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Sandstorm Gold Exercises Underground Mine Option at Santa Elena

Vancouver, British Columbia | February 25, 2014

Sandstorm Gold Ltd. (“Sandstorm” or the “Company”) (NYSE MKT: SAND, TSX: SSL) is pleased to announce that the Company has exercised its underground mine option (“Underground Option”) with SilverCrest Mines Inc. (“SilverCrest”). The Underground Option allows Sandstorm to purchase 20% of the gold produced from underground at SilverCrest’s Santa Elena Mine in Sonora, Mexico (“Santa Elena”). For consideration, Sandstorm will make a US$10 million payment to SilverCrest and will continue to make ongoing per ounce payments equal to US$350 until 50,000 ounces of gold have been delivered to Sandstorm (inclusive of ounces already received from open-pit production), at which time the ongoing per ounce payments will increase to US$450.

Sandstorm’s CEO Nolan Watson commented, “The Santa Elena stream has generated significant value for Sandstorm shareholders and we are glad to continue our involvement in the project for the life of the underground operation.”

Santa Elena Development Update

The construction of a 3,000 tonne per day mill at Santa Elena is nearing completion and SilverCrest is expecting to commission the plant during the second quarter of 2014. The initial mill feed will be from open-pit operations, transitioning to an underground and heap leach pad ore mix in the third quarter of 2014.

Recent delineation drilling was completed underground at Santa Elena to better define underground resources and verify widths and grades for the planned production stopes to be mined. The results of 1,590 metres of drilling confirmed high-grade mineralization, with 21 holes averaging 8 metres in thickness at 2.08 grams per tonne (gpt) gold and 130.5 gpt silver. The most significant assay results from this underground drilling program are shown in the table below and interval widths are considered near-true thickness. As Santa Elena progresses into an underground operation further delineation drilling will be completed to continue to verify production stope reserves.

Hole ID
From (m)
To (m)
Interval (m)
Au gpt
Ag gpt
SEUG-13-01
49.1
52.4
3.3
4.76
100.9
includes
49.1
50.4
1.3
8.67
107
SEUG-13-02
56
63.9
7.9
2.21
165.5
includes
56.9
60
3.1
2.83
341.5
SEUG-13-03
76.9
90.3
13.4
2.23
138.8
includes
78.4
84.9
6.5
3.6
212.9
SEUG-13-04
93.7
108.9
15.2
2.91
131.7
includes
103.5
106.1
2.5
10.83
306.6
SEUG-13-05
63.5
70.5
7
2.86
148.1
includes
66.5
67.5
1
4.99
195
SEUG-13-06
62
67.9
5.9
1.92
110.9
SEUG-13-07
78.4
90
11.6
5.83
232.5
includes
81
85.5
4.5
12.2
407.4
includes
83.2
84.3
1.2
21.7
572
SEUG-13-08
39.2
47.5
8.3
2.37
95
includes
40.3
41.4
1
1.84
326
includes
45
46.4
1.4
6.7
140
SEUG-13-09
42.3
53.6
11.3
1.45
102
includes
45.7
47.2
1.5
0.91
337
SEUG-13-10
51.3
53
1.7
0.12
33.5
SEUG-13-11
49.2
66.5
17.3
1.51
125.3
includes
54.1
55.6
1.5
0.52
560
SEUG-13-13
38
43.1
5.1
0.97
70.9
SEUG-13-14
51
60
9
1.61
165.7
includes
52.8
56
3.3
1.97
334.2
SEUG-13-15
42.8
53.1
10.3
1.84
136.5
includes
48
49.7
1.7
1.61
447
SEUG-13-16
36.2
41.6
5.4
1.23
60.9
SEUG-13-17
56.9
62.4
5.5
0.35
26.4
SEUG-13-18
58.7
64.9
6.2
2.2
434.8
includes
62.6
63.7
1.2
6.44
1450
SEUG-13-19
59.7
63
3.3
0.34
24.4
SEUG-13-20
36.6
42.9
6.3
0.66
48.6
SEUG-13-21
40.9
51
10.1
1.2
89.1
includes
42.9
44
1.1
3.56
98
SEUG-13-22
34.5
39.2
4.7
0.88
53.7
Weighted Ave.
8
2.08
130.5

Note: All numbers are weighted averages, uncut, undiluted and rounded.

The Qualified Person under NI 43-101 for this News Release is N. Eric Fier, CPG, P.Eng, President and Chief Operating Officer for SilverCrest Mines Inc., who has reviewed and approved its contents.

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