Mr. Nolan Watson reports

SANDSTORM GOLD ANNOUNCES RECORD PRODUCTION IN SECOND QUARTER

Sandstorm Gold Ltd. has released its results for the second quarter ended June 30, 2015 (all figures in U.S. dollars).

Second quarter highlights:

• Record attributable gold-equivalent ounces sold of 12,901;
• Revenue of $15.4-million;
• Average cash cost per attributable gold-equivalent ounce of $304 resulting in cash operating margins of $892 per ounce;
• Operating cash flow of $9.5-million;
• Net loss of $13.5-million;
• Announced the closing of the restructuring of the Aurizona gold stream and its outstanding loan with Luna Gold Corp.;
• Announced the closing of the acquisition of Gold Royalties Corp; Gold Royalties has over $1-million in cash and a portfolio of royalties on 12 mining projects located in Canada, including one royalty that is generating cash flow from gold production.

Sandstorm president and chief executive officer Nolan Watson commented: "The second quarter delivered solid operating cash flow to the company driven by record gold sales from our 14 producing royalty and stream assets. With over $50-million in cash at quarter-end, Sandstorm is in a position to be a buyer in what is a struggling gold market, and we believe that, as we execute on the opportunities that are in front of us, we will build significant shareholder value."

Financial results

Revenue and gold sales

Revenue was $15.4-million in the second quarter of 2015, generated from the sale of 12,901 attributable gold-equivalent ounces at an average realized selling price of $1,196 per ounce. Revenue in the second quarter of 2014 was $13.2-million, with the increase in 2015 primarily being driven by a 27-per-cent increase in the number of attributable gold-equivalent ounces sold.

Costs and expenses

The average cash cost per attributable ounce was $304 during the quarter, resulting in a cash operating margin of $892, compared with $310 and $986, respectively, for the second quarter of 2014. Administrative expenses and project evaluation costs together increased by $800,000, compared with the second quarter of 2014 due to the vesting of previously granted stock-based compensation and professional fees relating to increased corporate activity.

Earnings and operating cash flow

For the three months ended June 30, 2015, the net loss and cash flow from operations were $13.5-million and $9.5-million, respectively, compared with net income and cash flow from operations of $3-million and $9.4-million for the comparable period in 2014. The change is attributable to a combination of factors, including an $8.1-million increase in income tax expense related to a reduction of the company's deferred income tax assets, which is a non-cash expense, a $3.5-million non-cash increase in depletion expense largely driven by an increase in attributable gold-equivalent ounces sold, a $3.3-million non-cash impairment relating to the Summit gold stream, a $1.1-million non-cash loss on revaluation of the company's investments, an increase project evaluation costs and a number of non-recurring items.

Streams and royalties

The company's stream and royalty segments for the three months ended June 30, 2015, are summarized in attached table.

           
In $000s           Attributable    Sales and     Cost of   Depletion    Impairment       Income     Cash flow
                    ounces sold      royalty       sales                of mineral        (loss)         from
                                    revenues  (excluding                  interest       before    operations
                                               depletion)                                 taxes

Aurizona                  2,921    $3,519.00   $1,192.00     $346.00             -    $1,981.00     $2,327.00
Bachelor Lake             2,125        2,537       1,063       1,263             -          211         1,474
Black Fox                 1,378        1,630         714         985             -          (69)          916
Diavik                    1,345        1,609           -       1,665             -          (56)        1,409
Ming                        416          488           -         497             -           (9)          488
Santa Elena               2,659        3,186         948       1,943             -          295         2,238
Royalties                 2,057        2,460           -       3,522             -       (1,062)        2,152
Other                         -            -           -           -        (3,323)      (3,323)            -
Corporate                     -            -           -           -             -          674        (1,525)
Consolidated             12,901   $15,429.00   $3,917.00  $10,221.00    ($3,323.00)  ($1,358.00)    $9,479.00

Attributable gold-equivalent ounces sold for the three months ended June 30, 2015, was 12,901 ounces, compared with 10,149 ounces for the comparable period in 2014. The ounces sold during the 2015 quarter represented a 27-per-cent increase from 2014, and a record for the company. The increase in ounces was largely attributable to increases in gold ounces sold from the Santa Elena mine in Mexico and the Aurizona mine in Brazil, as well as an additional 1,345 attributable gold-equivalent ounces arising from the recently acquired royalty on the Diavik mine in the Northwest Territories, Canada. The production increases were partially offset by decreases in gold ounces sold from the Bachelor Lake mine in Quebec, Canada.

Santa Elena mine

Silvercrest Mines Inc. posted record production from Santa Elena during the second quarter of 2015 due to increased throughput and mill operating efficiencies, which increased gold and silver recoveries. As a result, Sandstorm's gold ounces sold from Santa Elena increased by 244 per cent compared with the second quarter of 2014.

Sandstorm has a gold stream to purchase 20 per cent of the gold produced at Santa Elena at a per-ounce price of $357. When Sandstorm's attributable production from Santa Elena reaches 50,000 ounces of gold, the continuing per-ounce payments will increase to $450.

Subsequent to quarter-end, First Majestic Silver Corp. and Silvercrest announced that the companies had entered into a definitive agreement, whereby First Majestic would acquire all of the issued and outstanding common shares of Silvercrest. Sandstorm's Santa Elena gold stream will not be affected by the acquisition.

Aurizona mine

Gold ounces sold from the Aurizona mine was 25 per cent higher when compared with the second quarter of 2014. Luna is processing ore from a stockpile, and it is expected that the stockpile will be depleted and Luna will cease milling operations during the third quarter of 2015.

The company has a 3-per-cent-to-5-per-cent sliding-scale net-smelter-return royalty on the production from Aurizona. At gold prices less than or equal to $1,500 per ounce, the royalty is a 3-per-cent net-smelter-return royalty. In addition, Sandstorm holds a 2-per-cent net-smelter-return royalty on Luna's 200,000 hectares of greenfield exploration ground. At any time prior to the commencement of commercial production, Luna has the ability to purchase one-half of the greenfield net-smelter-return royalty for a cash payment of $10-million.

Bachelor Lake mine

compared with the second quarter of 2014, there was a 15-per-cent decrease in gold ounces sold from Bachelor Lake, primarily related to the mine experiencing lower feed grade, which was largely driven by higher-than-expected dilution from some stopes. Metanor considers this occurrence to be isolated and expects grades to increase in the following quarters. Metanor recently released positive drill results from its exploration activities at the Bachelor Lake mine. For detailed results, refer to the Metanor website.

Sandstorm has a gold stream to purchase 20 per cent of the gold production at Bachelor Lake for $500 per ounce.

Outlook

Based on the company's existing gold streams and royalties, production for 2015 is forecasted to be between 40,000 to 50,000 attributable gold-equivalent ounces. The company is forecasting attributable gold-equivalent production of approximately 50,000 ounces per year beginning in 2018.

Other

Tax

During the three months ended June 30, 2015, the company recognized a non-cash reduction in its deferred income tax assets of $8.1-million. This is a non-cash-based expense, and the company continues to have substantial loss-carryforward pools in Canada for tax purposes.

Gold stream settlement

As contemplated in the Deflector gold purchase agreement, the company provided notice to Doray Minerals Ltd. that it was requesting back the $6-million that Sandstorm had advanced under the purchase agreement. As part of a settlement agreement, the company received $7-million in June, 2015. The difference between the $7-million received and the carrying value of the Deflector mineral interest of $6.3-million was recognized in other income. As a result of the settlement, both parties' obligations were extinguished under the gold purchase agreement.

Impairment

The lack of progress with respect to Santa Fe Gold Corp., raising additional capital to satisfy the terms and conditions of the negotiated restructuring of its senior secured indebtedness, prompted the company to evaluate its investment in the Summit gold stream. As a result of its review, the company recorded an impairment charge of $3.3-million for the full balance of the mineral interest.

Webcast and conference call details

A conference call will be held on July 31, 2015, starting at 8:30 a.m. PDT to further discuss the second quarter results. To participate in the conference call, use the following dial-in numbers and conference ID.

Local/international:  647-788-4916

North American toll-free:  877-214-4966

Conference ID:  98823585

It is recommended that participants dial in five minutes prior to the commencement of the conference call. An audio webcast of the conference call can be accessed on the Sandstorm website.

The Sandstorm management discussion and analysis and financial statements for the second quarter will be accessible on the company's website and on SEDAR. The company has also completed a Form 6-K filing with the U.S. Securities and Exchange Commission that will be accessible on EDGAR. Shareholders can request a hard copy of the management discussion and analysis and financial statements by e-mailing info@sandstormltd.com.

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