Sandstorm Gold Ltd.

good day 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 2022 third 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 will be no assurance that forward-looking statements will prove to be accurate and 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, then the number one on your telephone keypad. If you would like to withdraw your question, please press the star, then the number two. Thank you. Mr. Kazemi, you may begin your conference.

Thank you, Michelle. And thank you to everyone who's joining us today. This has been another record quarter, not just in terms of results, which I'll get into later, but it's also been a record in terms of transactions and acquisitions. As we mentioned in the last few conference calls, all of us at Sandstorm are truly excited about the foundation of portfolio we're creating. Over the last 10 months, we've made some big moves in terms of acquisitions and improving our royalty portfolios. Behind the scenes, the team has been there working tirelessly as we continue to build the new Sandstorm and solidify a clear vision for the company going forward. Right now as we speak, Nolan Watson is at a global summit meeting with various world leaders to discuss and see how Sandstorm can play a role in an ever-advancing world and one where energy transition is playing a more central role in business and in industry. As much as the regrets not being here today, exciting things are happening for the company and our shareholders. And we're excited to continue to share updates and videos on our progress, so you'll see more of those over the coming months. As you can see, in the third quarter, we completed multiple significant transactions, adding several new assets to the portfolio. And the financial results that we released yesterday are an early reflection of the hard work that has gone into increasing the size and quality of the company's portfolio. I'd like to start with a quick look at Sandstorm's balance sheet. The first column on this slide highlights Sandstorm's bank debt as of yesterday and investments in other mining companies. It's important to note that since we closed the Nomad acquisition, there were two large payments owed under the streaming agreements. one for approximately $56 million for the Platte Reef Stream and another for $82 million under the Greenstone Stream. While the exact timing of those payments were dependent on certain milestones being achieved, I'm happy to report that both those payments have now been made and there are no further upfront payments remaining. The $505 million drawn on a revolving credit facility not only accounts for the equity financing that the company completed in October, but as well as the two payments I mentioned earlier, meaning Sandstorm has over $120 million in credit capacity. As a management team, we're committed to focusing our efforts to debt repayment while also assessing any new creative opportunities that may present themselves. It's also worth noting that the significant investments that Sandstorm has in other mining companies, included in the $152 million worth of investments is the first to venture with Horizon Copper, which formed part of the consideration for the transfer of the HOP Modern interest and Entrez Resources equity stake. The column on the right shows estimated pro forma figures after the final component of the Horizon Copper deal closes. As you can see, after the Antamina NPI sale, Sandstone will hold nearly $300 million in investments in other mining companies. Of course, These investments are in addition to the portfolio cash flows that are brought and paid for in our existing royalties portfolio. The third quarter of 2022 was another record for Sandstorm in terms of both revenue and gold equivalent production. The company realized $39 million in revenue, a 41% increase compared to the same period in 2021, and sold 22,606 attributable gold equivalent ounces. 46% increase from the comparable period in 2021. These strong operating results were despite a decreasing commodity price environment. The average realized gold price from the company's streams was approximately $1,700 per ounce, which is nearly a 10% decrease from the second quarter in 2022. Rapidly rising interest rates around the world and depressed commodity prices can make for a very challenging market for many companies. However, I find some comfort in the fact that Sandstorms continue to break new records even in this environment. I'm also excited for when the tides inevitably turn and we see Sandstorms' portfolio benefit from more bullish commodity markets. Looking at the quarterly results in a bit more detail on this next slide, of the $39 million in total revenue, approximately $24 million was attributable to sales from the company's stream agreements. and approximately $15 million was royalty revenue. Average cash cost for the three months ended September 2022 was $323 per trivial ounce. This resulted in cash operating margins of $1,383 per ounce, a 10% decrease when compared to the third quarter of 2021. Cash flows from operating activities, excluding changes in non-cash working capital, was 50% higher than the comparable period in 2021, coming in at around $31 million. Sandstorm's net income for the quarter was $31.7 million, which included a $24.9 million gain resulting from the sale of the company's hot modern interest to Horizon Copper. Sandstorm received a flagship gold stream on the hot modern project, along with a portion of debt and equity in Horizon Copper in consideration for the transfers. With the Base Core Nomad transaction, Sandstorm added 30 new streams and royalties to its portfolio, 10 of which are now cash flowing to the company. This slide shows a breakdown of Sandstorm's streaming and royalty assets, and you'll see that we have several new additions on this list. Beginning with the largest contributor to gold equipment production during the quarter is the Cerro Moro mine under the Yamada Silver Stream Agreement. Sandstorm received and sold 122% more silver ounces from Cerro Moro during the third quarter when compared to the same period in 2021. This increase was partially offset by a decrease in the average selling price of silver. The second biggest contributor were the Mercedes mine in Mexico. Many of you will recall that Sandstorm completed a transaction with Bear Creek Mining at the end of 2021, which included a Goldstream agreement on the Mercedes mine. Deliveries to Sandstorm commenced in April 2022 under this agreement. In addition to the Sandstorm Goldstream, the company acquired additional streaming contracts through the Nomad acquisition. The gold equipment production attributable to Mercedes shown here includes deliveries from the Nomad agreements as well, which commenced after the completion of the acquisition in August 2022. Antimino Royalty is another addition to this list, which was acquired in the base core transaction that closed in July of this year. I would highlight the fact that Sandstorm currently owns the full 1.66% net profits interest. As the company announced in May 2022 and further discussed in a second quarter conference call, Sandstorm has agreed to transfer the Antimino Royalty of Horizon Copper and retain a silver stream and a residual royalty on the project as part consideration. This component of the Horizon Copper deal is expected to close in the coming months. In the interim, Sandstorm is receiving payments under the Antemina MPI. Other notable additions to this list are the Bonacro Gold Stream, an asset located in Cote d'Ivoire, the Blyvor Gold Stream in South Africa, and the Castellanos Royalty in Chile. In total, the new assets acquired in the no amount of base score transaction account for approximately 30% of Sandstorm's production for the third quarter. That's an immediate, meaningful increase to revenue, which should only increase as other assets from these transactions begin to cash flow to Sandstorm over the next several years. In terms of geographical breakdown of the third quarter's attributable ounces, 40% of production came from operations located in North America, with nearly half of that coming from Canadian mines. In total, the Americas accounted for over 85% of gold equivalent production. Clearly, it was a strong quarter for Sandstorm, and I'm pleased to say that the company is on track to meet its guidance of between 80,000 to 85,000 attributable gold equivalent ounces in 2022. Sandstorm continues to be a growth-oriented company, and we're forecasting over 80% growth by 2025. when we anticipate attributable gold equivalent production to be over 150,000 ounces. And with that, I'll turn it over to Dave for some asset updates. Dave?

Great. Thanks, Irfan. So, with the recent takeover activity on Yamana, I thought it would make sense to discuss two important assets we have that are operated by them. Starting with the MARA project in Argentina, with just over 56% owned by Yamana and the rest of 44%, just under 44%, owned by Glencore, just recently consolidated from Newmont. With feasibility study unpublished until next year, we have yet to have an estimated timeframe to production. However, in the background, activity is dynamic and it's clear that a number of groups beyond Sandstorm are keen on pushing this project forward aggressively. It's for reasons like the uncertainty of timing for MARA that we wanted to ensure Sandstorm's financial capability to make the ongoing stream payment when the project gets into construction. Looking back to the end of 2015 when this option was purchased, we did not have the balance sheet to do this on our own. But since then, Sandstorm has grown our credit facility and achieved a great cash flow growth profile. Having the foresight to negotiate this gold stream in 2015 prices, even though we didn't have the financial capacity at the time to complete it, we find ourselves today in a position to handily complete quarter billion dollar transactions because of our long-term focused financial planning. This is a very deep investment for us and a great bit of optionality for our shareholders. As a reminder, the MARA project is the amalgamation of the Agua Rica project and the Alhambra Mine. Utilizing the processing, infrastructure, and tailings storage at Alhambra, mine material from Agua Rica will be transported by conveyor to the mill. This project is a fundamental growth project within the AMANA's portfolio and has been key in justification of the offered takeover premiums. For the balance of 2022, the MARA Joint Venture is completing the feasibility study for release in the first half of 2023. However, more importantly, the JV is busily working with the Intergovernmental Commission of Catamarca on the Environmental and Social Impact Assessment. Definition of this document is expected to be filed by the end of 2022 with a final ESIA filed at a later date. Mara will be among the top 25 copper projects in the world when in production and expected to be one of the lowest capital intensity copper projects globally. Moving on, I'll give a bit of an update on Cerro Moro also within the Yamana portfolio of assets. Yamana has been speaking at length regarding the expansion potential of the project over the past year. Cerro Moro is a key component of what Yamana calls their 1.5 plan. to see a self-funded expansion of 50,000 to 60,000 ounces of gold equivalent production at the mine. The objective at Cerro Moro is to create a sustainable 10 years of production at a minimum of 160,000 ounces of gold equivalent per year. They're planning to achieve this through ore sorting, plant expansion, and potentially heap leach operations. Exploration success would also be required for this plan to be executed, but that's one of the aspects of Saramoro that we appreciated the most when we first looked at the project. The first plant expansion is underway with some small modifications expected to increase throughput to 1,500 tons per day. A further expansion to 2,200 tons per day is also planned as a Phase II program. Total capital for both expansion programs are estimated to be $30 to $40 million. Parallel to the plant expansions, there are ongoing tests to the heap leach potential at site. This would open up an entire new category of mineralization at the site that's never been considered resource. So what is emerging is a vision that we had of Saramora way back in 2015 when we completed this deal. With Yamana at the center of a number of takeover bids, clearly others are seeing the potential of having these assets within the portfolios of larger companies. This continues to demonstrate how Sandstorm takes an ultra-long-term view of our investments, attempting to envision how they perform under new management and new ownership. So with that, I'll pass over the call back to the operator, Michelle. To begin the Q&A, please feel free, of course, to ask questions about any of our streams and royalties.