An anonymous director reports

SANDSTORM GOLD ROYALTIES ANNOUNCES 2023 THIRD QUARTER RESULTS

Sandstorm Gold Ltd. has released its results for the third quarter ended Sept. 30, 2023 (all figures are in U.S. dollars).

Third quarter highlights:

• Revenue of $41.3-million (Q3 2022: $39.0-million);
• Attributable gold equivalent ounces of 21,123 ounces (Q3 2022: 22,606 ounces);
• Cash flows from operating activities, excluding changes in non-cash working capital of $33.9-million (Q3 2022: $31.3-million);
• Average cash cost per attributable gold equivalent ounce of $220 resulting in cash operating margins of $1,699 per ounce (Q3 2022: $323 per ounce and $1,383 per ounce, respectively);
• Net income of $0.0-million (Q3 2022: $31.7-million);
• Renewed credit facility: in September, 2023, Sandstorm renewed its revolving credit facility, allowing the company to borrow up to $625-million and extending the term for an additional two years, maturing in September, 2027;
• Bear Creek Mining Corp. amendment: in September, 2023, Sandstorm announced that it had agreed to amend its existing gold and silver stream agreements with Bear Creek and to refinance certain other debt investments of Bear Creek that it holds; in exchange for the stream amendments, Sandstorm will receive a 1.0-per-cent net smelter return royalty on Bear Creek's wholly owned Corani project in Peru -- one of the world's largest fully permitted silver deposits -- and $10-million of additional consideration in the form of a combination of Bear Creek common shares and debt; concurrently, Bear Creek undertook an equity financing transaction for gross proceeds of $9.5-million (Canadian), which closed on Oct. 5, 2023; the restructuring is subject to several closing conditions and is expected to close in the fourth quarter of 2023;
• Non-core asset sales: in September, 2023, the company announced its intention to monetize between $40-million and $100-million in non-core assets by the end of 2024 with a focus on accelerating repayment of the company's outstanding debt; the company has since engaged advisers to lead a process to sell certain non-core assets; subsequent to quarter-end, Sandstorm reached an agreement with Sandbox Royalties Corp. to sell El Pilar and Blackwater royalties for total consideration of $25-million, including a cash payment of $10-million; the transaction is expected to close in the fourth quarter of 2023 and is subject to certain closing conditions.

Outlook

Based on the company's existing streams and royalties, attributable gold equivalent ounces for 2023 are forecasted to be between 90,000 and 100,000 ounces. The company's production forecast is expected to reach approximately 125,000 attributable gold equivalent ounces within the next five years, with a sustainable average annual production of approximately 110,000 attributable gold equivalent ounces over the next 15 years.

Financial results

For the three months ended Sept. 30, 2023, the company realized quarterly revenue of $41.3-million compared with $39.0-million for the comparable period in 2022. The increase in revenue is largely attributable to a 13-per-cent increase in the average realized selling price of gold partially offset by a 7-per-cent decrease in attributable gold equivalent ounces sold.

The company had cash flows from operating activities of $31.9-million and net income of $0.0-million for the three-month period, compared with cash flows from operating activities of $25.1-million and net income of $31.7-million for the comparable period in 2022. The change in net income is due to a combination of factors, including a $24.9-million gain that was recognized during the three months ended Sept. 30, 2022, resulting from the sale of the company's Hod Maden interest to Horizon Copper, and a decrease in the gains recognized on the revaluation of the company's investments whereby a loss of $4.0-million was recognized by the company during the three months ended Sept. 30, 2023, while during the three months ended Sept. 30, 2022, the company recognized a gain of $1.9-million.

Other contributing factors to the change in net income include a $4.3-million decrease in deferred income tax recovery largely driven by the one-time recognition of previously unrecognized tax attributes arising from the sale of Hod Maden during the three months ended Sept. 30, 2022, and a $3.3-million increase in finance expense, primarily related to interest paid on the company's credit facility that was drawn down to finance acquisitions made in 2022. The change in net income was partially offset by a $2.4-million increase in revenue.

Streams and royalties

Of the attributable gold equivalent ounces sold by Sandstorm during the third quarter of 2023, approximately 23 per cent was attributable to mines located in Canada, 17 per cent from the rest of North America, 49 per cent from South America and 11 per cent from other countries.

Canada

Streams and royalties on Canadian mines contributed 18-per-cent-more gold equivalent ounces to Sandstorm when compared with the third quarter of 2022. The change is primarily due to an increase in the number of gold ounces sold from the Black Fox mine in Ontario and an increase in royalty revenue from the company's other royalties, largely due to increases in mining activity on concessions subject to the company's royalties. The increase was partially offset by a decrease in gold equivalent ounces received and sold from the CEZinc smelter in Quebec and a decrease in royalty revenue from the Diavik mine in the Northwest Territories.

North America excluding Canada

Operations located within North America, but outside of Canada, contributed 30-per-cent-less gold equivalent ounces when compared with the third quarter of 2022. The change was primarily driven by a decrease in ounces received and sold from the Relief Canyon mine in Nevada as a result of delays in shipments and timing of sales and a decrease in gold equivalent ounces received from the Santa Elena mine in Mexico. The decrease was partially offset by an increase in royalty revenue from the Cosala mine in Mexico and the Galena mine in Idaho.

South America

Operations in South America contributed 1-per-cent-less gold equivalent ounces when compared with the third quarter of 2022. The change was driven by a decrease in revenue attributable to the Chapada copper stream, partially offset by an increase in royalty revenue from the Caserones mine in Chile.

Other

Streams and royalties on mines in other countries contributed 19-per-cent-less attributable gold equivalent ounces when compared with the third quarter of 2022. This change is primarily due to a decrease in royalty revenue from the Hounde mine in Burkina Faso. The decrease was partially offset by an increase in gold equivalent ounces received and sold from the Blyvoor mine in South Africa.

Webcast and conference call details

A conference call will be held on Tuesday, Nov. 7, 2023, starting at 8:30 a.m. PST, to further discuss the third quarter results. To participate in the conference call, use the following dial-in numbers and conference ID or join the webcast.

International:  1-416-764-8688

North American toll-free:  1-888-390-0546

Conference ID:  55968798

About Sandstorm Gold Ltd.

Sandstorm is a precious-metal-focused royalty company that provides upfront financing to mining companies and receives the right to a percentage of production from a mine for the life of the mine. Sandstorm holds a portfolio of approximately 250 royalties, of which 40 of the underlying mines are producing. Sandstorm plans to grow and diversify its low-cost production profile through the acquisition of additional gold royalties.

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