Sandstorm Gold Ltd.

Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Sandstorm Gold Royalties Conference Call. 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 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 that time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. I would like to remind everybody that this call is being recorded today. November the 4th, 2021. And I would now like to turn the conference over to Mr. Nolan Watson. Please go ahead, sir.

Thank you, Michelle. Good morning, everyone, and thank you for calling into this third quarter earnings call for 2021. This morning, I'm going to provide an update on the company, including our official announcement about becoming a dividend-paying company, as well as answer some common questions that we've been getting from investors, and then Irfan, our CEFO, is going to walk us through the third quarter results, and then Dave Warren is going to provide a brief update on a few of the assets underlying our streams of royalties. After that, we'll turn it over to the operator for a question and answer, period. And if anyone has any questions that do not need to be part of a live Q&A, you can ask those through the web portal, and we'll ensure that each question we get there will get a direct response from us after the call. At this time, we'll be going through a prepared PowerPoint presentation on the web portal. So if you're able to, please turn your attention there now. First thing I would like to update everyone on, as it's usually the first question I get from investors during meetings, is the timing of the hog mod and EIA and the status of the project. My understanding is that the project has now successfully completed every single stage of the EIA process with flying colors and is simply awaiting a signature to be granted. As many of us who have been in the mining industry for a long time well know, Sometimes this last step takes a week, and sometimes it takes a few months, depending on how busy the government individuals are. Although we're disappointed with the delays, and as a Sandstorm shareholder myself, I'd much prefer to have that signature in hand, I'm happy that the project continues to move forward in many other ways, including other minor permits and government approvals that keep rolling in, and the project continues to take steps forward even during this time. In the meantime, Sandstorm continues to not only be realizing strong cash flow from our streaming and royalty portfolio, but we are finally at the long awaited point where our board has officially approved for Sandstorm to become a dividend paying company. This has been a long time coming, but I'm particularly excited to be able to share these details with you. What we've decided to do is initiate the quarterly dividend each and every quarter going forward. The first of these dividend payments will be paid to investors during Q1 of next year. The exact details of the record date as well as the payment date will be determined soon, and we'll send out a separate press release informing investors of those specific details. The dividend has been targeted initially at approximately a 1% yield per annum, which we feel walks the balance of us wanting to return some capital to shareholders and also sends the clear message that we are still a growth company. The bulk of our cash flow will still be used to grow the company aggressively. This 1% yield works out to approximately 2 cents Canadian per share per quarter, with Canadian shareholders receiving dividends in Canadian dollars and all of the shareholders receiving dividends in an equivalent value but denominated in U.S. dollars, meaning non-Canadian shareholders will be paid in U.S. dollars, but the amount will work out to be a bit less than 2 cents U.S. per share. Our plan with this dividend is to re-evaluate the payout ratio each and every year. with the belief that if we're able to execute our business model well over time, we will be able to demonstrate a long track record of annual dividend increases while maintaining ourselves as a growth company. I'm particularly excited about this milestone for Sandstorm, and I hope most of our shareholders are too. The next thing I would like to update shareholders on is another form of capital allocation that has continued to be relevant to Sandstorm, and that is share buybacks. As many of you know, we have a long track record of stepping into the markets, and purchasing our shares whenever we feel we're trading at an unjustifiably low valuation. And as our share prices come under pressure in recent months, we once again started repurchasing shares under our normal course issuer bid. In fact, we've now purchased approximately 4.4 million shares of Sandstorm during 2021, the vast majority of which have been purchased very recently in September and October. Over the past four years now, we have repurchased 19.9 million shares, which is over 10% of our company. We believe that the delay in the HODMOD and permit has provided us an opportunity to repurchase some shares at very cheap prices, and we've been very happy to do that over the past couple of months. And if our share price continues to stay in this range, we'll likely continue to pick away in the market. These shares we have repurchased over the past few years have been done at an average price of $5.40 U.S. per share, which we think is quite the bargain. The last common question I'll address this morning is what does our current deal pipeline look like and do we think we'll be able to continue to grow in this competitive environment? So I'll draw your attention to this next slide six. So far this year, we have completed three acquisitions for a total of $153 million U.S. From what I see in our pipeline, I think there's the possibility of another medium-sized deal in precious metals in the next two to three months. Depending on timing and if it closes by the year end, 2021 could be a record year of acquisitions for Sandstorm since inception. We have plans to continue to aggressively grow the company, and based on the potential deals we see in front of us, we're confident that we can do that. So far in 2021, we have allocated a total of $180 million U.S., with the bulk of that capital being for new acquisitions to grow the company, and with $27 million U.S. of that being allocated to share buybacks. Sandstorm's portfolio is generating enough cash flow that we can continue to grow the company and shrink the share float and initiate a dividend. I know that there's been a recent sell-off in gold equities around the world, and Sandstorm has been particularly hard hit, but we're pleased to be in the enviable position of growing the company and shrinking the share float and initiating a dividend. It isn't hyperbole to say that the fundamentals of Sandstorm's business are stronger than they have ever been and will continue to build up business for shareholders. With that, I'll hand it over to Irfan to discuss the quarterly results.

Thanks, Nolan. And thank you to everyone who's tuned in this morning. I'm going to take a few moments and review the highlights from the third quarter financials. On this first slide, we see the trend in revenue, attributable gold production, and average realized gold price over the last four quarters. During the third quarter, Sandstrom generated $27.6 million in sales and royalty revenue from its cash-flowing assets. This represents an increase of approximately 19% compared to the third quarter in 2020. The company sold approximately 15,500 attributable gold-equivalent ounces at an average realized gold price of $17.79. The slight reduction in ounces sold this quarter compared to Q2 was previously anticipated due to a few changes in production schedules of certain assets, which I will discuss in a minute. Regardless, Sandstorm is on track for another record year of production, with nearly 51,000 gold equivalent ounces sold for the nine-month period ended September 30, 2021. In fact, we're increasing the bottom end of our guidance and believe we'll hit 64,000 to 69,000 gold equivalent ounces in 2021. The next slide compares the third quarter of 2021 with the results of the third quarter in 2020. As I've mentioned, Sandstorm realized a 19% increase in revenue and sold 29% more gold equivalent ounces when compared to the third quarter in 2020. The increases were largely due to revenue attributable to the recently acquired Valley Royalty package. and an increase in revenue from various assets, such as the Fruita del Norte mine. In addition, the average price of copper and silver have increased by 49% and 36%, respectively, when compared to the same period in 2020, which contributed to the increase in gold equivalent ounces sold at our copper and silver royalty and streaming assets. Moving down the list, cash costs Per tribulant ounce was $238 for the third quarter, resulting in cash operating margins of $1,541 per ounce. Cash flows from operating activities, excluding changes in non-cash working capital, increased by 16% compared to third quarter in 2020, and net income was up slightly at $6.6 million. Taking a look at the production breakdown by asset on the next slide, you will note that the Yamana Silver Stream was a top contributor for the quarter. Cerro Morro, the underlying asset of the Yamana Silver Stream, contributed over 2,300 gold equivalent ounces in Q3. Despite leading the portfolio in production, silver deliveries were down slightly. Under the stream agreement, there is a lag of one quarter for silver deliveries from the Cerro Morro mine. For example, The attributable ounces in the third quarter is based on the mine's production in Q2. There are more of second quarter production was down slightly compared to the previous periods, partially due to site improvements that were originally slated for the second half of the year. This decrease in production was partially offset by the increase in silver price that I mentioned previously. It is worth noting that there's an annual cap of 1.2 million ounces of silver under the stream agreement. which works out to 300,000 ounces per quarter. If Sandstorm hits this cap in one quarter, but not all quarters, there is a true-up delivery that occurs at the end of the year, which will be realized in our first quarter production figures. The Chapada Copper Stream was another strong contributor to third quarter production. Compared to the third quarter in 2020, Chapada contributed over 80% more gold-equivalent ounces. This was largely due to the increase in the average selling price of copper over the last year. As I mentioned earlier, the newly acquired Valley Royalty Package was a large contributor to the company's production results. The long-life assets underlying this Royalty Package were a welcome addition to Sandstone's portfolio in June of this year. The other part of the deal announced in June was the Vatacoola Gold Stream. This transaction is expected to close in the fourth quarter, and we expect the fixed gold deliveries to begin soon thereafter. The next slide provides a breakdown of the third quarter production by region and metal type. Nearly 40% of gold accrual ounces were attributable to North America, and over half coming from South America, largely driven by Cerro Moro, Chapada, and the Valley Royalty Package. Looking at metal type, two-thirds of production came from precious metals, over half of which was gold. The 30% of production from base metals is largely driven by the company's copper assets in the Vale royalty package. Sandstrom remains focused on precious metals, and we continue to anticipate approximately 80% of revenue coming from gold and silver by 2024. Finally, I want to highlight the company's increased revolving credit facility that was announced in October. Sandstorm amended its revolving credit facility agreement, allowing the company to borrow up to $350 million U.S. With this new loan, Sandstorm became the first royalty company to establish an ESG-linked credit facility, and one of the first mining companies to have an internally customized KPIB-based facility. This loan incorporates sustainability-linked incentive pricing terms that allow us to reduce the borrowing costs as the company's sustainability performance targets are met. These performance targets include increasing the percentage of our investments that align with sustainability and climate-related reporting standards, as well as maintaining or improving certain external ESG ratings and diverse representation amongst senior management and board members. Since the beginning of Sandstorm, management has been committed to taking actual steps to improve ESG factors in our industry. And that's why we continue to be highly rated across so many of the different metrics that rate the companies in the industry. And I'm particularly pleased to be part of innovative solutions like this that benefit shareholders while also improving corporate responsibility. With that, I'll pass the mic over to Dave for some asset updates.