating bank debt share.

Speaker Change: Share buybacks greenstone implant reef coming online Hod maden and getting into construction at our corporate development team has once again out there trying to plant the seeds for our next leg of growth.

Speaker Change: Our future is bright at sandstorm.

Speaker Change: With that I'll hand, it over to <unk> to review the quarterly details.

Speaker Change: Thank you Nolan.

Erfan Kazemi: With the rapid rise in commodity prices and with gold and silver hitting all-time highs, the first quarter of 2024 has brought a renewed sense of optimism and excitement to the mining industry. We're seeing many positive developments from our royalty portfolio as operators and exploration companies accelerate investment in their projects. In terms of Sandstorm's first quarter financial results, we're off to a solid start to the year. With just over 20,300 attributable gold equivalent ounces sold, the company is right on track to achieve its production guidance for 2024, which is between 75,000 and 90,000 gold equivalent ounces. The average realized gold price for the quarter was $2,062 per troy ounce.

Speaker Change: With the rapid rise in commodity prices and with Golden silver hitting all time highs. The first quarter of 2024 has brought a renewed sense of optimism and excitement to the mining industry.

Speaker Change: Seeing many positive developments from our royalty portfolio as operators and exploration companies accelerate investment in their projects.

Speaker Change: In terms of sandstorms first quarter financial results, we are off to a solid start to the year.

Speaker Change: With just over 20300 attributable gold equivalent ounces sold the company is right on track to achieve its production guidance for 2024.

Which is between 75090 thousand gold equivalent ounces.

Speaker Change: The average realized gold price for the quarter with $2062 per attributable ounce.

Erfan Kazemi: It's worth noting that the company received some of its more material stream deliveries at the beginning of the quarter. In Q1, gold and silver prices made more material moves upward towards the end of the quarter. Sales from our streaming contracts totaled $27.2 million, and royalty revenue was $15.6 million for total quarterly revenue of $42.8 million. Cash operating margins remain strong, coming in at $1,782 per trivial ounce for the three-month period. That is an 8% increase in cash operating margins compared to the same quarter in 2023, resulting cash flows from operating activities, excluding changes in non-cash working capital with $32.6 million for the first quarter, net of a $10 million one-time contractual payment related to the company's Mount Hamilton royalty that was recognized in the first quarter of 2023. Cash flows were relatively consistent year over year.

Speaker Change: It's worth noting that the company received some of it's more material stream deliveries at the beginning of the quarter and Q1 Golden silver prices made more material moves upward towards the end of the quarter.

Speaker Change: Sales from our streaming contract totaled 27.2.

Speaker Change: $2 million in royalty revenue was $15 6 million for total quarterly revenue of $42 8 million.

Speaker Change: Cash operating margins remained strong coming in at seven $782 per attributable ounce for the three month period.

Speaker Change: That is an 8% increase in cash operating margins compared to the same quarter in 2023.

Speaker Change: Resulting cash flows from operating activities, excluding changes in noncash working capital with $32 6 million for the first quarter.

Speaker Change: Net of a $10 million onetime contractual payment related to the company's now Hamilton royalty that was recognized in the first quarter of 2023 cash flows were relatively consistent year over year.

Speaker Change: Yes.

Erfan Kazemi: The company had a net loss of $3.9 million for the three-month period ended March 31st, compared to net income of $15.6 million for the comparable period in 2023. The change was primarily driven by a decrease of $10 million in contractual income related to the Mount Hamilton royalty that I mentioned, as well as fair value changes in the revaluation of the company's investment in debentures. As Nolan just discussed, higher commodity prices are having a positive impact on the company's cash flows, which helps expedite our deleveraging efforts.

Speaker Change: The company had a net loss of $3 9 million for the three month period.

Speaker Change: Ended March 31, compared to net income of $15 6 million for the comparable period in 2023.

Speaker Change: The change was primarily driven by a decrease of $10 million in contractual income related to the Mount Hamilton royalty that I mentioned.

Speaker Change: As well as a fair value changes and the revaluation of the company's investment in debentures.

Speaker Change: As Nolan just discussed higher commodity prices are having a positive impact on the company's cash flows.

Speaker Change: Which helps expedite our deleveraging efforts.

Erfan Kazemi: During the first quarter, we were able to make net payments of $20 million on the company's revolving credit facility, and we ended the quarter with bank debt totaling $415 million. Subsequent quarter ends, we have continued debt repayment. And as of yesterday, Sandstorm's net debt was approximately $405 million. With the closing of the non-core sales transaction announced yesterday that Nolan mentioned, we expect our bank debt to be well below $400 million in the coming months.

Speaker Change: During the first quarter, we were able to make net payments of $20 million on the company's revolving credit facility and we ended the quarter with bank debt totaling $415 million subsea.

Subsequent to quarter end, we have continued debt repayment and as of yesterday at Sandstorm net debt was approximately $405 million.

Speaker Change: With the closing of the noncore sales transaction announced yesterday that Noel mentioned, we expect our bank debt to be well below $400 million in the coming months.

Erfan Kazemi: Looking at a breakdown of our assets and where production came from during the quarter, the Bonnecrow mine in Cote d'Ivoire was the top producer. This was largely due to the timing of sales, whereby approximately 800 gold ounces were delivered towards the end of the fourth quarter and subsequently sold in Q1 2024. The company's streams at the Chapada mine and the Cerro Moro mine continue to be on Sandstorm's list of top producing assets.

Speaker Change: Looking at a breakdown of our assets and where production came from during the quarter. The bond accrual mine in Cote d'ivoire was the top producer.

Speaker Change: This was largely due to the timing of sales whereby approximately 800 gold ounces were delivered towards the end of the fourth quarter and subsequently sold in Q1 2024.

The company streams on the chip had a mine in the Cerro Moro mine continue to be in Sandstorm list of top producing assets.

Erfan Kazemi: In February, Lundin Mining announced a 25% increase in mineral resources at the Chapada Suava deposit. However, I want to highlight that attributable production from the Antimena copper mine in Peru was lower in the first quarter compared to the previous quarter. The decrease is related to the nature of the MPI that Sandstorm holds, whereby there was a reduction in the royalty payment due to a one-time adjustment to the asset retirement obligation at the Antimena mine to reflect updates relating to the recently approved mine plan, another working capital adjustment.

Speaker Change: In February Lundin mining announced that 25% increase in mineral resources at Japan Swabber deposit.

Speaker Change: I want to highlight that attributable production from the <unk> copper mine in Peru was lower in the first quarter compared to the previous quarters. The.

Speaker Change: The decrease is related to the nature of the NPI that sandstorm holds whereby there was a reduction in the royalty payments due to a onetime adjustment to the asset retirement obligation at the <unk> mine to reflect updates relating to the recently approved mine plant and other working capital adjustments.

Erfan Kazemi: Despite this one-time adjustment affecting Sandstorm's quarterly revenues attributable to Antimena, the underlying benefit to Sandstorm is the extension of operations at Antimena and the proposed processing capacity expansion at the mine, which should further increase the already long-dated nature of this incredible asset. Sandstorm is well positioned to take advantage of an environment of rising gold, silver, and copper prices. In the first quarter, nearly 75% of the gold equivalent ounces sold were attributable to gold and silver mines, while 15% of Etruva Gold Coal's analysis came from copper mines.

Speaker Change: Despite this one time adjustment affecting sandstorms quarterly revenues attributed to and to me that the underlying benefit to sandstorm is the extension of our operations and to meet and the proposed processing capacity expansion at the mine, which should further increase the already long dated nature of this incredible asset.

Speaker Change: Sandstorm is well positioned to take advantage of an environment of rising gold silver and copper prices.

Speaker Change: In the first quarter nearly 75% of the gold equivalent ounces sold were attributable to gold and silver mines.

Speaker Change: <unk>, 15% of attributable gold equivalent ounces came from copper mines.

Erfan Kazemi: As Nolan discussed, cash flows are expected to be strong this year, and we're excited to see some of our key development assets come online over the coming months and years. I'll leave it there and turn the mic over to Dave for some portfolio highlights. Dave.

Speaker Change: As Nolan discussed cash flows are expected to be strong this year and we're excited to see some of our key development assets come online over the coming months and years.

Speaker Change: I'll leave it there and turn the mic over to Dave for some portfolio highlights date great.

Dave: Great. Thanks, Erfan. And good morning, everyone.

Dave: Thanks, Stefan and good morning, everyone.

Dave: Today, I thought I would remind everyone of the timelines for Greenstone and Platteleaf, but I also want to speak to the market share that Sandstorm has of the spending going on in the junior mining exploration sector. Starting with Greenstone, which is now fully consolidated under Equinox Gold, on track for the first gold pour this month following the introduction of ore into the grinding circuit on April 6, they have over 1.5 million tons of ore stockpiled and over 70,000 tons of ore crushed.

Dave: Today, I thought I would remind everyone on timelines for Greens kind of important.

Dave: I also want to speak to the market share that sandstorm as of the spending going on in the junior mining exploration sector.

Dave: So starting with greenstone.

Dave: Which is now fully.

Dave: It will be consolidated under equinox gold on track for first gold pour this month following the introduction of a word to the grinding circuit on April six.

Dave: Have over $1 5 million tonnes of ore stockpiled and over 70000 tonnes of ore crushed.

Dave: With preparations for early commissioning feed underway, the project targets throughput of 20,000 tons per day, with commercial production expected in Q3 of 2024 and 90% of that nameplate capacity by the end of the year. Greenstone is on the final stretch of becoming the fourth largest gold mine in Canada. Moving on to Platte Reef, the technical team and I just completed a visit to Platte Reef in South Africa two weeks ago, and we're really pleased to see the project there develop. It's a very impressive site, and the scale of everything leaves you awestruck.

Dave: With preparations for early commissioning peed underway the project targets throughput of 20000 tonnes per day with commercial production expected Q3 of 2024, and 90% of that nameplate capacity by the end of the year Green.

Dave: Greenstone is on the final stretch, becoming the fourth largest gold mines in Canada.

Dave: Moving on to plan rates, the technical team and I just completed a visit to <unk> in South Africa, two weeks ago.

Dave: Really pleased to see the project their development, it's very impressive site and the scale of the everything leaves you was struck.

Dave: Ivan Holmines is doing an excellent job pushing this project to production, which is now hoping to become the largest South African PGM producer by a significant margin. Despite the enormous scale of what is being built on site, the project will start rather modestly with 800,000 tons per annum in phase one, expected in Q3 2025. Considering the scale of SHAP2 and the ingenuity of how SHAP3 is being converted, you can see how the expansion up to 4 million tons per year per annum in phase two and a further expansion to 10 million tons per annum for phase three can happen.

Dave: I haven't all mines is doing an excellent job pushing this projected production, which now hoping to become the largest south African PGM producer by a significant margin despite the.

Dave: Enormous scale of what is being built on site. The project will start rather modestly with 800000 tonnes per annum in phase one.

Dave: <unk> for Q3 2025, considering the scale of shaft, two and the ingenuity of how <unk> is being converted you can see how the expansion up to 4 million tonnes per year per annum in phase III and a further expansion to 10 million tonnes per annum for phase III can habit.

Dave: As expected, Ivanhoe has an impressive build team on site, with many of the people involved in the construction of the amazing Kamoa Kakula project in DRC currently involved in the optimization and construction of Platinum. We're excited to see the mill starting to take shape, and this first phase should be ready in time for production in Q3 2025. Shaft 3 is almost finished reaming and is expected to be ready for hoisting in Q4 2025, with a capacity of 4 million tons per annum, bringing the entire hoisting capacity to 5 million tons per annum by the end of next year. An updated and optimized feasibility study is expected on Phase 2 expansion by the end of this year.

As expected.

Dave: <unk> has an impressive build team on site with many of the people involved in the construction on the amazing Kamala cooler project in DRC.

Dave: Currently involved in the optimization and construction applaud.

Dave: We're excited to see the mill starting to take shape in this first phase should be ready in time for the production in Q3 2025 shaft. Three is almost finished reviewed and is expected to be ready for hoisting in Q4, 2025, making it with a capacity of 4 million tons per annum, bringing the entire hoist.

Dave: The capacity for two 5 million tonnes per annum by the end of next year.

Dave: An updated and optimized feasibility study is expected on phase II expansion by the end of this year.

Dave: The last item I wish to speak about today is regarding the optionality of the royalties that we own. Beyond the 40 cash flowing assets in the portfolio, it's important to remind shareholders there are close to 200 additional projects worldwide that we hold royalties on. Of course, Sandstorm has been accumulating royalties and packages for 15 years, and it's incredible to see how far our reach into the junior mining exploration market extends, tracking financings for the last three years and one quarter.

Speaker Change: Last item I wish to speak.

To vote today is regarding the optionality of the royalties that we have.

Speaker Change: Beyond the 40 cash flowing assets in the portfolio. It's important to remind shareholders that are close to 200 additional projects worldwide that we hold royalties on.

Speaker Change: Of course, sandstorm has been accumulative royalties and packages for 15 years now and it's incredible to see how far our reach into the junior mining exploration market extend tracking financings for the last three years and one quarter, we see that in precious metal and base metal junior explorers.

Dave: We see that in precious metal and base metal junior explorers, $14.8 billion has been raised by companies in North America and Australia. When you look at how much was raised by our own junior mining partners, whom we hold royalties with, there's a remarkable 1.8 billion raised. This means that Sandstorm Gold is seeing the benefit of greater than 12% of all junior mining exploration finance completed in North America and Australia. If we are seeing a renaissance of new equity into that sector, we hope this amount will increase over the rest of this year and continue to see projects in our portfolio move from exploration to development to production, like we have seen from partners like Urdine in their buying of the Hyundai Mine or Las Cisnes by Cera

Speaker Change: $14 $8 billion has been raised by companies in North America, and Australia when.

Speaker Change: When you look at how much was raised by our own junior mining partners. When we hold royalties wins Theres a remarkable one 8 billion raised this means that sandstorm gold is seeing the benefit of greater than 12% of all junior mining exploration financings completed in North America.

Speaker Change: And Australia.

Speaker Change: If we aren't seeing a renaissance of new equity into that sector. We hope this amount will increase over the rest of this year and continue continued to see projects in our portfolio move from exploration to development to production like we have seen from partners like <unk> in their buying Hyundai mine.

Speaker Change: Or less business by Serrato goal.

Dave: It's great to have a huge portfolio in an exciting time like this, where capital is starting to flow into the exploration space. So, with that, I'll hand the call back over to Joanna, the operator, for our Q&A session. Please feel free to ask questions about any of our projects and royalties.

Speaker Change: Great to have a huge portfolio and an exciting time like this where capital is starting to flow into the exploration space, So with that I will.

Speaker Change: I hand, the call back over to Joanna the operator for our Q&A session. Please feel free to ask questions about any of our projects and our royalties and streams.

Joanna: Thank you.

Joanna: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any key.

Joanna: 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 Touchtone phone you will hear with Saudi Telecom technology and you have a question.

Joanna: We're using a speaker phone please lift the handset before pressing any case.

Joanna: One moment, please, for your first question. The first question comes from Heiko Ihle at HC Mainright. Please go ahead.

Joanna: One moment. Please for your first question.

First question comes from Heiko Ely at H C. Wainwright. Please go ahead.

Heiko Ihle: Hey there, thanks for taking my questions. I assume you can hear me okay? Yes, bye Heiko. Perfect. How are you?

Heiko Ely: Hey, there thanks for taking my questions I assume you can hear me okay.

Heiko Ely: Yep.

Nolan Watson: Hey, on your pipeline of non-core asset sales, what are you seeing with sales prices right now, given the spot prices versus, you know, where we would have been when you started this non-core asset sales mission? And building on that question, earlier in this call, you discussed people bidding on assets you don't want to sell. Looking at your pipeline, and there's no need to provide a name, I'm just curious, looking at the assets that are for sale, how soon to production are the nearest term ones that you are willing to, you know, sell for the right price, please?

Heiko Ely: Perfect.

On your pipeline of non core asset sales what are you seeing with sales pricing right now given the spot prices versus where we would've been when you started this non core asset sales mission and building on that question earlier on this call you discussed people bidding on assets you don't want to sell.

Heiko Ely: Looking at your pipeline are they still need to provide the name I'm just curious looking at the assets that are for sale. How soon to production. Our nearest term ones that you are willing to.

Heiko Ely: <unk> for the right price please.

Nolan Watson: Yeah, so I guess just as a reminder that after this sale process to evolve $21 million, that will conclude our asset sale process. There's nothing else that we're considering going forward. And if I reflect on the process, the phases of bidding and when the prices for bidding were due were before this run-up in commodity prices. And so we didn't really get a lot of information about what people would be paying going forward for assets. I expect that, for example, when we're competing to buy streams and relatives going forward, there will be a bit more competitive tension because commodity prices are higher.

Speaker Change: Yes, So I guess just as a reminder, that after this sale process to evolve a $21 billion that will conclude our asset sale process. There is nothing else that we're considering going forward.

Speaker Change: As I reflect on the process.

Speaker Change: The phases are big and when the prices are bidding where do where before this run up in commodity prices and so we didn't really get a lot of information about what people would be paying going forward for assets I expect that for example, when we're competing to buy streams and royalties going forward.

Speaker Change: Worked.

Speaker Change: Pension because commodity prices are higher.

Nolan Watson: In terms of asset sales right now, we're done selling anything in our portfolio. Our portfolio is locked down. We only want to buy things going forward and grow in gold, and we're going to be focused on doing that. And the only non-core asset sales that we'll sell going forward will be the assets of debt and equity investments that we hold in other mining companies that aren't core. And we're going to continue to try to sell those to accelerate our debt repayment.

Speaker Change: Or asset sales right now.

Speaker Change: Selling anything in our portfolio our portfolio is locked out of we only want to buy things going forward and grow and goals.

Speaker Change: We're going to be focused on doing that and the <unk>.

Speaker Change: Non core asset sales that will sell going forward will be.

Speaker Change: The assets of debt and equity investments that we hold that other mining companies that are core and we're going to continue to try to solve that.

Speaker Change: Accelerated approval.

Nolan Watson: Fair enough. Your average cash costs went up 50 bucks year-over-year, and I believe it was $69 quarter-over-quarter. This isn't really surprising given where commodity prices are right now, but still, you know, a fairly large percentage when viewed on a percentage basis. Your longer-term estimate is 125,000 attributable GEOs in five years. Assuming, and you were hinting at this earlier in this call, that gold prices are probably here to stay, assuming spot prices stay where they are and with new assets entering production, do you have an internal model of where you see the cash costs figure through the next several years, ideally even year-over-year, while you work towards 125,000 GEOs?

Speaker Change: Fair enough.

Speaker Change: Your average cash costs went up 50 bucks year over year on the legal was $69 quarter over quarter. This isn't really surprising given where commodity prices are right now but sold in a fairly large percentage when looking at it.

Speaker Change: Percentage basis your longer term estimates a 125000 attributable geos in five years, assuming you were hinting at this earlier on this call that gold prices are probably here to stay assuming spot prices stay where they are and with new assets entering production do you have an internal model of where you see.

Speaker Change: The cash cost figure through the next five next several years ideally even year over year, while you work towards the 125000 Geos.

Nolan Watson: Yeah, so, our guidance now, if you include Mara, is up to kind of 155,000 ounces. We do have that modeled out.

Speaker Change: Yeah. So.

Speaker Change: Our guidance now if you include Mara as uptick kind of 155000 ounces.

Nolan Watson: What I would say is that the average cost per ounce for us is dependent on a couple of things. One is obviously the gold price, because often in our streams, we're paying 20% of the gold price, for example. So if the gold price goes up, our costs go up a little bit, like I put that 20%. But then one of our big pieces of growth is Hod Modin, and Hod Modin does have a higher cost per ounce.

Speaker Change: We we do have that modeled out what I would say is that the average cost per ounce for us is dependent on a couple of things. One is obviously gold price because often of our streams, we're paying a 20% to the gold price for example, so the gold price goes up our cost of alright.

Speaker Change: About 20%.

Speaker Change: And one of our big pieces of growth is hot button and Hot Maden does have a higher cost per ounce would take 50% of the gold price there.

Nolan Watson: We pay 50% of the gold price there. So you will see that by around 2027, 2028, or whenever Hod Modin gets up and running, our costs per ounce on average will go up a little bit because of that. But generally speaking, our cost per ounce is going to be and stay very, very low for a long period of time. A lot of the royalties that we have coming online, things like Greenstone and Platte Reef, very, very low costs per ounce.

Speaker Change: You will see by around 2027, 28, or whatever one gets up and running our cost per ounce on average will go up.

Speaker Change: A bit because of that.

Speaker Change: But generally speaking.

Speaker Change: Cost per ounces.

Speaker Change: It would be and stayed very very low for a long period of time a lot of the royalties that we have coming online.

Speaker Change: Looks like greenstone and flat rates.

Speaker Change: Very very low cost per helps our margin as close to in some cases, 100%.

Nolan Watson: Our margin is close to, in some cases, 100%. You know, Robertson, the royalty that's coming online from Barrick, that's a full royalty, so we get 100% of the gold price, so our cost base is zero. So we're gonna still have very, very, very high margins going forward.

Nolan Watson: but I wouldn't be able to get a number.

Speaker Change: Robertson the royalty that's coming online from Barrick has a full royalties for the 100 critical places our cost base in zero. So Oregon is still have very very very high margins going forward.

Speaker Change: But I wouldn't be able to prior number out of you.

Heiko Ihle: Yeah, well, it'll be what it'll be, and it'll bounce around. Fair enough. Got it. Thank you. I'll get back to you.

Speaker Change: Got it.

Speaker Change: It'll be what it'll be and it'll bounce around depending on.

Speaker Change: Fair enough.

Speaker Change: Got it thank you I'll get back in queue.

Joanna: Thank you. The next question comes from Derick Ma at TV Securities. Please go ahead.

Speaker Change: Thank you. Your next question comes from Derek at TD Securities. Please go ahead.

Derick Ma: Thank you, good morning, and congratulations on the asset sales. Question: as you start looking at growth opportunities again, are you looking at producing development or exploration opportunities at this time? What is the size range of the deals that you're looking at? And if the size of the deal is more than your quarterly cash flows, are you willing to tap into debt? And what's the maximum level of debt you're willing to add to your balance sheet at this? Yeah, so

Derek: Thank you and good morning, and congratulations on the asset sales.

The question as you start looking at growth opportunities again are you looking at producing development or exploration options. At this time what are the size range of deals that youre looking at and the size of the deal is more than your quarterly casuals are you willing to tap into that and what's the maximum level of debt. We are willing to add to the balance sheet at this time.

Nolan Watson: Yeah, so I guess the way I'd answer that is in terms of the amount of debt that we're willing to take, it really depends on the assets that we're buying. Right now, to answer your question, we're focused really on a barbell approach to growth, with kind of 50% of our time focused on sort of the high dollar number transactions that are for assets that are cash flowing now.

Speaker Change: Yeah. So.

Speaker Change: I guess the way I'd answer that is in terms of the amount of debt that we're willing to take it really depends on the assets that we're buying right now to answer your question.

We're focused really with a barbell approach approach for growth with kind of 50% of our time focused on sort of the high dollar number.

Speaker Change: Transactions that are for assets that are cash flowing now.

Nolan Watson: And so if we did one of those transactions, it would come with its own debt capacity. We've got a revolver that allows us to drop to $625 million. We're not looking at any transactions that would require us to upsize that revolver. So if we did anything, it would be within that revolver range that we already have. And the acquisition would come with its own debt capacity.

Speaker Change: And so if we did one of those transactions it would come with its own debt capacity.

We've got a revolver that allows us to drop to $625 million, we're not looking at any transactions that would require us to upsize that revolver.

Speaker Change: If we did anything it would be within that revolver range that we already have and it would be acquisition would come with its own debt capacity.

Nolan Watson: But the other 50% of our time that we're spending on is trying to plant the small seeds of growth for that next leg of growth past things like Hadamard and Armara. So going out past 2030, what are the opportunities that we can tie down for really small dollars today? Where are we tying those opportunities down? So if someone's finding a copper and gold mine somewhere, we want to be the guys on the ground paying a million dollars to buy the royalty, getting a right of percipital to maybe do an early deposit stream option, and getting a right of percipital for the gold streams going forward when those mines eventually get built.

Speaker Change: The other 50% of our time that we're spending on is trying to plant a small seeds of growth for that next leg of growth past the things like heart monitor Barra so going out past 2030, what are the opportunities that we can tie down for really small dollars today.

Speaker Change: Where we're tying those opportunities down so if someone's finding a copper gold mine. So we're we want to be the guys on the ground and $1 billion to buy the royalty you're getting a writer first refusal to may be due in early deposit stream option and get a writer first refusal for the Gulfstream as going forward when those might eventually get built and so we're trying to figure out how to increase our growth now in the short term but.

Nolan Watson: And so we're trying to figure out how to increase our growth now in the short term, but also how to increase our growth past 2030 and beyond with that approach. But anything that we're considering that is long-dated to cash flow, we're not considering allocating material dollars to that. That'll be hard work, but low pay. Okay, thank you.

Speaker Change: Also how to increase our growth past 2030, and beyond with that approach that but anything that we're considering that is long dated cash flow, we're not considering allocating material dollars to that all the hard work.

Speaker Change: Okay. Thank you.

Joanna: Thank you, ladies and gentlemen. As a reminder, if you have any questions, please press star 1 now. The next question comes from Tanya Jakushanek at Scotiabank. Please go ahead.

Speaker Change: Thank you, ladies and gentlemen, as a reminder, if you have any questions. Please press star one now.

Speaker Change: Next question comes from Tanya <unk> of Scotiabank. Please go ahead.

Tanya Jakushanek: Good morning, everyone. Thank you for taking my question. I'm just wondering when you mentioned Nolan, the deals, that barbell approach, the, you know, obviously the higher-valued ones up front to fill that gap that you have a flat production profile. The deals that you are considering, I'm just wondering about the simplicity of the deals. We are seeing that a lot of the deals that are being done, unless they're pure royalty deals, come with an equity component and come with a lending component.

Tanya: Good morning, everyone. Thank you for taking my question.

Tanya: Just wondering one when you mention Nolan.

Tanya: Dr that barbell approach.

Tanya: Obviously, the higher valued one.

Speaker Change: And Frank can fill that gap that you have a flat production profile.

Speaker Change: The deals that you are considering I'm just wondering on the complexity of the deal.

Speaker Change: We are seeing that a lot of the deals that are being done unless app <unk> com with an equity component.

Speaker Change: Lending component.

Tanya Jakushanek: So they're more complicated than they have been in the past. Is that what we should be thinking about in terms of the type of deals that you're looking at? And then just wondering, you mentioned the size of up to 625 million available on the revolver, but where is your sweet spot?

Speaker Change: That more complicated than they have been in the past.

Speaker Change: Yes.

Speaker Change: Is that what we should be thinking about in terms of the type of deals that youre looking at and then just one.

Speaker Change: Wondering you mentioned size up to $625 million available on the revolver, but why is your sweet spot.

Nolan Watson: Yeah, that's a great question. I would say that, broadly, right now, we're so happy with our portfolio and what it looks like. And continued debt reduction is one important place that we can allocate capital. So the bar is very high for the quality of the types of things that we would have to buy to grow. If we're going to allocate capital for growth, it's got to be for a deal that really makes a lot of sense and makes more sense for our story.

Speaker Change: Yes.

Speaker Change: Great question, I would say that broadly right now, we're so happy with our portfolio and what it looks like.

Speaker Change: And continued.

Speaker Change: Continued debt reduction is one important place that we can allocate capital. So the bar is very high.

Speaker Change: The quality of types of things that we would have to buy to grow we're going to allocate capital for growth. It's got to be for a deal that really makes a lot of sense. It makes sense for our story better. So to answer your question about structure of deals right now I can confidently say that the only things that were looking at that are material in large are pretty straight down the fairway.

Nolan Watson: So to answer your question about the structure of deals, right now, I can confidently say that the only things that we're looking at that are material and large are pretty straight down the fairway. Precious Metal Streams and Royalties that would not have other portions of the capital structure be a material part of the capital allocated. Years from now, that may change, but that's not on the radar right now.

Speaker Change: Precious metal.

Speaker Change: Dreams and royalties that would not have.

Speaker Change: Yeah.

Speaker Change: Other portions of the capital structure would be a material part of the capital allocated Athena two years from now that May change.

Speaker Change: That's not unrelated irregular.

Nolan Watson: Okay, and most of the, you know, and maybe this is early for you to say as you start looking and or are approached on some of these deals, would most of them be in this sort of the 50 to 300 million range, is that what you're seeing, is that your sweet spot?

Speaker Change: Okay and most of that.

Speaker Change: And maybe too early for you to say you start.

King.

Speaker Change: Our approach on some of the.

Speaker Change: When most of our <unk> $300 million range is that what youre, saying is that your sweet spot.

Nolan Watson: Yeah, I would even say higher than 50. We're kind of looking at the one to 300 million range as our sweet spot right now.

Speaker Change: Yes, I would even say higher than 15 were kind of looking at the $1 million to $300 million range is our sweet spot right now.

Speaker Change: Okay, and then can I just on your capital allocation. So I'm just wanted to make sure I understand that we've got the debt level that you wanted to break down to under 350 million or thereabout.

Tanya Jakushanek: Okay. And then can I just, on your capital allocation, so I'm just wanting to make sure I understand that we've got this, you know, debt level that you want to bring down to under $350 million or thereabout, I think, was the target. And then should I be thinking that as soon as we get under that, that's when the deployment of capital for buyback would make sense? And sort of assuming everywhere, but pick a value, but the low NAV would be something that you would look at as a benchmark for buying back shares.

Speaker Change: The target.

Speaker Change: And then should I be thinking that as soon as we get under that plan deployment.

Speaker Change: Capital for buyback would make sense in silicon assuming anywhere.

Speaker Change: The value of that below NAV.

Speaker Change: Something that you would look as a benchmark for buying back shares.

Nolan Watson: I think that originally we had picked a $350 million number back when gold prices were much, much lower. And we were worried about sort of different production, but that different production is behind us, and the gold prices ended up being much, much higher. So now that we've completed or are going to be completing the sale of non-core assets to evolve, and we expect to exit Q2 with about $375 million of debt.

Speaker Change: Yeah, I think that originally we had picked up $350 million number back when oil prices were much much lower and we were worried about sort of a different production, but that dip in production is behind us nickel prices ended up being much much higher.

Speaker Change: So now that we've completed are going to be completing those sales local or assets to evolve and expect to exit Q2 with both $375 million of debt. We now have the confidence of our balance sheet enough to start very small low levels buying back our shares now and we will still though use the bulk of our capital to be repaying our debt.

Nolan Watson: We now have confidence in our balance sheet enough to start at very small, low levels buying back our shares now. And we will still, though, use the bulk of our capital to repay our debt. So our original goal of paying that down to below $350 million by the end of this year and then start buying back shares, I think we'll actually be able to buy back shares and still end up with debt well below $350 million by the end of the year. And so we're kind of front loading the share repurchases a little bit.

Speaker Change: Our original goal of pay debt to below $350 million by the end of this year and then start buying back shares. We think we'll actually be able to buy back shares and still end up with that well below $350 million by the end of the year and so we're kind of upfront frontloading of share repurchases a little bit.

Tanya Jakushanek: Okay, so $375 million by the end of Q2, then we start seeing sort of the share buyback is what I'm reading, and and then how do you manage that on your share price? you know, buy back below NAV, is that what you're looking at? And then sort of as a stock, you know, all stocks are volatile in the gold space, kind of trying to buy below NAV. Would that be a fair way of thinking about it?

Speaker Change: Okay, so $375 million by the end of Q clear then we start seeing a share buyback.

Speaker Change: John.

John: And then how do you manage that on your share price.

John: Buyback the low end is that what youre looking at and then sort of as.

John: The stock comp the volatile in the gold space.

John: Trying to buy below NAV would that be.

Speaker Change: Fair way of thinking about it.

Nolan Watson: Yes, although I would give the caveat that it's our view of what our shares are worth, and we are currently in the process of re-informing what we think that number is. If you had asked me six months ago what our NAV per share was, I would have said something like $8 Canadian per share back then. But now that gold prices have reset themselves higher, and I believe that the gold price is going to stay strong and continue to go higher. I think that that number is the wrong number. It's too low on two reasons.

Speaker Change: Yes, although I would say I would give the caveat that.

Our view of but our shares are worth and we are currently in the process of reinforcing what we think that number is if you would've asked me six months ago, what we think our NAV per share was I would've said something like $8 Canadian per share back to Ed.

Speaker Change: Now that gold prices have reset themselves higher and I believe that the gold price is going to stay strong continued to go higher I think that that number is the wrong number it's too low.

Nolan Watson: One, because the gold price is higher, and we're going to make more money, but also because at these higher commodity prices, our partners, as Dave alluded to, are raising more money, turning on the drills in their projects, finding more exploration upside, and they're going to expand their plants. And so the numbers that I'm using in my Excel model to determine what our shares are worth are the wrong numbers because they're too low.

Speaker Change: Two reasons, one because the gold price is higher we're going to make more money, but also because at these higher commodity prices our partners as Dave alluded to they are raising more money theyre turning on the drill as their projects. They are finding more exploration upside theyre going to expand their plants and so the numbers that I am using and by excel model to determine what our shares are worth the wrong numbers because they are too low there's going to be more gold.

Nolan Watson: There's going to be more gold ounces found, there's going to be more gold ounces produced, as well as the sandstorm. So, you know, the value per share is determined by how many ounces we are going to get for us to go price. And I think the answer is our model should have more ounces than they currently have.

Speaker Change: <unk> found just going to be more gold ounces produced and sold the sandstorm. So the value per share is determined on how many ounces are we going to get festival price and I think the answer is.

Speaker Change: Our model should have more ounces than they currently have on the gold price is going to be higher than what our models were and so our share prices are worth a lot a lot more than that.

Nolan Watson: And the gold price is going to be higher than what our models were. And so our share prices are worth a lot, a lot more than that. Now, what is that number?

Nolan Watson: I don't know. It's probably somewhere between nine and twelve dollars a share. Are we going to buy our shares in the market all the way up to twelve dollars? Probably not. But will we buy them up to nine? Probably yes.

Speaker Change: So what is that number I don't know its probably somewhere between nine to $12 a share or are we going to buy our shares in the market, although thats $12, probably not but will we buy them up to nine probably yes.

Tanya Jakushanek: Okay, and then how should I think about dividends in this sort of scenario?

Speaker Change: Okay, and then how should I think about dividends and that sort of thing.

Speaker Change: Mario.

Nolan Watson: Yeah, so right now, we're paying $0.02 per share per quarter. And our plan is to continue to do that sort of every December; we reevaluate that policy and decide whether we keep it the same or increase the dividend. And so we'll keep paying our dividend, and this December, we'll make that decision when that time comes.

Mario: Yes, so right now we're paying two cents per share per quarter and our plan is to continue to do that sort of every.

Mario: December we reevaluate that policy and decide whether we keep the same or increase the dividend and so we'll keep paying our dividend and this December we will make that decision when that sometimes.

Tanya Jakushanek: Okay, so you review the dividend once a year in December, is that correct? Yep, correct. That's great. Thank you so much for this. Appreciate you taking the time to answer my question.

Speaker Change: Okay. So your review of the dividend once a year in December is that correct, yes correct.

Speaker Change: Okay. That's great. Thank you so much for that I. Appreciate you taking my question.

Speaker Change: Thank you.

Nolan Watson: Thank you. That concludes today's Q&A session. I will turn the call back over to Mr. Watson for closing comments.

Nolan Watson: Thank you that concludes today's Q&A session I will turn the call back over to Mr. Watson for closing comments.

Nolan Watson: Well, thank you very much. And thanks, everyone, for calling in and taking the time. And, as usual, feel free to call us at the office if you have any further questions. And I hope everyone has a good day.

Watson: Well, thank you very much and thanks, everyone for calling in and taking the time and as usual feel free to call us at the office again further questions and I hope everyone has a good day.

Joanna: Ladies and gentlemen, this concludes your conference for today. We thank you for participating, and we ask that you please disconnect your lines.

Speaker Change: Ladies and gentlemen. This concludes your conference for today, we thank you for participating and we ask that you. Please disconnect your lines.