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 Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. 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 one on your telephone keypad. If you would like to withdraw your question, please press star two. Thank you, Mr. Watson. You may begin your conference.

Thank you, Joanna. Good morning, everyone, and thank you for calling into our Q2 earnings call. As usual, in a few minutes, I'll hand things over to Irfan, our CFO, to review our quarterly financial earnings and highlights. And before I do that, I would like to give a brief update out of our business and specifically hone in on four key points. Those being, number one, an explanation of our Q2 production, which was below budget. Two, a status of where our debt is and is expected to be by the end of the year. Three, an update on our share buyback plans. And four, and finally, I'd like to talk about our next steps of growth as a company. So with respect to number one in our Q2 production, I would describe it as an uncharacteristically weak and hopefully unlikely to reoccur quarter. During the second quarter, there were a number of temporary effects that caused the quarter to be below our expectations, including Arizona having problems with its Biaba pit, Cerro Moro and Chapada moderately underperforming, and Greenstone taking longer to begin delivering first goal to Sandstorm than originally budgeted. But I would like to reassure everyone that each of these items are all temporary and not only are we expecting these mines to rebound, the Greenstone mine is now up and running and delivering gold to Sandstorm under our stream. We did not receive any material amounts from Greenstone in Q2. However, even here in July and now into August, we're seeing the ounces starting to come from that gold stream. So Q3 should be our first quarter with some Greenstone production. And as they continue to commission and ramp up their mine, our gold sales will ramp up correspondingly. One of the other reasons for the dip in gold equivalent production in Q2 relates to the recent significant increase in the price of gold relative to silver and copper. Specifically, our annual gold equivalent ounce production estimates were based on $1,800 per ounce gold, which was close to the gold price at the time that we set our budgeted numbers. Now that the gold price has increased significantly above $2,400 an ounce, it means that our silver revenue and copper revenue turns into fewer gold equivalent ounces at this high gold price. In fact, our Q2 gold equivalent ounces are lower by more than 2,000 ounces just from this pricing effect of converting copper and silver into gold equivalent ounces. I, for one, though, I'm not going to complain about high gold prices. And as gold prices are now around $2,500 almost, we're still expecting, even with these high gold prices, our 2024 gold equivalent ounces to be between 75,000 to 85,000 ounces per year. with these figures expected to increase eventually to 155,000 ounces per year once both HODMOD and ANMARA have been built. This is nearly a 100% increase in gold equivalent production over the next five years. Point number two, the status of our debt. We continue to use the majority of our cash flow to pay down our debt, and as I said here this morning, our debt balance is down to $383 million U.S., and therefore our goal of getting debt down to $350 million by the end of the year is well on track. And that leads me to point number three, which is because of high gold prices, we've been able to not only bring our debt down as anticipated, we have also been able to simultaneously buy back some of our own shares. We have a small share buyback plan in place, which is approximately 10,000 shares per trading day, as long as we're not in blackout. For example, today we are in blackout because of the earnings release, so we can't buy shares today. But on Monday, we'll be back in the market buying small amounts of shares. This plan may change from time to time, as we are currently focusing the majority of our cash flow on paying down debt and will continue to do so with the goal of getting our balance sheet ready for our next lake of growth, which brings me to my final point, four. We are in a fortunate position to already own growth assets in Greenstone, Platte Reef, Robertson, and Hodmodden, and we have the right to purchase the Mara Stream, which we anticipate doing. These assets should nearly double our production from where we are today. So the future is bright at Sandstorm. If you take a look at this slide, which is our current best estimate of our top seven assets by value, you can see that four of these seven assets were not even in production yet during this Q2 results that we're talking about this morning. Odd Modern, Platte Reef, Greenstone, and Morrow will all be very important contributors to Sandstorm's future, and we're looking forward to that very bright future. Another way of looking at it, is that in Q2 of this year, only 55% of Sandstorm's NAV was in production. By the end of next year, that number should be up to 72% as Greenstone ramps up and Platte Reef comes online. And then by 2029, we expect 88% of our NAV to be in production. Our portfolio is maturing quickly. And as a reminder of the cash flow generating capacity of that portfolio, you can see that once those ramp ups do happen by 2029, We expect our portfolio to be able to generate after-tax cash flows of close to a quarter billion dollars per year. Now, we're continuing to pay down our revolving debt facility, and as we do that, we're opening up room on it for potential future acquisitions that would grow our production even further, and we're starting to once again look at such potential transactions. What I want to emphasize, however, is that we are not contemplating any transactions that would cause us to have to raise equity. We want to decrease our share count, not increase it. And also, we're not contemplating any transactions that would cause us to have to draw down too much on a revolver to the point where we would no longer be comfortable buying back our own shares. Overall, I want to be clear that with our significant free cash flow, we are still predominantly focused on debt reduction with the purpose of recharging our balance sheet so we can eventually begin our next leg of acquisition growth and grow from a position of financial strength while avoiding dilution. We are very fortunate to be in this position to be able to do this while having a nearly 100% increase in production coming from our existing portfolio. It's a good place to be. And with that, I'll hand it over to Irvin.

Thanks, Nolan. Looking at the financial results for the three-month period ended June 30th, gold equivalent production totaled just over 17,400 trivial ounces. Nolan mentioned there were a few factors that resulted in slightly softer production numbers when compared to the previous quarters. Some of these I'll discuss in a little minute, but the company remains on track to achieve a trivial production between 75,000 and 85,000 gold ounces in 2024. Stronger gold prices boosted revenues during the second quarter, where the company recognized over $41 million. Elevated commodity prices have been a welcome tailwind against the mining industry in the first half of this year. While during the second quarter, the Sandstorm realized average gold prices of $2,313 per ounce from the company's gold streams and achieved a new record for cash operating margins of over $2,040 per trivial ounce. As Nolan discussed, shareholders have a lot to look forward to over the next few years as the company's portfolio continues to mature. Over the near term, we anticipate stronger production as the Greenstone mine continues to ramp up following its first gold ore in May. The Greenstone Gold Stream was purchased as part of the company's acquisition of Nomad Royalties in 2022 and is one of the most material development assets from that acquisition to come online. Once fully ramped up, Greenstone expected to contribute between 8,000 and 10,000 gold ounces annually to Sandstorm. Quarterly revenue was comprised of $25.8 million in sales from streaming contracts and $15.5 million in royalty revenue. With strong operating margins, the company had $32.6 million in cash flow from operating activities, excluding changes in non-cash working capital. These exceptional cash flows continue to support our effort in deleveraging the company's balance sheet. Debt repayment has been our primary focus over the last 24 months following various asset acquisitions in 2022. During the second quarter, the company made net debt repayments of $27 million on its revolving credit facility. And as Nolan mentioned, we have $383 million debt outstanding as of now and an undrawn and available balance of $242 million. Net income for the quarter was $10.5 million compared to $2.7 million for the comparable period in 2023. The increase was partially driven by a fair value revaluation gain of approximately $7 million as a result of the settlement of the company's debenture due from Versamet Royalties, which was formerly known as Sandbox Royalties. The debenture was settled by way of conversion to common shares of Versamet, resulting in the gain. In June, Versamet announced a transaction with B2 Gold, which subsequently values Versamet at nearly $300 million. The settlement of Sandstorm's debenture highlights the next step in daylighting value for Sandstorm shareholders, which was the underlying investment thesis back in 2022. As previously disclosed, Sandstorm renewed its normal course issuer bid in May and was actively buying back shares throughout the second quarter. After the three months ended June 30th, the company bought back and canceled nearly 460,000 common shares for a total consideration of $2.5 million. Subsequent to quarter end, the company has purchased approximately 90,000 additional shares, while not in blackout. We expect this level of buyback activity to continue for the remainder of the year, as Nolan mentioned, and we're pleased to once again be able to return capital to shareholders via share buybacks in addition to our quarterly cash dividend. Gold equivalent ounces for Q2 reflected lower production at some of the underlying assets in the portfolio when compared to the second quarter in 2023. Attributable production at Saramoro reflected decrease in head grades and the corresponding decrease in silver sales. This was partially offset by an increase in the average realized selling price of silver, which is approximately $28 compared to $25 per ounce in the second quarter of 2023. The realized selling price of silver is reflective of the silver market in early April, as Sandstrom typically receives its materials silver deliveries, including deliveries from Saramoro, early in the quarter. In April, Equinox reported displacement of material in the Piaba pit at the Arizona mine, resulting in restricted access to the pit. As a result, Equinox paused mining at Piaba to establish a remediation plan. Milling and gold production continued from ore stockpile through April, while mining activity commenced at the Arizona Tatajuba pit, which is also within Sandstorm's royalty claim. Equinox anticipated ramp-up of mining activities at Tatajuba to boost ore for plant feed in June going forward. Partially offsetting the decrease in sales and royalty revenue was the 56% increase in the number of copper pounds sold from the Chapada copper mine. The average realized selling price of copper also increased to $4.22 per pound compared to $4 per pound in the same period in 2023. Finally, taking a quicker look, or a quick look, at a breakdown of our attributable gold equivalent ounce sold during the second quarter, over 80% of our ounces sold came from operations in the Americas, 17% of which came from operations in Canada. We expected this to increase over the coming months and years as Greenstone ramps up to commercial production. Sandstorm continues to be a precious metal focused company with nearly 70% of retrieval production coming from precious metal and only increasing more with time. While our material copper assets, Chepata, Antimida, and Caceronis continue to provide excellent exposure to our preferred base metal. And with that, I'll pass it over to Dave for a few updates.