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Sandstorm Gold .(SAND) - 2024 Q4 - Earnings Call Transcript
SANDSandstorm Gold .(SAND)2025-02-19 20:41
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Financial Data and Key Metrics Changes - In Q4 2024, the company reported strong revenue of 47millionandoperatingcashflowof47 million and operating cash flow of 36 million, driven by gold equivalent production of 17,721 ounces, which is consistent with previous quarters [5][34] - Total revenue for 2024 was approximately 176million,despiteadropinattributablegoldequivalentouncessoldfrom97,000ouncesin2023toapproximately73,000ouncesin2024[34][35]−Cashcostsin2024were176 million, despite a drop in attributable gold equivalent ounces sold from 97,000 ounces in 2023 to approximately 73,000 ounces in 2024 [34][35] - Cash costs in 2024 were 275 per attributable ounce, resulting in cash operating margins of approximately 2,100perounce,leadingtostrongcashflowsfromoperatingactivitiesof2,100 per ounce, leading to strong cash flows from operating activities of 139 million [36] Business Line Data and Key Metrics Changes - The Greenstone mine began production, contributing approximately 2,000 gold ounces in 2024, with expectations of 8,000 to 10,000 ounces per year once at full capacity [40] - The Bonikro stream was a top contributor in 2024, benefiting from higher grades and optimization efforts, with minimum annual deliveries expected between 4,000 and 6,000 ounces in 2025 and 2026 [41] - At the Antamina mine, operations were extended through to 2036, with potential throughput expansion of up to 40% anticipated [45] Market Data and Key Metrics Changes - Attributable production in 2024 was predominantly from South America (45%), followed by North America (35%), and other countries (20%), with 75% of production being precious metals [49] - The company expects increasing gold exposure as Greenstone ramps up and other gold streams begin contributing over the next few years [49] Company Strategy and Development Direction - The company plans to increase share buybacks significantly, prioritizing this over debt reduction once debt falls below 300million[30][81]−Long−termproductionisexpectedtoincreasetoover150,000goldequivalentouncesperyearoverthenextfiveyears,drivenbyramp−upsatGreenstoneandotherdevelopmentprojects[18][51]−Thecompanyisfocusedonmaintainingastrongbalancesheetandcapitalallocationstrategy,withaconservativeguidancerangefor2025of65,000to80,000ounces[12][51]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgedthat2024wasadipyearinproductionduetoseveralminesunderperforming,butexpressedconfidenceinfutureproductionincreasesandcashflow[9][10]−Themanagementemphasizedtheimportanceofconservativeguidancetoavoidmissingtargetstwoyearsinarowduetofluctuatinggoldprices[12][104]−Thecompanyisoptimisticaboutthefuture,withexpectationsofstrongcashflowsandpotentialupsidesurprisesbasedonmarketconditions[16][22]OtherImportantInformation−Thecompanyhasreduceditsdebtfrom300 million [30][81] - Long-term production is expected to increase to over 150,000 gold equivalent ounces per year over the next five years, driven by ramp-ups at Greenstone and other development projects [18][51] - The company is focused on maintaining a strong balance sheet and capital allocation strategy, with a conservative guidance range for 2025 of 65,000 to 80,000 ounces [12][51] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2024 was a dip year in production due to several mines underperforming, but expressed confidence in future production increases and cash flow [9][10] - The management emphasized the importance of conservative guidance to avoid missing targets two years in a row due to fluctuating gold prices [12][104] - The company is optimistic about the future, with expectations of strong cash flows and potential upside surprises based on market conditions [16][22] Other Important Information - The company has reduced its debt from 640 million to 340million,withexpectationstodropbelow340 million, with expectations to drop below 300 million by mid-2025 [26][29] - A buyout option for the Vatukoula stream has been agreed upon, which could lead to a recovery of capital and profit for the company [27] Q&A Session Summary Question: What was the motivation behind the Vatukoula stream and royalty buyback? - The operator had been insolvent, and a larger Chinese company is coming in as a shareholder on the condition that they buy out the stream [70] Question: What gives the team confidence in incorporating Gualcamayo into formal guidance? - The operator is a well-capitalized multi-billion dollar Argentinian company, and the upfront capital required is manageable [73] Question: What are the priorities once the company hits the $300 million debt threshold? - The priority will be share buybacks, followed by debt reduction and potential acquisitions [81] Question: What type of deal opportunities could impact Sandstorm? - The company is not looking at significant deals currently, focusing instead on smaller opportunities that could yield substantial returns in the future [84] Question: What is the timeline for deposits related to the MARA project? - The option is indefinite until a Board-approved decision is made to start building the mine, which would trigger the payment structure [88] Question: What is causing the expected drop in production in 2027 and 2028? - The drop is attributed to the Woodlawn stream, which is capped and will see a significant reduction in contributions after 2027 [96]