Sandstorm Gold (SSL) Q2 2024 earnings summary

Executive summary

• Q2 2024 production was below budget due to temporary operational issues at several mines and delayed gold deliveries from Greenstone, but these are expected to rebound in the coming quarters.

• Despite lower production and revenue, strong gold prices drove record cash operating margins and robust revenue growth.

• Net income rose to $10.5 million from $2.7 million year-over-year, aided by higher investment gains and lower depletion expense.

• Sandstorm Gold Royalties operates a diversified, gold-focused royalty and streaming portfolio with over 230 royalties, 41 cash-flowing assets, and more than 30 development assets globally.

• Management is prioritizing debt reduction and share buybacks, supported by rapidly declining bank debt.

Financial highlights

• Q2 gold equivalent production totaled 17,414 ounces, with revenue at $41.4 million, down 17% year-over-year due to a 29% drop in ounces sold, partially offset by a 17% increase in average realized gold price.

• Achieved record cash operating margins of $2,043 per attributable ounce, with average realized gold price at $2,313/oz.

• Net income for Q2 was $10.5 million, up from $2.7 million year-over-year, aided by a $7 million fair value gain from the Versamet debenture settlement.

• Cash flow from operating activities (excluding non-cash working capital) was $32.6 million.

• Revenue mix: 67% from precious metals, 23% from copper, 10% from other commodities.

Outlook and guidance

• 2024 gold equivalent production guidance remains at 75,000–85,000 ounces, with expectations to reach 125,000–155,000 ounces annually within five years as Hod Maden and MARA come online.

• Greenstone mine is ramping up and expected to contribute 8,000–10,000 ounces annually once fully operational, with commercial production targeted for Q3 2024.

• Portfolio maturity will increase NAV in production from 55% in Q2 to 72% by end of next year, and nearly 90% by 2029.

• More than 80% of revenues are expected to come from gold by 2029, with a continued focus on precious metals.