Q4 2024 Sandstorm Gold Ltd Earnings Call
Good morning.
The name is <unk> and I.
There will be a conference operator today.
Speaker Change: At this time I would like to welcome everyone to the Sandstorm gold royalties annual 2020 for fourth quarter results Conference call.
Lines have been placed on mute to prevent any background noise.
Speaker Change: Please be aware that some of the commentary may contain forward looking statements.
Speaker Change: Can be no assurance that forward looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.
Speaker Change: The speaker's remarks, there will be question and answer session if.
Speaker Change: If you would like to ask a question. During this time of simply press Star then the number one on your telephone keypad.
Mr. Watson: If you would like to withdraw your question. Please press star of up it didn't impact you. Thank you. Mr. Watson you may begin your conference.
Watson: Thank you Ina and good bye.
Speaker Change: Everyone and thank you for calling into our Q4 and annual 2024 earnings call.
Speaker Change: Before I hand things over to Irvette, our CFO to review the financial statements highlights I'd like to give an update on a number of things in our business.
Speaker Change: Specifically number one brief characterization of our Q4 production and what we're seeing so far in Q1 of 2025.
Speaker Change: Number two I'd like to provide an explanation of our 2025 guidance as well as our long term production outlook.
Speaker Change: Number three with that backdrop I'd like to talk about our cash flow expectations and our balance sheet strength and then four I'd like to explain our latest strategy for capital allocation because.
Speaker Change: As I walk through each of these points Youll see that we have a strong balance sheet lots of cash flow and therefore, a significant capital allocation decisions and I think it's important for shareholders to understand how we are allocating capital and why.
Speaker Change: So starting off with a brief characterization of our Q4 sales we had strong revenue of $47 million U S.
Speaker Change: Operating cash flow of $36 million being driven by gold equivalent production of 17721, elses, which is similar to the past couple of quarters.
Speaker Change: What's worth noting is that there were a couple of one time events in Q4, one of which increased in ounces and one of which was a one time decrease in ounces that effectively offset each other.
Speaker Change: Specifically during the quarter Americas Gold and silver were successfully completed their merger and they raised capital and brought in a new management team and as part of that they requested to deliver some goals to us early so that they can reduce their indebtedness and show a stronger balance sheet. Therefore.
Speaker Change: Therefore in Sandstorms Q4, there was an extra 1500 ounces for Americas gold and silver.
Speaker Change: We made an adjustment to our stream in the future to allow for a corresponding lower delivery overtime for the remaining portion of the stream.
Speaker Change: Also during Q4 at both cats erode S in Jakarta.
Speaker Change: Both lending mining assets there was an abnormal one time drop in deliveries of copper to sandstorm because during their Q3, even though production was normal there were delays when they shipped and sold the concentrates and under our contracts to deliveries and payments that sandstorm, we're entitled to in Q4 are based on what it was.
Speaker Change: Shipped and sold in Q3, therefore that delay resulted in a material drop in our Q4 sales.
Speaker Change: The good news is that the production at the underlying mines was normal through these periods. So for Lindeen in Q4, they sold more concentrates than during a normal quarter, which means that sandstorm will get catch up deliveries in Q1. So we're expecting a relatively strong Q1 to start off 2025.
So moving on to item, two and our 2025 guidance and long term outlook.
Speaker Change: 'twenty 'twenty four was a dip here in production for us with if your minds I mean lower than average years from a production perspective, but also soaring gold prices meant that our silver at our copper revenue turned into fewer gold equivalent ounces than originally anticipated.
Speaker Change: When we set our budget for 2024, we assumed 1800 dollar gold prices.
Speaker Change: And internally, we were expecting 83000 ounces as a base case.
Speaker Change: But with gold prices going up so much our silver and copper revenue turned into fewer gold equivalent ounces and expected.
Speaker Change: In the end for 2024, we missed our internal G E O production targets by 10700 ounces.
Speaker Change: But 8300 ounces of that nearly 80% of the Miss was from price fluctuations.
Speaker Change: And the 15 year history of Sandstorm, we've hit our annual guidance range 13 out of 15 times and the only two times. We missed were won during Covid. When a number of the mines were temporarily shut down and two in 'twenty 'twenty four because of soaring gold prices, we want to be able to give guidance to the market that investors can be confident in.
Speaker Change: So that we do not Miss two years in a row because of soaring gold prices. So we've decided to provide a very conservative range guidance for 2025.
Speaker Change: 65000 to 80000 ounces.
Speaker Change: That might seem low to some people, but please know that part of this is just trying to ensure that we don't make the same mistake twice back to back as gold prices continue to go up which would be absolutely amazing for our business and as for our cash flow and for our balance sheet and I want to make sure that our reputation as far as guidance is concerned stay strong even.
Speaker Change: If gold prices continue to go up which I certainly hope they do.
Speaker Change: We definitely don't expect to have production close to 65000 ounces for the year. However, there if there are unexpected softness in deliveries for some of our assets.
Speaker Change: Bear Creek has trouble delivering their ounces or if greenstone has unexpected challenges ramping up and then simultaneously gold prices go through the roof you.
Speaker Change: You can paint a picture of a scenario where G E O production could look soft.
Speaker Change: I think it's also important to note that guiding this way is a double edged sword, because there are scenarios, where the mines do what we think they do and gold prices soften a bit.
Speaker Change: Dramatically Miss guidance to the upside.
Speaker Change: For example, we ran a scenario where the mines delivered according to their public guidance.
Speaker Change: Silver prices stay at about $30, an ounce in the copper prices stayed somewhere in the mid fours and we said well what if gold prices to go down to $2000 an ounce.
Speaker Change: Model kicked out a number of 90000 gold equivalent ounces for the year way outside of our guidance range to the upside.
Speaker Change: All of this to say that I believe we are guiding conservatively.
Speaker Change: And either way, our cash flow will be stronger and there are scenarios for upside surprises.
Speaker Change: I'll talk more about this later, but one of the things that I love about now having a strong balance sheet is it if the market doesn't understand this dynamic and how strong we are at our share price dip because of the conservative guidance. We are happy to step into the market in size now and buyback our shares and canceled them.
Speaker Change: It's days like today for example, where if we werent in blackout because of earnings that we would be in the market insider buying and canceling those shares so tomorrow when we come out of blackout, we will be stepping into the market to the maximum we were allowed and buying back shares for investors, who don't get the big picture and we will cancel those shares that the remaining <unk>.
Speaker Change: There is a low to higher percentage of our company and therefore, we will get a higher percentage of our future growth as time to backup the truck with share buybacks and that's what we're going to do.
Speaker Change: One of the reasons, we're particularly happy to buy back shares and canceled them is because of our belief in our long term guidance.
Speaker Change: Based on what we're hearing from our mining partners at the moment, it's our expectation that our production will increase to over 150000 gold equivalent ounces per year over the next five years.
Speaker Change: Again this is from a ramp up of greenstone, which is now in production.
Speaker Change: Well, it's a phased build approach to Idaho's Platt Reef mine, which is now in construction in Ivanhoe updated the market. This morning on their progress at flat rate, that's consistent with our guidance as well as Barrick's Robertson mine, which just got his permits and is expected to be completed in 2027 as well as the hot modern mine, which based on my <unk>.
Speaker Change: Most recent understanding SSR will be giving updated development timelines and capital commitment decisions and guidance to the market within the next month.
Speaker Change: Our growth also now includes the development of the deep carbonates project at Qualcomm Io, which Dave is going to talk about in later detail on this call.
Speaker Change: Around the same time that glaucoma I always coming online should also be when Glencore is Mara mine will be coming towards completion, which I believe is our most valuable stream and our whole portfolio and I'm told this morning, Gary Nagle, the CEO of Glencore mentioned that they would be putting in their ritchie application in Argentina and then.
Speaker Change: Next six months.
Speaker Change: Shortly after that Rio Tinto should be mining on the entre joint venture ground, although you're totally in Mongolia, which is one of the world's most significant copper mines and it'll be a significant stream for us for many years to come.
Speaker Change: Based on all of this you can see how yes, we have strong cash flow now we have a strong balance sheet finally, but the future is in construction and it's going to be incredible.
Speaker Change: You can see on this updated production forecast chart, where we know color coded the production that we expect from our different growth assets.
Speaker Change: You can see that these assets come online and as they come online our production will double and stay high for a longer period of time.
Speaker Change: In 2025, there will be continuous key catalysts as each of these big projects keep getting pushed forward. So this is an exciting year for us.
Speaker Change: When you look at what that production profile can generate in terms of annual cash flows. We have this updated slide to show that our portfolio can now generate after tax cash flows of around $150 million per year based on $2600 gold.
Speaker Change: And by the way coal prices are much higher than that now and we're just trying to be conservative with her figures, but that cash flow ramps up so that by 2030, it should be closer to $260 million U S per year and again, that's a $2600 gold $30 silver $4 copper.
Speaker Change: At today's spot prices, the cash flow would be closer to $300 million U S per year.
Speaker Change: So you can see based on that.
Speaker Change: Confidence in our balance sheet right now.
Speaker Change: A couple of years ago at the peak of our debt, we owe to $640 million.
Speaker Change: We now only O $340 million and we expect that number to go below $300 million sometime between the end of Q2 and Q3 of this year and to continue dropping rapidly.
Speaker Change: One of the things that will help accomplish this is that for a attic Cola stream, which has been a nonperforming stream for some time and for which we have not been recognizing revenue.
Speaker Change: Come to an agreement for a buyout option of $14 million, which in order to be used has to be exercised shortly.
Speaker Change: The stream has not been paying us for an extended period, but with the incremental $14 million. We would then have all of our capital back plus a profit on this deal so not a bad situation for us and we'll use those proceeds to repay debt.
Speaker Change: Once our debt is below $300 million.
Speaker Change: That is the point, where we are extremely comfortable and happy to stay on indefinitely, if necessary. If our shares continue to trade at a material discount to their fundamental value.
Speaker Change: Although $300 million is not a particularly a magic number it feels a magic for us because not only does it mean that our debt is below two times today's EBITDA and approximately one times our forward looking EBITDA for 2030.
Speaker Change: Its also the number that makes our debt less than our investments in other mining companies debt and equity we have over $300 million worth of investments in other companies debt and equity, which is actually yielding us a higher return than our debt is costing us.
Speaker Change: But I'm trying to paint is a mental picture.
Speaker Change: Of a situation whereby the middle of this year, we no longer have any need to continue to prioritize debt repayment.
Speaker Change: We have other potential capital allocation alternatives, whether they'd be growth for share buybacks we.
Speaker Change: We don't anticipate getting cash called at our Morris stream option into the latter half of next year, what's permitting is complete.
And when we finally do start contributing to that streaming will only consume a portion of our operating cash flow for a few years.
Speaker Change: What this means is that we are now finally in a position with a strong balance sheet and lots of cash flow, where we can start increasing the priority of our share buybacks, which leads me to this next slide.
Speaker Change: And this new slide we're trying to show that a bit.
Speaker Change: Big six streaming royalty companies, we are the ones that have been returning the most capital to shareholders over the last nine to 12 months on a relative basis.
Speaker Change: Over the last nine months for every gold equivalent ounces that we have received and sold we have returned $540 U S to shareholders through either dividends or share buybacks. This is more than any of our peers why I bring this up is that because we believe our balance sheet is now stronger and our shares are still undervalued that we put on in.
Speaker Change: Increasing this even further in the months to come and we'll be ramping up our share buybacks. We believe in the long term strength and growth profile of our company and we're looking forward to that future. We're trying to shrink our share float and cancel our shares so when we get that future. We will have way more cash flow and fewer shares outstanding.
Speaker Change: As a significant shareholder of sandstorm myself I believe this will be the most profitable path for us all.
Speaker Change: And with that I'll hand, it over to her fan to talk about the specific financial results.
Her Fan: Thanks Nolan.
Her Fan: Good morning, everyone and thank you for joining us today.
Her Fan: Our 2024 results delivered total revenue of approximately $176 million.
Might have dropped in attributable gold equivalent ounces.
Her Fan: So from 97000 ounces in 2023% to approximately 73000 ounces.
Her Fan: In 2024, while the majority of the operations of the portfolio matter of budget forecast as Nolan mentioned, the outperformance of gold relative to other metals impacted the company's gold equivalent production.
Her Fan: That is other commodities like copper silver iron ore translate into less gold ounces when the gold price is comparatively higher.
Her Fan: And there's no one mentioned at year end, an increase of 30% and the average realized gold price compared to our 2024 budgeted result.
Her Fan: Impacted the difference of over 8000 fewer gold equivalent ounces than we had anticipated.
Her Fan: However, higher gold price environment is welcome and continues to drive healthy operating margins and strong cash flows for the company.
Her Fan: Cash cost in 2024 were $275 per attributable ounce, resulting in cash operating margins of approximately $2100 per ounce.
Her Fan: And when excluding changes in noncash working capital. These record margins led to strong cash flows from operating activities of $139 million.
Her Fan: Well not a record in terms of cash flow there were certainly robust and allowed us to make good progress on debt repayment decreasing the balance on our credit facility by $80 million as well as returning over $28 million to shareholders in the form of dividends and share buybacks as Nolan discussed.
Her Fan: In the fourth quarter sandstorm renewed its revolving credit facility for another four year term with reduced interest rates above sofa.
Her Fan: The combination of debt repayments and lower interest rates throughout 2024 reduced the company's finance expense by $4 $5 million.
Her Fan: Net income for 2024 with $15 $5 million down from $42 7 million in 2023.
Her Fan: The decrease in net income was largely driven by valuation adjustments in the company the investment portfolio as well as the onetime contractual payment received in 2023 related to the company's melt Hamilton royalty.
Her Fan: Interim tax expense in 2023 was lowered due to previously unrecognized tax attribute.
Turning to the next slide this is a detailed asset breakdown of attributable gold equivalent production in 2024.
Her Fan: First gold deliveries from the greenstone mine, we're certainly highlight this past year.
Her Fan: Green Zone represents the first material development asset from the investments we made in 2022 to commence production.
Her Fan: And Mark the beginning of the new growth chapter that no-one highlighted.
Her Fan: By the end of the year Sandstorm received and sold approximately 2000 gold ounces from greenstone.
Her Fan: Equinox is continuing to ramp up operations in the mine and.
Her Fan: And we look forward to an increase in attributable production throughout 2025.
Her Fan: With greenstone at full design capacity, we expect gold deliveries to be approximately 8000 to 10000 ounces per year attributable to sandstorm.
Her Fan: As one of Canada's largest open pit gold mine with an initial 15 year mine life Greenstone is a welcome addition to our producing mine portfolio and will play an important part as we aim to double our production profile over the next several years.
Her Fan: The company's bond across Dream was one of the top contributing assets in 2024.
Her Fan: Production of <unk> has recently benefited from higher grade due to mine sequencing and improved plant throughput from various optimization effort.
Her Fan: In the third quarter of 2020 for Allied Golden announced the closing of our Canadian $53 million third party financing package for advancement initiatives.
Her Fan: Most of our complex, including the monochrome mine.
Her Fan: Allied allocated six and a half million in 2024 for the advancement of high priority targets, which are located within the area of interest of Sandstorm stream.
Her Fan: In conjunction with a third party financing sandstorm amended gold stream and the monochrome mine to include minimum annual deliveries, which are between 4000 6000 ounces in 2025 and 2026.
Her Fan: Lundin Gold's reported record production of fruit to del Norte in 2024.
Commissioning of the plant expansion continues to progress and Lundin Gold has also identified opportunities to further increase average throughput to 5500 tonnes per day starting in 2026.
Her Fan: In December Lundin gold announced that it had surpassed 56000 meters of drilling in 2024.
Her Fan: The largest ever exploration drilling program conducted on the land package at an estimated cost of $44 million when combined with its regional drill program.
Her Fan: Drilling has been focused on further delineating the recently discovered bonds us through deposit fruit still north Te.
Her Fan: London plans to complete an additional 65000 meters of drilling in 2025 and released an initial mineral resource in P. A on the bonds as their deposits this year.
Her Fan: At the end to minimize the approval the modified EIA has extended operations.
Her Fan: Through to 2036 as a result of the updated mine plan and re estimation of future closure costs and adjustment to the asset retirement obligation of the mine was recognized in 2024 impacting royalty revenues in the fourth quarter.
Her Fan: However, we expect this impact to be offset long term with the potential for throughput expansion of up to 40% and more certainty around future mine life extension.
Her Fan: At Japan up.
Her Fan: One of our larger carpet stream 2024 production is expected to be sufficient to meet sandstorms annual copper delivery cap.
Her Fan: However, as Nolan indicated the timing of settlements shifted approximately 20% to 30% of annual deliveries for the first quarter of 2025.
Her Fan: Lundin mining continues to implement several optimization initiatives and reported three 6% decrease in mining costs compared to 2022 fallen various optimization effort.
Her Fan: Our redesigned mining plan is expected to streamline operations, while maintaining output further improving free cash flow generated from the mine.
Her Fan: In 2025, London mining is planning a 20000 meter drill program at Japan with a goal to grow resources.
Her Fan: We're also expecting the results of the scoping study on the Soave deposit an updated technical report to be filed this year.
Her Fan: In the fourth quarter Sandstorm amended the terms of its relief Canyon streaming agreement relating to the timing of six ounces.
Nolan explained sandstorm receive an additional 500 ounces of gold in the fourth quarter.
Her Fan: The amended stream terms the company expects fixed deliveries of approximately 5000 ounces in each of 2025 through 2027.
Her Fan: These stream amendments fall of $50 million financing completed by Americas gold and silver in conjunction with their consolidations the Galena complex in Idaho.
Her Fan: And American School is now being led by Mr. Paul Hewitt, and it's focused on unlocking value at Galena and deleveraging the company's balance sheet.
Her Fan: Yeah.
Her Fan: In 2020 for Sandstorm attributable production remained predominantly from South America at 45%.
Her Fan: Followed by 35% from North American operations, and the remaining 20% from other countries around the world.
Her Fan: In terms of metal type production.
Her Fan: Production was 75% precious metals approach.
Her Fan: Approximately 61% from gold.
Her Fan: We expect increasingly more gold exposure from the portfolio greenstone ramps up and other Gulfstream to begin contributing over the next few years.
Her Fan: In 2025, we're already off to a good start with strong gold market. This has allowed us to pay back an additional $15 million of debt since January one.
Speaker Change: And as Don discussed we plan to increase the rate of our share buyback program over the course of the year.
Speaker Change: In terms of production, we are forecasting between 65080 thousand gold ounces in 2025.
Speaker Change: And as the year progresses, we plan on tightening that range as we get better clarity on various commodity price scenarios and the ramp up progress at greenstone.
Speaker Change: Long term, we are raising our production outlook based on various positive advancements at our development asset.
We anticipate production to reach 150000 attributable gold equivalent ounces in 2030 based on our existing streams and royalties plus the exercise of sandstorms Gulfstream option on the Mora project.
Speaker Change: And with that I'll pass it over date for for more details on our growth assets.
Speaker Change: Great. Thanks, a fun and good morning, everyone.
Speaker Change: Today's asset update will focus on a couple of less well understood asset exposures in our portfolio in the Oyu Tolgoi joint venture area and the <unk> mine with a small mentioned on valleys northern system iron and copper projects.
Speaker Change: On the topic of Oyu Tolgoi I'd like to begin by addressing the formalization of the joint venture agreement. Initially proposed 2008 between Ot LLC, the operating entity and Entre resources.
Speaker Change: Following this I'll highlight some of the recently released drill results.
Speaker Change: Finalize it start February joint venture agreement puts in place mechanisms like the transfer of licenses into Ot LLC, which is crucial to avoid delays in the development work plan for 2025 within the Hugo North extension.
Speaker Change: The arbitration decision also sets the stage for potential conversion of the JV agreement into a more efficient arrangement, which should benefit all the stakeholders and align with Mongolian laws, requiring economic benefits sharing we expect entre to release more information on this as it progresses.
Speaker Change: Onto the drilling, which although released recently was actually completed as far back are completed in 2022 and 2023. Many of the drill holes were infill to the existing resource on the Hugo North extension, which is the image that we're showing in the plan map on the right.
Speaker Change: However, many of the drill holes were drilled outside the existing resource and wire frames, it's a little hard to see on the slide.
Speaker Change: But there are intercepts are 400 meters of 141% copper equivalent 448 meters of one 6% copper equivalent.
Speaker Change: 613 meters of seven 7% copper equivalent 638 meters of one point <unk>, 5% copper equivalent 398 meters of 2.07% copper equivalent and 175 meters of 173% copper equivalent.
Speaker Change: All these holes are currently outside of any resource, but they exceed the resource cut off of 0.41% copper equivalent and may be incorporated within the lift one and lift to footprint. There are still results pending from eat more holes from the 2023.
<unk> program.
Speaker Change: Additionally, 23 underground holes and nearly 2500 meters of surface drilling were completed in 2024 to target a potential lift to footprint.
Speaker Change: <unk> of this drilling is to update the Hugo North extension resource estimate for geotechnical and for geotechnical characterization entree will announce these results as they are received.
Speaker Change: These results are nothing short of extraordinary.
Speaker Change: Effectively setting a new benchmark in the global mining industry. The sheer magnitude of this copper gold project continues to amaze me and I'm confident that future findings will be equally impressive I am immensely grateful that sandstorm has the privilege of being a part of this remarkable venture which promises to deliver even more.
Speaker Change: Machine outcomes.
Speaker Change: I really want to speak too guac mile as well as this was one of our most surprise in projects in our portfolio both for us and for our investors. The first royalty came in the Premier royalties acquisition and this asset produced for the better part of a decade as a heap leach operation under.
Speaker Change: Number of different operators.
Speaker Change: In 2023, a subsidiary of the wealth funded international conglomerate Isa group acquired the asset. Since then the group has invested into the existing heap leach operation to improve the secondary recovery of the heap Leach, where they uncovered a recoverable leach inventory of three <unk>.
Speaker Change: <unk> 3000 ounces they began revising the plan on the heap that involved the slope re profiling planned to improve infiltration of <unk> of the heaps. They created a line filtration plant and improved solution flow, which should allow for a significant increase in recoverability of the residual gold in the heaps.
Speaker Change: This means potential production of greater than 30000 ounces per year, just from residual leaching.
Speaker Change: Historically for the first part.
Speaker Change: And for the first part of 2025 cents storm has held a 1% MSR on the oxide material.
Speaker Change: Once production reaches eight 396000 ounces threshold expected.
Speaker Change: As expected in the first half of 2025, the royalty increases to 3% for all remaining oxide material. However.
Speaker Change: This is just the beginning of the upside for Sandstorm has the long awaited sulfide portion of the deep Carbonates project is now in motion. The Asa Group has submitted a 1 billion dollar investment plan to Argentina's incentive rajeev for major investments or Rishi as Nolan mentioned before.
Speaker Change: Making it the first mining project to do so in the first project in San Juan.
Speaker Change: Feasibility studies are scheduled for completion, this year, which will pave the way for the development of a new underground mine, along with milling system and a flotation plant.
Speaker Change: Suppose processing capacity. This facilities is estimated to be between 30 504000 tonnes per day.
Speaker Change: Deep carbonates project aims to produce 120000 ounces of gold annually for at least 17 years with an investment of $485 million.
Speaker Change: There is also a $52 million exploration program expected to start this year, which will look for potential porphyry mineralization. In addition to expanding the sulfide zones of the current epidermal deposit.
Speaker Change: For sandstorm, a $30 million bullet payment must be made to us upon declaration declaration.
Speaker Change: Declaration of commercial production, which we are now estimated in either 2029 or 2030. In addition, there is a two 5% tenants are on the deep carbonates project, which means we could receive up to 3000 ounces per year. In addition to that one time payment.
Speaker Change: In 2022 under previous ownership quiet Camille was slated for closure, but in the hands of this ambitious well capitalized group and with the with the involvement of the Richy program. The best May be ahead for quark mile.
Finally, it's worth a quick mention of valleys recent announcement of their almost 12 billion $12 5 billion dollar U S investment into the carriage as region over the next five years. This is massman is expected to increase their annual iron ore production from the region to 200 million tons per year.
Speaker Change: The copper production is projected to increase by 32% within the region. Our royalty will benefit from both of these increases as more information comes out we'll update our forecasts and with that I'll hand, it over to the operator for the Q&A session. Please feel free to ask questions about any of them.
Speaker Change: Our royalties and streams.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star one on your telephone keypad.
E prompts that Johanna Speedway East and should you wish to cancel your request. Please press star followed by the tier.
Speaker Change: Youre using a speakerphone please lift the handset before pressing.
Speaker Change: One woman please for your first question.
Speaker Change: Your first question comes from the line of Josh Wolfson from RBC capital markets. Please go ahead.
Speaker Change: Yes. Thanks very much first question is on the very cool extreme and royalty buyback.
Speaker Change: Having check the prior quarters, there is no signs of any distress.
Speaker Change: Distress for the operator, so I am wondering when did they stopped paying the stream and.
Speaker Change: What was sort of the motivation to resolve it in the way that it was disclosed in the sense that it doesn't seem to be much compensation beyond just the face extreme your payment and nothing for the royalty. Thanks.
Speaker Change: Yes, they stop paying us quite a while ago, we haven't recognized revenue from them in quite some time.
Speaker Change: It's one of those situations where it's.
Speaker Change: Theyre insolvent at the money operating level or their parent company had no money.
Speaker Change: A large Chinese companies coming into the shareholder of their parent company on the.
Speaker Change: Condition that they buy us out.
Speaker Change: So they've.
Speaker Change: They've already made a $4 million deposit to our lawyers accounts, that's nonrefundable. So if they don't pay the additional $10 million.
Then we get to keep the floor and we keep our stream.
Speaker Change: And so they have to pass the next 10 by next month is how that works.
Speaker Change: Okay.
Speaker Change: And then on the guidance that now includes <unk>.
Speaker Change: What could be I guess, a larger contributor.
Speaker Change: I'll say, having covered Humana previously this was a project that was more technically complicated.
Speaker Change: The Capex number that's in the release is quite large.
Speaker Change: Not familiar at all with the operator or the parent company so with that in mind, what gives the team the confidence that this should be incorporated into formal guidance.
Speaker Change: Yeah. So we've been we've been tracking for a while now and.
Speaker Change: Is that baked capex number that you are seeing that there have been news reports that includes a whole bunch of sustaining capital and whatnot. The actual upfront capital is not that big of a nut.
Speaker Change: The entity that has bought it im not particularly familiar with them, but they are a multibillion dollar.
Speaker Change: Argentinian company, and so very very well capitalized.
Speaker Change: Okay.
Speaker Change: Then just turn it back to the first part in terms of streams that might be.
Speaker Change: More at risk of renegotiation is there anything in.
Speaker Change: In the portfolio that we should be more aware of where that risk materialize at some point or maybe where there is an opportunity at higher gold prices today that things could get renegotiated.
Speaker Change: Yeah.
Speaker Change: I would say the only the only two things in our portfolio for a while that I would call. Our problem children have been Americas gold and silver a bear Creek and Americas Gold and silver got solved last quarter with all of that new management team coming in new cash coming in.
Speaker Change: I think that Mercury has up to $5 billion now so that problem children has gone away and the only one that remains as bear Creek and Theres very few ounces and our guidance related to them.
Speaker Change: And I think one of the benefits is if they do go into some sort of needed process to sell their assets.
Speaker Change: <unk> $45 million in loans and other things, so well and we have security of their assets. So I think if theres a pause at one of our problem. Our only remaining material problem child has the potential to become a material positive for us in terms of monetizing.
Speaker Change: Road.
Speaker Change: Got it great. Thank you.
Speaker Change: Thank you once again should you have a question. Please press star followed by one on your telephone Keypad. Your next question comes from the line of Derik Mark. Please go ahead.
Speaker Change: Thank you when sandstorm hits that $300 million debt threshold to be clear what are the priority is it share buyback debt reduction and then acquisition growth or tuck ins, how it turns out I'm thinking about that.
Speaker Change: Share buybacks and share buybacks and share buybacks.
Speaker Change: What's our share prices closer to NAV full then keep paying down our debt I really do like getting.
Speaker Change: That really low.
Speaker Change: But share buybacks, that's the number one priority and then debt reduction will keep looking for deals, but the deals have to come with a higher rate of return and debt reduction and that's a really hard threshold.
Speaker Change: Okay, Okay, and maybe what type of deal opportunities weighted type answer and then what kind of ticket sizes should we be thinking about.
Speaker Change: Yeah, we're not looking at anything seriously right now I mean, the only the only things that were looking at.
Speaker Change: Or are things that are $1 billion here.
Speaker Change: There, where we're tying down what we think will be a really big opportunity in the future, where we're getting greater first if you have would be the stream provider.
Speaker Change: Five years from now seven years from now.
Speaker Change: Not looking at allocating material capital in 2025, I think towards the end of this year. If we bought back a ton of shares in our share price is much higher than our debt as you know over the $200 million.
Speaker Change: Will we start looking for acquisitions.
Could be more near term cash flow and we would pay pay overtime as they built the mind yet we'll start looking then but we're not looking now.
Speaker Change: Okay makes sense and then in terms of Mara if that's put forth into the rig in the next six months by Glencore, what does that mean in terms of the option window for sandstorm and what might sensor and be on the hook for deposits.
Speaker Change: Yes, so our auction is indefinite until they make the board approved decision and start building the mine and that's what triggers are option. Once that is triggered we will absolutely get of course say, yes, and the way our deal was structured with glencore, but slightly different than the original deal restructure with Humana with Glencore came in as the operator.
Speaker Change: Renegotiated the mechanisms of when do we pay so now the way. It works is when we elect to yes, we do not have to rate of $225 million check upfront.
Speaker Change: We pay slowly over time with them as they build the mine.
Speaker Change: So if it's a two and a half year or three year construction, we pay about $75 million a year per year over that three years, and which is substantially less than what our cash flow will be so at all points in time, we will be cash flow positive and we'll just have to divert a portion of our cash flow to this whether it happens.
Speaker Change: So this could start in 2008, our deposits could be in 2027 essentially.
Speaker Change: Yes.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you and your next question comes from the line of Ben Andrew from Me, Rick Lehman James. Please go ahead.
Ben Andrew: Hi, Good morning, My question relates to the.
Speaker Change: Sort of the 2027 guidance again I take your comments.
Speaker Change: How about geos changing with prices, which as you know it's always been a challenge here.
Speaker Change: The other category drops off starts to drop off pretty substantially in 27 28.
Speaker Change: What's actually going on there I'm trying to determine because I would think valets up at that time. So some of the others is going up what's actually dropping off in 2728.
Speaker Change: That causes that reset.
Speaker Change: Yes, just a couple of things going on one is you'll notice that 2026 is an up year relative to 2020.
Speaker Change: And part of that is Woodlawn.
Speaker Change: <unk> stream turning on but it is a capped stream that we inherited when we acquired nomad and so we basically get a bunch of payments really fast at $30 million and then the stream drops off so that's why you see a dropdown in 2027 at the woodlands starts in 2026, and then it goes away by the end of 2027.
Speaker Change: And then there's a little bit of a tailing off of our Cerro Moro stream.
Speaker Change: Perfect. Thanks, very much that's very helpful and just Woodlawn.
Speaker Change: Multi commodity sing again, right. So there's a fair bit of price movement in there as well right yes, okay.
Speaker Change: You very much.
Speaker Change: Yeah.
Speaker Change: Thank you and your next question comes from the line of Daniel Jacobs connect.
Speaker Change: Scotiabank. Please go ahead.
Daniel Jacobs: Hi, Yes. Good morning, everyone. Thank you for taking my questions.
Speaker Change: Some of them are cleared by my colleagues our questions.
Speaker Change: Yes.
Speaker Change: I'm intrigued about your 2025 guidance again and I know you mentioned you don't see yourself down at that 65000.
Speaker Change: Yeah.
Speaker Change: With that.
Speaker Change: When you risk adjust.
Speaker Change: With guidance from place was that based on just the commodity price getting now are there other risk adjustments to that.
Speaker Change: That could get you there some assets that you are concerned about.
Speaker Change: There are other risk adjustments that we've made so if we look back at 2024 for example, and the things that caused us to Miss the number one thing with the gold price going up as I explained before.
Speaker Change: Fewer geos, but there were things like greenstone ramped up much slower than what they had guided.
Speaker Change: And that was a portion of our base and there is an assumed for ramp up at greenstone from their guidance in 2025.
Speaker Change: We've actually been so conservative that our base case model now is so conservative and assumes no ramp up from what they're currently doing.
Speaker Change: We do think it'll ramp up we're not seeing anything operationally that would suggest it doesn't we just don't Wanna be wrong two years in a row for the same reasons.
Speaker Change: Okay.
Speaker Change: Risks would be I'm going to do with the ramp up at greenstone, Although your numbers have lapped okay.
Speaker Change: At auction I gathered from the 2025 guidance.
Speaker Change: Yes, yes, so greenstone ramps up the way the way it thinks it's going to and coal prices are soft we could blow through our guidance on the high side.
Speaker Change: Okay, and then for the 2025 guidance I think I heard that Q1 is supposed to be a strong quarter.
And so maybe you can just kind of lay out for us how that year looks like it is.
Speaker Change: Our strong Q1, and then the other three quarters, they're equal or how do you see I guess about 60, 41st half second half guidance on that would be great.
Speaker Change: Yes, I think we're expecting our quarters through 2025 to be relatively consistent with each other with a slight ramp up towards the end of the year, if greenstone does ramp up.
Speaker Change: But what I would say is Q1 should have an extra bump.
Speaker Change: 1000 to maybe 1500 geos related to that concentrate timing of sales that we were missing in Q4, that's going to extra show up in Q1, so it'll be sort of a onetime bump to Q1, and then things should be relatively flat for the year with trending upwards towards the end of the year.
Speaker Change: Okay.
Speaker Change: How I see it as stronger Q1, and then sort of like maybe a little bit Q2, Q3 equal and then.
Speaker Change: Stronger in Q4.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: I'll take that thank you and then my final question, if I could just coming back on the debt level of 300 million in that by Q2 Q3 somewhere in there.
Speaker Change: You stopped paying down your debt.
Speaker Change: Yeah.
Okay.
Speaker Change: Share buyback, obviously, depending on where your shares are you you.
Speaker Change: You know.
Speaker Change: Buy back your shares Amdocs.
Speaker Change: Okay.
Speaker Change: Out there.
Speaker Change: Central.
Speaker Change: Our transactions.
Speaker Change: Landscape, you don't really have a paint and until 2027.
Speaker Change: For marrow cell and you don't find anything.
Speaker Change: I know you work through your share buyback program do you look at your dividend as well in terms of moving that up.
Speaker Change: Okay.
Speaker Change: Yeah. That's a good question I think that our intention with the dividend is has always been to establish it low and then start increasing slightly every year for a very long period of time, we ask.
Speaker Change: Tablets it low and then took on a bunch of that to do these transactions and the interest rates went up so we just parse those increases our balance sheet is strong enough.
Speaker Change: So we sort of look at the dividend once a year and I would expect barring any real surprises that the next time, we look at it it will be an increase.
Speaker Change: Okay. That's very helpful. Thank you on that.
Speaker Change: Thank you very much for taking my questions and a lot of my other ones were already answered.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you there are no further questions at this time I will now hand, the call back to Mr. Nolan Watson for any closing remarks.
Speaker Change: Alright, Thank you very much everyone for calling in and hope everyone has a good day and again if there are any further questions. We're here at around enabled to answer them. Thank you.
Speaker Change: Thank you and this concludes today's call. Thank you for participating you may all disconnect.
Speaker Change: Okay.