Sandstorm Gold Q1 2025 Earnings Report

Sandstorm Gold EPS Results

• Actual EPS: $0.04
• Consensus EPS: $0.05
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

Sandstorm Gold Revenue Results

• Actual Revenue: $50.10 million
• Expected Revenue: $71.61 million
• Beat/Miss: Missed by -$21.51 million
• YoY Revenue Growth: N/A

Sandstorm Gold Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 11:30AM ET

Sandstorm Gold (NYSE:SAND) operates as a gold royalty company. The company focuses on acquiring royalties and gold and other metals purchase agreements from companies that have advanced stage operating mines. It offers upfront payments for companies to acquire a stream and receives the right to purchase a percentage of a mine's production for the life of the mine. The company has a portfolio of 243 streams and royalties. It primarily has operations in Canada, Mexico, the United States, Mongolia, Burkina Faso, Ecuador, South Africa, Ghana, Botswana, Cote D'Ivoire, Argentina, Brazil, Chile, Peru, Egypt, Ethiopia, Guyana, Paraguay, French Guiana, Turkey, Sweden, Fiji, and Australia. The company was formerly known as Sandstorm Resources Ltd. and changed its name to Sandstorm Gold Ltd. in February 2011. Sandstorm Gold Ltd. was incorporated in 2007 and is headquartered in Vancouver, Canada.

Sandstorm Gold Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning. My name is Ludie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sunstorm Gold twenty twenty five First Quarter Results. 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.

[Operator]

There 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. 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 the star followed by the number one on your telephone keypad. And if you would like to withdraw your question, you can press the star followed by the number two. Thank you.

[Operator]

Mister Watson, you may begin your conference.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

Thank you, Ludi. Good morning, everyone, and thank you for calling into our q one earnings call. This morning, I'm going to provide a brief business update about our capital allocation plans, then I'm going to hand it over to Irfan, our CFO, to discuss the specific financial results, and then to Dave Oram to provide additional updates. We're pleased to announce not only record quarterly revenue of $50,000,000 US, but also operating cash flow of over $40,000,000 US. Our business just keeps getting stronger and stronger, and it feels good to be Sandstorm these days.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

Sandstorm is a growth story, and we're maintaining our long term outlook of our production doubling by 02/1930, and therefore we expect significantly more quarterly free cash flow in the years to come. Over the past couple of months there have been two very significant updates that are happening with our key development assets being Mara and Hahn Maden. Specifically, during Q1, SSR announced that they are spending up to $100,000,000 in 2025 on HOD Modden CapEx for long lead items such as tunnels, roads and early site earthworks. It's been a long time coming, but it feels great to see this project moving forward with boots and equipment on the ground. Also, recently Glencore's CEO publicly stated that they anticipate having the RIDGI applications for the MARA project officially submitted shortly.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

I believe over time MARA will become Sandstorm's most valuable asset, and it will be a nice anchor asset within our portfolio. When we look at our new cash flow projections at various gold prices, both this year and in 02/1930, you can see that we're anticipating our cash flow generated by our portfolio on an after tax basis to be over $300,000,000 US per year, and that's at $3,200 gold prices. We used to show $3,200 gold prices as an upside scenario, but here we are at $3,400 gold prices. The portfolio is generating a lot of cash flow now and it's going to be generating dramatically more cash flow over the next several years. You can see why we have been so keen to buy back our own shares.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

Late last year, when we started purchasing our own shares on the market, we were able to buy nearly 2,000,000 shares at an average price of US5.51 dollars per share. During Q1 of twenty twenty five, we purchased over 3,000,000 shares at an average price of $6.21 per share and we have cancelled all of those shares. Today, we sit here with a share price closer to US9 dollars per share, so I think those share repurchases were the most intelligent way we could have allocated capital. During Q1, we were also able to repay $15,000,000 of debt and we ended the quarter with $340,000,000 of debt and subsequent to quarter end we repaid another $12,000,000 of debt and now our debt is down to $328,000,000 and dropping rapidly. We have been sticking to our plan of recharging our balance sheet, shrinking our share float, and that plan is going very, very well.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

So this is a bit of a shorter than normal update for me, but the Sandstorm story is more simple than ever to explain. So with that, I'm going to hand it over to Irfan to talk about the specific financial results.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

Thanks Nolan.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

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. We reported record revenue of $50,100,000 for the quarter supported by strong gold market in the first three months. Additionally, Sandstorm received a payment of $4,000,000 related to our Vaticula Gold Stream, bringing our total sales, royalties and income from other interests to 54,100,000.0 Production from our stream and royalty portfolio was just shy of 18,500 attributable gold equivalent ounces, which was below the 20,300 ounces sold in the first quarter of last year. In part, the year over year decrease in GEOs was driven by the timing of sales of ounces received in the fourth quarter of twenty twenty three and sold in the first quarter of twenty twenty four, as well as the outperformance of gold relative to the other commodities in our asset mix.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

As we've discussed on previous quarterly calls, higher gold prices can result in lower gold equivalent production as non gold revenue from our copper and silver streams convert to fewer gold equivalent ounces. However, the combination of record revenue and record cash operating margins resulted in strong cash flows. 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. As a result, operating cash flows, excluding changes in non cash working capital, were $40,800,000 As Nolan discussed, we allocated a significant amount of capital towards share buybacks in the first three months of the year. When combined with the quarterly cash dividend, I'm pleased to report that Sandstorm returned over US23 million dollars to shareholders in the first three months, or approximately 57% of operating cash flows.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

We also continued our progress on deleveraging the balance sheet, making net repayment of $15,000,000 during the quarter, an additional $12,000,000 subsequent to quarter end. And as Nolan mentioned, our revolving credit facility was $328,000,000 drawn as of yesterday. Cost of sales and depletion were largely in line with production levels and we ended the quarter with $11,300,000 in net income or $04 a share. Turning to the next slide, we can see a bit more detail in terms of the top assets contributing to production in Q1. Attributable production from Chapada Copper Mine increased on a year over year basis, supported by higher commodity prices and an increase in copper pounds sold.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

Sandstorm received additional copper deliveries in the first quarter as part of the true up mechanism under the Chapada stream agreement. Lundin Mining has plans to invest in a 20,000 meter drilling program in 2025 with a goal of growing resources at Chapada. Drill is expecting an updated resource estimate and technical report incorporating the Suave deposit by the end of the year. Production continues to ramp up with the Greenstone gold mine where Sandstorm received and sold nearly 1,300 gold ounces in the first quarter. Equinox Gold remains focused on ramping up production to full capacity and expects the processing plant to achieve design recovery rates by mid year following various optimization improvement efforts.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

At Bonacro, attributable gold sales were lower year over year as a result of atypical inventories at the end of twenty twenty three which were sold in the first quarter of twenty twenty four. Allied Gold is forecasting production in 2025 to be weighted towards the second half, in part as a result of improvements to feed grades at the mine. Additionally, we're expecting that between 510% of Allied's guided production of AgBou will reflect toll treated BonaCro material that is covered by the Sandstorm Gold Stream. Allied recently closed an CAD80 million financing to fund its optimization and growth initiative, including exploration and technical studies aimed at extending the mine life at its Cote D'Ivoire assets, including the Bonacro gold mine. Following a record year of production in 2024, Lundin Gold reported a year over year increase in gold production at Fruta Del Norte in the first quarter.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

Strategic mine 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. Looking forward to the rest of the year, we continue to anticipate progress from Ivanhoe mines at their Platte Reef mine, which is expected to commence production in the latter half of the year. We also expect Vale's southeastern system to begin contributing to the Vale royalties by midyear, once the cumulative sales threshold has been met. Gold equivalent production in the first quarter continues to be largely attributable to mines located in South America, accounting for nearly 50% of geos sold. We expect production from North American mines to increase as Greenstone ramps up throughout 2025.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

Nearly three quarters of production came from precious metals in Q1, while the remaining 27% was largely attributable to copper assets. We maintain our guidance forecast for 2025 where we expect production to be between 65,000 to 80,000 attributable gold equivalent ounces. As 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. For 2025, a plus or minus 10% change in both copper and silver prices relative to gold price is expected to impact attributable gold equivalent production by approximately 1,500 ounces.

[Erfan Kazemi-Esfahani, Chief Financial Officer at Sandstorm Gold]

Long term, we expect production to reach 150,000 ounces in 02/1930 based on the company's existing royalty and stream portfolio, plus the exercise of the MARO Goldstream option. As I said, 2025 is off to a great start, and we expect a strong gold market, along with key assets ramping up and coming online to continue generating robust cash flows throughout the remainder of the year. And with that, I'll turn it over to Dave for some highlights from our portfolio. Dave?

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

Great, thanks, Erfan, and good morning everyone. We start off today on a topic I'm particularly proud of since starting Sandstorm. That is building a portfolio of mining projects that have an outstanding exploration and expansion upside potential. At Sandstorm, we've long held the concept that the greatest royalty deals in our space are the ones that have meaningful exploration upside. With projects such as Oyu Tolgoi and Greenstone, we feel very reassured that the best additional value for investors comes with the success of that drill bit.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

But it's not just the big producers in our portfolio that shine, because we own two thirty royalties in streams. And while not all of them are having exploration dollars spent on them, many of them are. And of course, all that work is free to us. On slide 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. This chart shows nine years, but goes back further with the same clear message.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

Sandstorm is receiving more than $100,000,000 of free drilling per year. It's not just drilling on projects 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 occurred at producing assets. In fact, as in each of the previous years, much of the drilling is for expanding existing mines and translate quickly into resources and reserves. In many cases, those gold equivalent ounces are not just implemented into a life of mine plan, but actually mined or sold within years of discovery. Great examples of this are at Junde and Pruta Del Norte, where incredibly successful drill programs on permanent ground has translated into production within a year or two of drilling these new ore bodies or extensions of existing ore bodies.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

Whenever this happens, that is definitive tangible value being provided to shareholders regardless of what discount rate one may use on those discovered ounces. 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 ounces. Here, we have tracked down how many ounces discovered on ground where our royalties are and determined what can be attributable to Sandstorm. For each of the past seven years, there are two columns. The light column represents the total annual sales of ounces from Sandstorm.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

The darker gold columns represent the discovered attributable ounces 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 mined gold equivalent ounces. 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 partners are adding value at a rate much higher than we are receiving.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

And the millions of dollars invested by our partners to get to this point costs nothing to Sandstorm. I think a great way to understand this created value is to take our surplus ounces discovered in 2024. Based on our current Q1 realized gold price and per ounce margins, 43,000 ounces discovered represents over $100,000,000 in additional value to the company. 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.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

Moving on to Hard Maden, and just really building only slightly on what Nolan had to say, SSR has recently discussed more detail of what's being spent at HOTMADIM and what is expected to be spent there over the next year. In 2024, it spent $42,000,000 predominantly in early works and site access. So far this year, the spend has been over $12,000,000 which is part of a total 2025 spend of 60 to $100,000,000. And primarily that will be advancement of site works, road access upgrades and additional underground tunneling works. Also part of the spend though is exploration, both in infilling the inferred resources, but also looking for possible extension of existing ore body and exploration of new targets in the mineral license.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

It really feels like momentum is building at the project and we're hopeful that 2025 will have consistent news flow regarding its construction timeline. Moving on to Omi Gold Mines. Omi is a past producing project like Cueta and Guyana, and focusing on a significant gold deposit, historical gold deposit. The site previously produced 3,700,000 ounces of gold from two open pits, Fennell and Wannad, over a thirteen year period finishing in 02/2005. It had a peak annual production close to 350,000 ounces, making it one of South America's largest producing gold mines.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

Today, O Mai hosts two significant gold deposits in the remnants of the Wenot open pit target, with an average grade of 1.48 grams per tonne indicated 1.99 grams of bird, plus an underground target at Gilt Creek averaging 3.22 grams per tonne. Combined, there is a resource of greater than 4,300,000 ounces. Judging by the subsequent holes in the balance of 2024 and the beginning of 2025, that resource looks destined to increase, with holes that were not, that have grades of 16.35 grams per ton over 10.5 meters below the existing resource and shallower hits along strike but out of the existing resource. In 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 Olmai since 2020, and it is great to see a project like this start hitting their groove and reveal what seems like hidden value within the sandstorm portfolio.

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

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 Gilt Creek target in addition to expanding the resource that went on. So with that, I'm gonna hand over the call to Ludi, the operator for a Q and A session. Please feel free to ask questions about any of our royalties and streams. Thank you.

[Operator]

Thank you. And ladies and gentlemen, we will now begin the question and answer session. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, you may press star followed by the number 2. Once again, please press star one on your telephone keypad to ask a question.

[Operator]

And your first question comes from the line of Heiko Ihle with H. C. Wainwright. Please go ahead.

[Heiko Ihle, MD & Equity Research at H.C. Wainwright & Co.]

Hi, everyone. Thanks for taking my questions. Hope everyone's doing well.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

Thank you.

[Heiko Ihle, MD & Equity Research at H.C. Wainwright & Co.]

You currently got a guidance of 65,000 to 80,000 ounces for the year. Obviously, that includes the phased ramp up at the Greenstone mine. You got twelve twelve sixty nine 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?

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

Yeah. So we've we've assumed about well, I'm I'm gonna be careful about what I say and what we've assumed. I just don't wanna give public guidance different than what Equinox gives. But what I will say is q one was a bit of an abnormality at Greenstone. It looks like that mine has turned a corner.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

We're seeing evidence that q two is gonna be a lot stronger than q one. And, in line, we're happy to have it in our portfolio.

[Heiko Ihle, MD & Equity Research at H.C. Wainwright & Co.]

Fair enough. And just to cover one more thing. At Fruta del Morte, there was obviously the plant expansion going on. I was in your asset handbook earlier today, but it didn't clarify. So just to confirm, the 0.9% NSO royalty is on the expanded plan it's it's on the whole site, expanded plan capacity and everything gonna get built in the future as well.

[Heiko Ihle, MD & Equity Research at H.C. Wainwright & Co.]

Correct?

[David Awram, Co-Founder, Senior Executive VP & Non-Independent Director at Sandstorm Gold]

Correct.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

That's all I have for engineers there. Perfect. I'll get back in queue.

[Operator]

And once again, if you would like to ask a question, please press star one on your telephone keypad. Presenters, we have no further questions at this time. I would like to turn it back Watson for closing remarks.

[Nolan Watson, Co-Founder, President, CEO & Non-Independent Director at Sandstorm Gold]

All right. Well, thanks, everyone, for calling into this call. And as usual, we're around here. If anyone has any follow-up questions, feel free to phone us at the office. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Nolan Watson, Co-Founder, President, CEO & Non-Independent Director
• Erfan Kazemi-Esfahani, Chief Financial Officer
• David Awram, Co-Founder, Senior Executive VP & Non-Independent Director

Analysts

• Heiko Ihle, MD & Equity Research at H.C. Wainwright & Co.