Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sandstorm Gold Ltd (SAND, Financial) reported strong revenue of over $41 million for Q2 2024, boosted by elevated gold prices.
- The company achieved a new record for cash operating margins of over $2,040 per gold equivalent ounce.
- Sandstorm Gold Ltd (SAND) is on track to achieve its annual production target of 75,000 to 85,000 gold equivalent ounces for 2024.
- The Greenstone mine has started delivering gold, with production expected to ramp up in Q3 2024.
- The company has successfully reduced its debt to $383 million and aims to bring it down to $350 million by the end of the year.
Negative Points
- Q2 production was below budget due to temporary issues at several mines, including Aurizona, Cerro Moro, and Chapada.
- The delay in Greenstone mine's gold delivery impacted Q2 results, with no material amounts received during the quarter.
- The increase in gold prices led to a decrease in gold equivalent ounces from silver and copper revenue, affecting overall production figures.
- Aurizona mine faced operational challenges, including displacement of material in the Piaba pit, affecting production.
- The company is still in the process of paying down significant debt, which limits its ability to make large acquisitions in the near term.
Q & A Highlights
Q: Your stated goal is to get the debt down to $350 million by the end of the year. Given current gold prices and cash flow, is there any stretch goal that you think is achievable?
A: Yes, the goal is to get it below $350 million by the end of the year. With strong commodity prices, we are buying back shares even before reaching that target. If strong prices continue, we hope to get it below $350 million and continue buying back shares.
Q: Have there been any conversations with mine operators wanting to buy back streams on their own assets given the current gold prices?
A: No, we do not engage in such conversations. If a mining company asks to buy back a stream or royalty, we say no quickly, and they stop asking.
Q: Following on debt reduction, do you have any longer-term targets beyond 2024?
A: Once we are below $350 million, we will continue to pay off debt as quickly as possible. Our goal is to get the number as low as possible before making significant acquisitions, ensuring we grow methodically and from a position of strength.
Q: Is your deal size still mostly within the range of $100 to $300 million?
A: Yes, for now, we are looking at deals that are $100 million or less. As we continue to pay down debt, that number will grow.
Q: What is the company's expectation for gold equivalent ounces (GEOs) in the second half of the year from Aurizona?
A: We expect production to get back closer to normal for the back half of the year, though maybe not quite up to Q1 levels.
Q: When in 2025 should we expect Sandstorm to start receiving royalty payments from the Valley Royalties, Southeastern System?
A: Payments are semi-annual, so it will align with the next semi-annual payment once it kicks in.
Q: Where is the Evolve royalty sale on the balance sheet given the uncertainty?
A: The original transaction was $20 million in two payments. The first $15 million has been paid and closed. The second $5 million may or may not close, and there is no Evolve sitting in our investments.
Q: Can you clarify the valuation of Versamet, given the $300 million valuation mentioned?
A: The $300 million references enterprise value. The amounts in investment associates are carried at cost and do not reflect market-to-market revaluation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
