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 2024 First 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 or 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 one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you, Mr. Watson. You may begin your conference.

Thank you, Joanna. Good morning, everyone, and thank you for calling into our Q1 earnings call. As usual, in a few minutes, I'll hand things over to Irfan, our CFO, to review our quarterly earnings highlights. Before I do that, I would like to take the time to give an update of our business with a specific emphasis on our capital allocation plans in this current high gold price environment. And in doing so, I want to talk about a few key points. Those being number one, how much cashflow we're making at these high gold prices, how much growth we have built into our portfolio and therefore how much more cashflow we're expecting to make in the future. Number two, how quickly our debt has been coming down. how that continued reduction in debt is accelerating not only because of high gold prices but because of the non-core asset sales processes that we've completed number three the status of the non-core asset sales processes i want to talk about where we are what we've achieved and what shareholders can expect going forward number four i want to remind people of the growth that we have coming online now and over the next few years then Finally, I want to talk about capital allocation priorities and specifically share buybacks versus additional growth. So starting with number one and how much cash flow we're making, you can see from this slide that at today's gold prices, we're expecting our portfolio to generate close to $165 million of cash flow. And as other assets come online, like Greenstone, Flat Reef, Robertson, Odd Modern, and Mara, We expect that cash flow to grow to over a quarter of a billion dollars per year within five years time. It's my belief that these new gold prices are, generally speaking, here to stay. And although there will certainly be more short-term volatility in the gold price, that the fundamental forces that have been driving gold higher are generational themes of geopolitical tensions, wars, inflation, currency debasement, U.S. dollar de-dollarization of global trade, etc. And these themes over the long term will continue to push gold higher. And if I'm right, this means that Sandstorm is making much more money than anticipated, and our shares are worth much more than they're trading at. That brings me to my second point. For a long time now, many of you know I've been wanting to buy back our shares in the market. And as some of you may have noticed, we recently filed a CDI report showing that we've recently bought back a few shares in the market. Our debt is now coming down so fast, We feel our balance sheet is now strong enough that we should be buying back some of our own shares. We've just announced the renewal of our normal course issuer bid. And our debt as we sit here today is already down to $408 million. And we've just announced that we've signed an agreement to sell a few non-core, non-precious metals royalties to a company called Evolve for $21 million in cash. And we expect this transaction to close in Q2. So these proceeds combined with our anticipated cash flow for the remainder of Q2 I mean, we expect to have our debt down to approximately $375 million by the end of this quarter. When you compare that $375 million to our substantial cash flow from our portfolio, I can now confidently say that we have low leverage, and that leverage is dropping rapidly as our debt evaporates. Because of this, we are now confident enough to resume repurchasing our own shares in the market. Having said that, Our plan is still to use the bulk of our cash flow to continue paying down debt and recharging our balance sheet so that we can set the stage for our next leg of growth. I'm a big believer that gold prices are going to stay high and go higher, and therefore we want to find more gold streams and royalties to purchase. I do think it's important to note, however, that we think our shares are worth so much more than what they're trading for. Therefore, we're not at all considering any growth that would require equity convertible to ventures or any other forms of delusion our goal is to buy back shares and shrink our share float so that any growth we have will be paid for from operating cash flow or from a revolver we are also now proud that our balance sheet is once again strong and we plan on keeping it that way in the past we have grown sandstorms sometimes in jarring ways for shareholders and we believe that those days are behind us and that our shareholders can expect smoother sailing going forward and growth that is more methodical and measured that does not require equity. I have to say, as a large Sandstorm shareholder myself, I'm excited for this next leg of growth, and I believe it will be done in a way that's rewarding to shareholders. That brings me to my third point. Just briefly, I'd like to provide a bit of color on the non-core asset sales process. As you know, we had guided the market that we would complete asset sales for a minimum of $40 million in cash proceeds. We had already completed $20 million of that, and with this latest sale to evolve of $21 million in cash, We've now completed our minimum objective of 40M. This latest and last sale of assets was the culmination of many months process run by RBCB involving many different royalty companies. Many of the offers we received during the bidding process were for non conforming people bidding on assets that weren't for sale. And although it was flattering to see how much people wanted to pay for some of our core royalties in the end, we wanted to keep all of our core royalties and we only wanted to part with a copper MPI a handful of other non-precious metal royalties that don't move the deal for sandstorm shareholders for what it's worked it's my view that we started this non-core asset sale process at lower commodity prices and when we had higher debt levels and we were trying to be conservative with our balance sheet but it's clear to me now we're making so much money we aren't being served well by over conservatism and we do not need to sell any streams or royalties going forward i anticipate that these are the last royalties that we'll consider selling and that our portfolio is locked down And the only things we're considering doing is adding to it for new gold streams and new royalties that will make our company stronger going forward. Having said that, we will continue over time to sell our non-core debt and equity investments that we have in other mining companies and use those proceeds to accelerate our debt repayment so that we can recharge our balance sheet and get ready for our next leg of growth in gold. Brings me to my fourth point, which is speaking about growth. I want to remind shareholders of the five great gold streams and royalties that we have coming online over the next several years, being the Greenstone mine, which should be pouring gold next month. The Platte Reef mine that our technical team just got back from, they should be pouring gold next year. The Barracks Robertson mine, SSR's Hodmodern mine, Glencore's Mara mine. Sandstorm shareholders have a lot of built-in growth to look forward to. And at these gold prices, we plan on making lots of money for shareholders. It really is a good time to be a Sandstorm shareholder. We have a strong asset base and a number of key catalysts coming up, including evaporating bank debt, chair buybacks, Greenstone and Platte Reef coming online, PodModden getting into construction, and our corporate development team is once again out there trying to plant the seeds for our next leg of growth. The future is bright at Sandstorm. And with that, I'll hand it over to Irfan to review the quarterly details.

Thank you, Nolan. With the rapid rise in commodity prices and with gold and silver hitting all-time highs, the first quarter of 2024 has brought a renewed sense of optimism and excitement to the mining industry. We are seeing many positive developments from our royalty portfolio as operators and exploration companies accelerate investment in their projects. In terms of Sandstorm's first quarter financial results, we are off to a solid start to the year. With just over 20,300 a trivial gold equivalent ounce is sold, the company is right on track to achieve its production guidance for 2024, which is between 75,000 and 90,000 gold equivalent ounces. The average realized gold price for the quarter was $2,062 per trivial ounce. It's worth noting that the company received some of its more material stream deliveries at the beginning of the quarter. In Q1, gold and silver prices made more material moves upward towards the end of the quarter. Sales from our streaming contracts totaled $27.2 million, and royalty revenue was $15.6 million, for total quarterly revenue of $42.8 million. Cash operating margins remained strong, coming in at $1,782 per trivial ounce for the three-month period. That is an 8% increase in cash operating margins compared to the same quarter in 2023. Resulting cash flows from operating activities excluding changes in non-cash working capital were 32.6 million for the first quarter. Net of a $10 million one-time contractual payment related to the company's Mount Hamilton royalty that was recognized in the first quarter of 2023, cash flows were relatively consistent year over year. The company had a net loss of $3.9 million for the three-month period ended March 31 compared to net income of $15.6 million for the comparable period in 2023. The change was primarily driven by a decrease of $10 million in contractual income related to the Mount Hamilton royalty that I mentioned, as well as a fair value changes in the revaluation of the company's investment into ventures. As Nolan just discussed, higher commodity prices are having a positive impact on the company's cash flows, which helps expedite our deleveraging efforts. During the first quarter, we were able to make net payments of $20 million on the company's revolving credit facility, and we ended the quarter with bank debt totaling $415 million. Subsequent to quarter end, we have continued debt repayment, and as of yesterday, Sandstrom's net debt was approximately $405 million. With the closing of the non-core sales transaction announced yesterday that Nolan mentioned, we expect our bank debt to be well below $400 million in the coming months. Looking at a breakdown of our assets and where production came from during the quarter, the Bonnechrome mine in Cote d'Ivoire was the top producer. This was largely due to the timing of sales, whereby approximately 800 gold ounces were delivered towards the end of the fourth quarter and subsequently sold in Q1 2024. The company streams on the Chapada mine and the Cerro Moro mine continue to be in Sandstorm's list of top producing assets. In February, Lundin Mining announced a 25% increase in mineral resources at Chapada's Suava deposit. I want to highlight that attributable production from the Antemina copper mine in Peru was lower in the first quarter compared to the previous quarters. The decrease is related to the nature of the MPI that Sandstorm holds, whereby there was a reduction in the royalty payment due to a one-time adjustment to the asset retirement obligation at the Antamina mine to reflect updates relating to the recently approved mine plan and other working capital adjustments. Despite this one-time adjustment affecting Sandstorm's quarterly revenues attributable to Antamina, the underlying benefit to Sandstorm is the extension of operations at Antamina. and the proposed processing capacity expansion of the mine, which should further increase the already long-dated nature of this incredible asset. Sandstorm is well positioned to take advantage of an environment of rising gold, silver, and copper prices. In the first quarter, nearly 75% of the gold equivalent ounces sold were attributable to gold and silver mines, while 15% of attributable gold equivalent ounces came from copper mines. As Nolan discussed, cash flows are expected to be strong this year, and we're excited to see some of our key development assets come online over the coming months and years. I'll leave it there and turn the mic over to Dave for some portfolio highlights. Dave?