Q1 2025 Sandstorm Gold Ltd Earnings Call
Heiko Ihle, Brian MacArthur, Tanya Jakusconek
Heiko Ihle, Brian MacArthur, Tanya Jakusconek, Derick Ma, Erfan
Take it easy!
Music
Ludi: Good morning, my name is Ludi and I will be your conference operator today. At this time, I would like to welcome everyone to the Sandstorm Gold 2025 First Quarter Result.
Speaker Change: 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 as actual results, and feature events could differ materially from those anticipated in such statements.
Speaker Change: After this begins your marks, there will be a question and answer session. If you would like to ask a question during this time, simply press a star followed by the number one on your telephone keypad. And if you would like to withdraw your question, you can press a star followed by the number two. Thank you Mr. Watson, you may begin your conference.
Thank you, Loody.
Watson: Good morning, everyone, and thank you for calling into our Q1 earnings call.
This morning, I'm going to provide a brief business update.
Watson: But our capital allocation plans, then I'm going to hand it over to Erfan or CFO to discuss the specific financial results, and then to Dave Awram to provide additional updates.
Watson: We're pleased to announce not only record quarterly revenue of $50 million U.S., but also operating cashflow of over $40 million U.S.
Watson: Our business just keeps getting stronger and stronger and it feels good to be
Watson: Desform is a growth story, and we're maintaining our long-term outlook of our production doubling by 2030, and therefore we expect significantly more quarterly free cash flow in the years
Watson: Over the past couple of months, there have been two very significant updates that are happening with our key development assets being Mora and Han Maude.
Watson: Specifically, during Q1, SSR announced that they are spending up to $100 million in 2025 on hot-modern capex for long-lead items such as tunnels, roads, and early site earthworks.
Watson: It's been a long time coming but it feels great to see this project moving forward with boots and equipment on the ground.
Speaker Change: Also, recently Glencore CEO publicly stated that they anticipate having the RIDGY applications for the MARA project officially submitted shortly.
Speaker Change: I believe over time, Mara will become Sandstorm's most valuable asset and it will be a nice anchor asset within our portfolio.
Speaker Change: When we look at our new cashflow projections at various gold prices, go this year and in 2030.
Speaker Change: You can see that we're anticipating our cash flow generated by our portfolio on an after-tax basis to be over $300 million US per year and that's a $3200 gold prices.
Speaker Change: We used to show $3,200 Gold prices as an upside scenario.
Here we are at $3,400 Gold Prices.
Speaker Change: and the portfolio is generating a lot of cash flow now and is going to be generating dramatically more cash flow over the next several years.
Speaker Change: You can see why we have been so keen to buy back our own shares.
Speaker Change: Late last year, when we started purchasing our own shares on the market, we were able to buy nearly two million shares at an average price of $5.51 US per share.
Speaker Change: During Q1 of 2025, we purchased over 3 million shares at an average price of $6.21.
at U.S. per share. We have cancelled all of those shares.
Speaker Change: Today, we sit here with a share price closer to $9 US per share. So I think those share repurchases were the most intelligent way we could have allocated capital.
Speaker Change: During Q1, we were also able to repay $15 million of debt, and we ended the quarter with $340 million of debt and...
Speaker Change: Subsequent to quarter-end, we repaid another $12 million of debt and our debt is down to $328 million.
and dropping rapidly.
Speaker Change: We've been sticking to our plan of recharging our balachete, shrinking our share float, and that plan is going very, very well.
Speaker Change: So this is a bit of a shorter than normal update for me.
Speaker Change: But the Sandstorm story is more simple than ever to explain.
Speaker Change: And so with that, I'm going to hand it over to Erfan to talk about the specific
Thanks, Nolan.
Speaker Change: Good morning everyone and thank you for joining us today. We've had a strong start to the year in terms of financial and operational performance and I'd like to walk through some of the highlights this morning.
Speaker Change: We reported record revenue of $50.1 million for the quarter, deported by strong gold market in the first three months.
Speaker Change: Additionally, Sandstorm received a payment of $4 million related to our vatikula Gold Stream, bringing our total sales, royalties, and income from other interests the $54.1 million.
Speaker Change: Production from our stream and royalty portfolio was just shy of 18,500 attributable gold equivalent ounces.
Speaker Change: which was below the 20,300 ounces sold in the first quarter of last year.
Speaker Change: As we've discussed on previous quarterly calls, our gold prices can result in lower gold equivalent production as non-goal revenue from our copper and silver streams convert to pure gold equivalent out there.
Speaker Change: However, the combination of record revenue and record cash offering margins resulted in strong cash flows.
Speaker Change: During the first quarter, Sandstorm recognized average cash margins of over $2,500 per gold equivalent ounce, or approximately 87% cash margins on each ounce sold.
Speaker Change: As a result, operating cash loads, excluding changing the non-cash working capital for $40.8 million.
Speaker Change: Nolan discussed, we allocated significant amount of capital towards share buybacks in the first three months of the year.
Speaker Change: When combined with a quarterly cash dividend, I'm pleased to report the Sandstorm returned over $23 million US to shareholders in the first three months for approximately 57% of operating cash flows.
Speaker Change: We also continued our progress on de-leveraging the balance sheet, making net repayments of about $15 million during the quarter, an additional 12 million subsequent quarter end.
Speaker Change: And as Nolan mentioned, our revolving credit facility with $328 million drawn as of yesterday.
Speaker Change: Coss of sales and depletion were largely in line with production levels and we ended the quarter with $11.3 million in net income or 4 cents per share.
Speaker Change: Turning to the next slide, we can see a bit more detail in terms of the top assets contributing to production in Q1.
Speaker Change: The trivial production from Japan, a copper mine, increased on a year-over-year basis, supported by higher commodity prices and an increase in copper pound sold.
Speaker Change: Sandstorm received additional copper deliveries in the first quarter as part of the true pop-up mechanism under the Shepardous Stream Agreement.
Speaker Change: Lundin Mining has planned some vests in a 20,000 meter drilling program in 2025 with a goal of growing resources at Chappata. Realists expecting an updated resource estimate and technical report incorporating the swive a deposit by the end of the year.
Speaker Change: Production continues to ramp up with the green stone gold mine where Sandstorm received and sold nearly 1300 gold ounces in the first quarter.
Speaker Change: Equinox Gold remains focused on wrapping up production, focus capacity, and expects the processing plan to achieve design recovery rates by mid-year, following various optimization improvement
Speaker Change: At Bonacro, a trivial gold sales were lower year-over-year as a result of atypical inventories at the end of 2023, which were sold in the first quarter of 2024.
Speaker Change: Allied Gold is forecasting production in 2025 to be waiting toward the second half.
Speaker Change: In part, as a result of improvements to feed grades at the mine.
Speaker Change: Additionally, we're expecting that between 5 and 10 percent of Allied guided production of Agbau will reflect all treated monochrome material that is covered by the Sandstorm Gold
Speaker Change: Allied recently closed an $80 million Canadian financing to fund its optimization and growth initiatives, including exploration and technical studies aimed at extending the mine life at its go-to-war assets, including the Bonacro Gold Mine.
Speaker Change: Following a record year of production in 2024, London Gold reported a year-over-year increase in gold production at Fruchadell, Northay in the first quarter.
Speaker Change: Strategic Mind Sequencing and Positive Grade Reconciliation Attributed Higher Mill Head Grade in the First Quarter, which Lundin Gold expects to continue throughout the first half of this year.
Speaker Change: Looking forward to the rest of the year, we continue on Anticipate Progress from Ivan Ho-Minds that their plot refines, which is expected to commence production in a latter half of the year.
Speaker Change: We'll expect Valle's South Eastern system to begin contributing to the Valle royalties by mid-year once the cumulative sales threshold has been met.
Speaker Change: Gold Okuman production in the first quarter contains the largely attributable to mines located in South America, accounting for nearly 50% of geo-sold. We expect production from North American mines to increase as Greenstone ramps up throughout 2025.
Speaker Change: Nearly three quarters of production came from precious metals in Q1, while the remaining 27% was largely attributable to copper assets.
Speaker Change: We maintain our guidance forecast for 2025, where we expect production to be between 65,000 to 80,000 at Tribal Gold equivalent ounces.
Speaker Change: At previously disclosed, this guidance considers a range of commodity price scenarios and a phased-up ramp up at Greenstone. As I mentioned, the company's production guidance is sensitive to changes in relative commodity prices.
Speaker Change: For 2025, a plus or minus 10% change in both copper and silver price as relative to the gold price is expected to impact through a gold equivalent production by approximately 1,500 ounces.
Speaker Change: Long-term, we expect production to reach 150,000 ounces in 2030, based on the company's existing royalty and stream portfolio, plus the exercise of the moral gold stream option.
As I said, 2025 is off to a great start.
and we expect a strong gold market.
Speaker Change: along with key assets ramping up and coming online to contribute, continue generating robust cash flows throughout the remainder of the year.
Speaker Change: And with that, I'll turn it over Dave for some highlights from our portfolio of Dave.
Great, thanks Erfan and good morning everyone.
Speaker Change: We start off today on this topic I am particularly proud of since starting Sandstorm.
Speaker Change: That is, building a portfolio of mining projects that have an outstanding exploration and expansion
Speaker Change: It's Sandstorm. We've long held the concept that the greatest royalty deals in our space are the ones that have meaningful exploration upside.
Speaker Change: with projects such as all you told going greenstone, we feel very reassured that the best additional value for investors comes with the success of that drill bed.
Speaker Change: But it's not just big producers in our portfolio sit shine because we own 230 royalties and streams.
Speaker Change: And while not all of them are having an exploration dollar spent on them, many of them are and of course all that work is free to us
Speaker Change: On Flight 12, you see a chart that we have used over the years to demonstrate how successful we've been at attaching Sandstorm to the projects that are getting huge amounts of work on them through drilling.
Speaker Change: This chart shows 9 years, but goes back further with the same clear message.
Speaker Change: Sandstorm is receiving more than a hundred million dollars of free drilling per year.
Speaker Change: It's not just drilling a project without permits or years away from development either because as we look closer into the data in 2024 alone, of the almost 600,000 meters of total drilling,
320,000 meters.
appears, occurred at producing assets. In fact,
Speaker Change: As in each of the previous years, much of the drilling is for expanding existing mine and translate quickly into resources and reserves. In many cases, those gold equivalent ounces are not just implemented into a life of mine plans.
but actually mined or sold within years of discovery.
Erfan Kazemi, Nolan Watson
Speaker Change: Great examples of this art, Hyundai and Prudent Del Norte [inaudible]
Speaker Change: where incredibly successful drill programs on permanent ground has translated into production within year or two of drilling these new orbodies for extensions of existence.
and there's two more bodies.
Speaker Change: Whenever this happens, that is definitive tangible value being provided to shareholders.
Speaker Change: Regardless of what discount rate one may use on those discovered in.
Speaker Change: Considering that information on this slide and moving on to slide 13, we see just how successful Sandstorm partners have been in their drilling of those tangible discovered gold equivalent
Speaker Change: Here, we have tracked down how many ounces discovered on ground where our royalties are.
and determined what can be attributable to Sandstorm.
Speaker Change: For each of the past seven years, there are two columns. The light column represents the total annual sales
Speaker Change: The Darker Gold Columns, represented discovered attributable ounces of sand.
Speaker Change: Sandstorm. As you can see on an annual basis, Sandstorm is doing better than replacing ounces sold. More precisely, there are no years that Sandstorm partners have not replaced mind-gold equivalent ounces.
Speaker Change: Indeed, every year there is an attributable surplus, and although variable over the last seven years, the average is almost 30% more ounces above and beyond the annual sales. This means our partners are adding value at a rate much higher than we are receiving.
Speaker Change: and the millions of dollars invested by our partners to get to this point cost nothing to Sandstorm.
Speaker Change: I think a great way to understand this created values to take our surplus ounces is covered in 2024.
Speaker Change: base on our current Q1 Realize Gold price and per ounce margins.
Speaker Change: 43,000 ounces discovered represents over $100 million in additional value to the company.
Speaker Change: That came to Sandstorm shareholders without spending anything for that upside, and that's just one year. The royalty model truly is a remarkable space to be in when your portfolio discovers as many ounces as Sandstorm does.
Thank you.
We're not too high-minded and just really...
Speaker Change: Building only slightly on what Nolan had to say, SSR, as recently discussed more detail of what's been spent at Han-Madam.
Speaker Change: And what is expected to be spent there over the next year?
Speaker Change: in 2024, it spent $42 million, predominantly in early works and side access. So far this year, the spend has been over $12 million.
Williams, which is part of a total 2025 spend.
$6,200 million dollars.
Speaker Change: and primarily that will be advancement of site works, road access upgrades, and additional underground tunneling works.
also part of this bend.
Speaker Change: is Exploration. Both in the incelling the inferred resources, but also looking for possible extension of the existing ore body and exploration of new targets in the mineral.
License.
It really feels like momentum is building at the project.
Speaker Change: and we're hopeful that 2025 will have consistent news flow regarding its construction time.
Speaker Change: Moving on to Oh My Gold Mods. Oh My is a past-producing project like Queda and Guyana and focusing on a significant gold deposit, historical gold deposit.
Speaker Change: The site previously produced 3.7 million ounces of gold from two open pets, Fennel and the Nod, over 13-year period finishing in 2005.
Speaker Change: It had a peak annual production close to 350,000 ounces, making it one of South America's largest producing gold mine.
Speaker Change: Today, all my hosts two significant gold deposits in the remnants of the win-hunt.
Speaker Change: OpenPid Target with average grade of 1.4 a grams per ton indicated in 1.99 grams of plus an underground target at Gil's Creek Averaging 3.22 grams per ton.
Combine, there's a resource of greater than 4.3 million ounces.
Speaker Change: Judging by the subsequent holes in the balance of 2024 and the beginning of 2025, that resource looks destined to increase.
Speaker Change: with holes that were not that have grades of 16.35 grams per tonne over 10.5 meters below the existing resource and shallower hits along strike but out of the existing resource.
Uh-oh.
Speaker Change: That's an addition to additional more targets along the site. This could become a project desirable by the biggest gold miners.
in the world.
Sandstorm has invested in Ole Miss since 2020.
Speaker Change: And it is great to see a project like this, start hitting their groove and reveal what seems like in value within the Sandstorm portfolio.
Speaker Change: I encourage you to continue to follow as they look to update their resource around Mid-Year and update their PEA later in 2025 to include the Underground Geal Creek target in addition to expanding the resource that were not.
Ludi: So, with that, we're going to hand over the call to Ludi, the operator for a Q&A session. Please feel free to ask questions about any of our Royal Tuesday streams.
Williams. Thank you.
Ludi: Thank you. And ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press a star, followed by the number one on your telephone keypad. If you're using a speaker phone, please speak up your handset before pressing any keys.
Ludi: We draw your question. You may press a star followed by the number two. Once again, these presses star one on your telephone keypad to ask questions.
Speaker Change: And your first question comes from the line of Heiko Ihle with H. Sealing Wright's Gohead.
Heiko Ille: Hi, everyone. Thanks for taking my questions. Hope everyone's doing well.
Thank you.
Heiko Ille: You currently got a guy into 65 to 80 thousand ounces for the year, obviously that includes the face ramp up at the Grimstall mine.
Speaker Change: You got 121269 ounces there in Q1, but can you just walk us through what you personally currently model for Q1, given the lower head grades that are expected at the site in the first half? And then maybe if you could even just sort of what numbers you're seeing by quarter?
Yes, so we've assumed...
About...
Speaker Change: Well, I'm going to be careful, though, what I say and what we've assumed. I just don't want to give all those guys different than what I could actually give. But what I will say is Q1 was a bit of an abnormality at Greenstone.
Speaker Change: It's a good one and we're happy to have it in our portfolio.
Fair enough.
Speaker Change: And just to cover one more thing, at Fruta del Morte, there's obviously the plant expansion going on. I was in your acid hand book earlier today, but it didn't clarify, so just to confirm the 0.9% and the Zorroiety is on the expanded plant, it's on the whole site, expanded plant capacity and everything you're going to get built in the future is well-correct.
Correct.
All right, that's all I have for today.
Perfect, I'll get back and cute.
Thank you.
Speaker Change: And once again, if you would like to ask a question, please press the star 1 on your telephone keypad.
Speaker Change: And presenters, we have no further questions at this time, but would like to turn it back to Mr. Watson for closing remarks.
Mr. Watson: Alright, well thanks everyone for calling into this call and as usual we're around here if anyone has any follow out questions feel free to phone us at the office. Thank you.