Sandstorm Gold Ltd.

Good morning. My name is Joanna and I will be your conference operator today. At this time, I would like to welcome everyone to the Sandstorm Gold Royalty's 2022 Second Quarter Results 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 this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star then the number 2. Thank you. Mr. Watson, you may begin your conference.

Thank you, Joanna. Good morning, everyone, and thank you for calling into this Q2 earnings call. At Sandstorm, we've had a very, very busy summer so far, and so as part of this Q2 earnings call, I'd like to provide everyone with a brief corporate update before handing it over to Irfan, our CFO, to go over the specific Q2 results, and then to Dave to provide asset-specific updates on a few of our streams. There are four specific areas that I'd like to provide an update on this morning. And those are number one, the base core royalty package acquisition. Number two, the nomad royalty acquisition. Number three, the surfacing of value through the sale of underappreciated valuable assets to Sandbox. And number four, the sale of the hot modern interest and the taking back of a gold stream from Horizon Copper. So I'll start with the first one being the acquisition of base core. Sandstorm successfully closed the $525 million acquisition of the Base Core Royalty portfolio on July 12th. That deal is now officially closed. As part of that transaction, we successfully upsized our revolving credit facility to $500 million and partially drew down on it to close the acquisition. Once Horizon Copper is up and running, which I'll talk more about shortly, the next step will be to vend in the Antamina Royalty into Horizon and take back Silverstream, a smaller portion of the copper royalty unit to venture. And I figure that this transaction, the second step, will close sometime this fall. Next, moving on to the Nomad Royalty Company acquisition. This week, both Nomad and Sandstorm shareholders voted overwhelmingly to approve the acquisition, and we now have all of the governmental approvals that are required for the transaction, and we expect it to close on Monday, August 15th, so this coming Monday. I have to say, having over 99% of voting shareholders support the acquisition for both Sandstorm and for Nomad shows what a logical combination this is. And we believe that the new Sandstorm will become an even more attractive investment vehicle for large institutional investors looking for high quality, high upside, lower risk exposure to gold. Moving on to the next update, we have successfully surfaced a significant amount of shareholder value by selling underappreciated and undervalued royalties to Sandbox. And that transaction officially closed on June 29th. You may have noticed a substantial amount of net income in this quarter's financials due largely to a gain on the sale of royalties. And it is this surfacing a value transaction with Sandbox that was the source of most of that gain because we sold the royalties for more than what we paid for. And the final update, which is an important one, relates to the sale of our 30% hog mod in interest to Horizon and the taking back of a Goldstream and a DeVenture. This transaction required the approval of the TSX-V, and I am pleased to say that we now have that approval in hand, and we're expecting this transaction to close near the end of August. We had a lot of moving parts this summer, and going into summer, our goal was that while everyone else was on vacation, we would get all of these transactions completed, so that when everyone else came back to their desk in September, the new and improved Sandstorm would be ready to go with a clean and clear story. And honestly, I'm so, so proud of the work that our team has done over the summer. And I'd like to take this opportunity to thank them because they've been working so hard to get all of these deals done. And I know that both I and shareholders appreciate the hours they've been putting in to get all this done. So speaking of the new Sandstorm, I just have two quick slides to remind investors what we look like emerging from the summer. Not being We are a pure play streaming and royalty company. By 2025, we'll have nearly 90% of our revenue coming from precious metals. Our streams and royalties are on some of the highest quality assets in the industry, with over 60% of our streams and royalties on mines that can produce in the lowest cost quartile. Out of the majors and mid-tier royalty companies, we are the most diversified precious metal company in the world with respect to royalties. Only 38% of our value coming from our top five assets, whereas every other major and mid-tier royalty company has over 60% of their value coming from only five assets, which, if you think about it, is not very diversified at all. And we have the highest growth amongst our peers, with a dramatic increase in production and cash flow coming over the next few years. And you can see that increase in cash flow here. With the cash flow generated by our portfolio, we're expecting that to increase to approximately $170 to $180 million U.S. per year by 2025. We are very excited for what lies in store for us going forward. And with that, I'm going to hand it over to Irfan to go over the specific results. Thanks, Nolan.

And thank you to everyone who has joined us this morning. The second quarter of 2022 was another one for the record book. For those of you joining us on the webcast today, you'll see on this first slide the growth trend over the last four quarters in terms of revenue and production. Sandstorm continues to grow our production quarter after quarter. And with the addition of the base point Nomad Assets, the company is on track for another record-breaking year in terms of financial results. Let's look at the quarterly results in a bit more detail. Sandstorm's revenue for the second quarter was approximately $36 million, an increase of 36% compared to the second quarter of 2021. The increase was driven by several factors, including a 7% increase in the attributable gold equivalent ounces sold, totaling over 19,000 ounces, as well as a 4% increase in the average realized selling price of gold. Revenue was comprised of $23.8 million in sales from our stream assets and $12.2 million in royalty revenues. When comparing the same period in 2021, the company has several new cash-flung assets in our portfolio this year, namely the Mercedes Mine, which began stream deliveries in April 2022, and the Batacula Gold Stream, which began making deliveries in December 2021. The valet royalties that were purchased in June of last year also contributed to higher revenue this quarter. Our corporate development team has been very busy over the last 12 months, and it's nice to see these recent acquisitions providing meaningful contributions to Sandstorm. Despite a softening gold market in the latter half of the second quarter, Sandstorm's average realized gold price was $1,866 per ounce for the three months ended June 30th. The average cash cost per trivial ounce has remained below $300 for the last several quarters, which is indicative of the high-quality and low-cost assets that are underlying our stream and royalty portfolio. Cash flows from operating activities, including changes in non-cash working capital, total $21.9 million this second quarter, resulting in cash operating margins of $1,593 per trivial ounce, Net income for the quarter was nearly $40 million. Net income was higher compared to the same period in 2021, driven by higher revenue, as well as a $22.9 million gain, mostly driven by the disposal of royalty assets that were sold to Sandbox Royalties in June 2022. For consideration for the portfolio of nine royalties, Sandstone received 34 million shares of Sandbox, a $15 million cash payment, and the $31.4 million convertible promissory note. Nolan mentioned, with the creation of Sandbox Royalties, Sandstorm respects the surface value from certain assets that were not receiving the warranted value in our existing portfolio. Additionally, Sandstorm recognized a $12.5 million gain resulting from the sale of the company's equity interest in Entrez Resources to Horizon Copper, which completed in May. During the second quarter, Sandstorm sold 19,276 attributable gold-cone ounces. This slide lists the top assets by production. Under the Yamana Silver Stream, the Saramoro Mine was the top contributor for the quarter, followed by the Chapada Copper Mine. The Chapada Copper Stream benefited from an increase in the average realized sound price of copper in the second quarter of 2022, compared to the second quarter of 2021. as well as a 64% increase in the number of copper pounds sold. Previously mentioned, we've added a few new assets to this list over the past year, which has contributed to the increase in attributable gold production. Namely, the addition of the Mercedes-Benz Gula Gold Streams along with the Vale Royalties. Production attributable to the Dyvik Royalty also contributed to the increase compared to the same period in 2021. which was driven by an increase in diamond prices, as well as some nuances of the timing of sales. Taking a look at the regional breakdown on the next slide, nearly 90% of production in the second quarter was attributable to operations in the Americas. Cerro Moro, Chapada, Futsal Del Norte, and Valet were the primary drivers of production in South America, while Relief Canyon, Santa Elena, Dyavik, Mercedes, and Black Fox were the larger contributors of production in North America. Geographical diversification has always been an important consideration when building and growing Sastron's portfolio. We have some incredible royalty assets around the world, and with the assets from the Base Core Nomad transactions, we've added a number of high-quality assets located in several stable mining jurisdictions.