Sandstorm Gold loses $74.6-million (U.S.) in 2013

2014-03-11 09:00 ET - News Release

Mr. Nolan Watson reports

SANDSTORM GOLD ANNOUNCES RECORD GOLD SALES AND REVENUE IN FOURTH QUARTER 2013

Sandstorm Gold Ltd. has released its unaudited results for the fourth quarter and year ended Dec. 31, 2013 (all figures are in United States dollars).

Fourth-quarter highlights (three months):

• Record revenue of $15.8-million;
• Average cash cost per ounce (1) of $407, resulting in cash operating margins (1) of $863 per ounce;
• Operating cash flow of $8.1-million;
• Net loss of $39.9-million, primarily due to a non-cash impairment charge of $52.2-million relating to the Serra Pelada gold stream.

2013 highlights (12 months):

• Record revenue of $59.8-million;
• Operating cash flow of $32.2-million;
• Average cash cost per ounce (1) of $420, resulting in cash operating margins (1) of $981;
• Net loss of $74.6-million;
• Acquired all of the outstanding common shares of Premier Royalty;
• Completed a $10-million loan to Luna Gold Corp. in accordance with a previously announced commitment to issue a non-revolving loan facility to Luna;
• Acquired a 1.0-per-cent net-smelter-return royalty on the Paul Isnard gold project located in French Guiana and owned by Columbus Gold Corp.;
• Acquired a 1.2-per-cent precious metal NSR on the Prairie Creek project located in the Northwest Territories, Canada, from Canadian Zinc Corp.;
• Amended the previously announced gold stream with Mutiny Gold Ltd. to a 2.6-per-cent gold stream on the Deflector mine;
• Entered into a streaming agreement with Entree Gold Inc. to purchase 25.7 per cent and 33.8 per cent of Entree's 20-per-cent share of the gold and silver produced from the Heruga and Hugo North Extension deposits in Mongolia.

Sandstorm president and chief executive officer Nolan Watson commented, "Amidst a challenging gold price environment in 2013, our streaming partners demonstrated the economic strength of their mining operations as the average all-in cost of the mines underlying our four key streams was close to $1,000 per ounce by the end of the year." Mr. Watson added, "Our focus is building shareholder value by growing and diversifying our production base and cash flow through the acquisition of streams and royalties."

Outlook

Based on the existing gold streams and including attributable production relating to the company's net-smelter returns, forecasted 2014 attributable production is between 40,000 gold-equivalent ounces to 50,000 gold-equivalent ounces, increasing to approximately 60,000 gold-equivalent ounces per annum by 2016. This growth is largely driven by the company's portfolio of gold streams with mines, most of which are either currently producing or expected to commence production by 2015.

Webcast and conference call details

A conference call will be held on Tuesday, March 11, 2014, starting at 8:30 a.m. PDT to further discuss the fourth-quarter and annual results. To participate in the conference call, use the dial-in numbers below. It is recommended that participants dial in five minutes prior to the commencement of the conference call. The webcast will also be available on the Sandstorm website.

Local/international: 647-788-4916

North American toll-free: 877-214-4966

Sandstorm's management's discussion and analysis, financial statements for the fourth quarter, and annual results will be accessible on the company's website and on SEDAR. The company has also completed a Form 40-F filing with the SEC that will be accessible on EDGAR. Shareholders can request a hard copy of the management's discussion and analysis and financial statements through e-mail.

(1) Sandstorm has included certain performance measures in this news release that do not have any standardized meaning prescribed by international financial reporting standards, including average cash cost per ounce of gold and cash operating margin. Average cash cost per ounce of gold is calculated by dividing the total cost of sales, less depletion, by the ounces sold. In the precious metals mining industry, this is a common performance measure but does not have any standardized meaning. The company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the company's performance and ability to generate cash flow. Cash operating margin is calculated by subtracting the average cash cost per ounce of gold from the average realized selling price per ounce of gold. The company presents cash operating margin as it believes that certain investors use this information to evaluate the company's performance in comparison with other companies in the precious metals mining industry that present results on a similar basis. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate these non-IFRS measures differently.