A Canadian-based organization focused on funding mining companies around the world with a current portfolio of over 250 mining projects, Sandstorm Gold Royalties, recently announced its first quarter highlights for 2023, including record attributable gold equivalent ounces of 28,368 ounces compared to 2022’s figure of 18,741 ounces. The release on May 10 featured numerous record figures, including the Q1 2023 revenue of $44 million compared to $35.4 million for the same period of last year.
Approximately 9% of Sandstorm’s gold equivalent ounces sold this quarter came from Canadian mines, 32% from North American operations (excluding Canada), 49% from South America, and 10% from other countries, including Africa, Asia, Australia, Europe, and Oceania.
The gold equivalent ounces sold from North American locations (excluding Canada) yielded 93% more resources compared to the first quarter of 2022. The company believes the primary driving factor behind this boost was the Mercedes mine in Mexico, which only just began delivering to Sandstorm in the second quarter of 2022. The Santa Elena mine in Mexico also displayed a significant increase in sales, offsetting the disappointing sale timing at the Relief Canyon mine in Nevada and Diavik mine in the Northwest Territories of Canada.
While Canada’s projects may have dipped by 20% since this quarter last year due to sale timing, results from North and South America clearly made up for it. South America also increased gold equivalent ounces by 22% compared to Q1 2022, with the biggest winners being the Antamina mine in Peru and the Caserones mine in Chile. Sandstorm acquired each of these projects after Q1 2022, explaining the significant increase, though the Fruta del Norte mine in Ecuador and the Aurizona mine in Brazil also yielded higher sales.
The Bonikro mine in Côte d’Ivoire and the Blyvoor mine in South Africa allowed the company to boost gold equivalent ounces sold from mines in other continents by 36%.
Not all of Canada’s projects lost sales this quarter, though. The CEZinc smelter in Quebec offset the region’s losses by increasing gold equivalent ounces. Sandstorm only recently acquired the CEZinc smelter in the Nomad Royalty acquisition in August 2022, along with the Bonikro and Blyvoor mines.
One of the largest record figures on the report may have been the cash flows. Sandstorm reported record cash flows from operating activities of $42.7 million compared to last year’s figure of just $26.7 million (excluding changes in non-cash working capital). The total sales, royalties, and income from other interests totaled a record $54 million compared to Q1 2022’s figure of $35.4 million.
Sandstorm’s cash cost per attributable gold equivalent ounce also went up a touch this quarter to $230, leading to cash operating margins of $1,652 per ounce. Last year in the first quarter, operating costs were a bit cheaper at $1,604 per ounce.
Sandstorm Gold Royalties increased its net income to $15.6 million this quarter compared to $9.1 million during the same period last year.
With this quarterly report, Sandstorm also announced that SSR Mining, the owner of the largest silver mine in Argentine, will assume operational control of Sandstorm’s Hod Maden Project through an agreement with Lidya Madencilik to acquire 40% interest in the operation. SSR Mining offers ample expertise with assets in the U.S., Argentina, Turkey, and Canada. Through the partnership with Lidya, the companies plan to further explore and develop the resources to unlock additional potential.
Based on Sandstorm’s existing revenues, the company forecasts 2023’s attributable gold equivalent ounces to total between 90,000 and 100,000 ounces. Within the next five years, Sandstorm expects attributable gold equivalent ounces to reach 125,000 ounces. The estimated sustainable average annual production over the next 15 years is set at 110,000 attributable gold equivalent ounces.
Given Q1 2023’s record report, each of these goals seems feasible enough. One major contributing factor to the company’s record sales, royalties, and income from other interests included a $10 million one-time contractual payment from the Mt. Hamilton royalty. This single payment equals approximately a 23% increase in attributable gold equivalent ounces sold, without even including the additional resources from the sale.
As gold demand continues to soar at extreme rates, we can expect to see more record reports from mining and royalty organizations for the rest of 2023. Karora Resources, Equinox Gold, Newcrest Mining, Victoria Gold, Lundin Gold, and others have all achieved their highest production rates on record this quarter to meet the growing gold demand rates. With gold creeping toward all-time price highs, it makes sense that the major players want to capitalize on this opportunity.
