Sandstorm posts record gold sales in 2018

Yamana Gold’s Cerro Moro gold-silver mine is southern Argentina, which has one of Sandstorm’s many streaming agreements. Source: Sandstorm Gold Ltd.

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Yamana Gold’s Cerro Moro gold-silver mine is southern Argentina, which has one of Sandstorm’s many streaming agreements. Source: Sandstorm Gold Ltd.

Sandstorm Gold Ltd. [SSL-TSX; SAND-NYSE American] said Friday January 4 that it sold approximately 57,600 attributable gold equivalent ounces in 2018, the highest yearly total in the company’s history. That number includes approximately 14,150 attributable gold ounces sold during the fourth quarter of 2018.

Approximately 85% of the ounces came from operations run by major and mid-tier mining companies, Sandstorm said in a press release.

On Friday, Sandstorm shares eased 0.16% or $0.01 to $6.44. The 52-week range is $6.95 and $4.61.

Sandstorm is a royalty financing company that seeks to acquire gold and other metals purchase agreements and royalties from companies that have advanced stage projects or operating mines.

In return for making upfront payments to acquire a gold stream, Sandstorm receives the right to purchase, at a fixed price per ounce, or at a fixed percentage of the spot price, a percentage of the mine’s gold, silver and other commodity production for the life of the mine.

The company has a portfolio of over 188 royalties, producing cash flow from 20 producing mines. Other company assets include a US$225 million credit facility.

Sandstorm recently released the results of a pre-feasibility study on its 30%-owned Hod Maden gold-copper project, which is located in northeastern Turkey.

The study is based on proven and probable mineral reserves of 2.61 million ounces of gold and 129,000 tonnes of copper. That material should sustain annual production of 266,000 gold equivalent ounces over a project life-span of 11 years, the study says.

Up front capital costs are estimated at US$272 million, with an All-In Sustaining Cost of US$374 per ounce. Gold was trading Friday at US$1,283.70 an ounce on the spot market.

The pre-feasibility study contemplates Hod Maden as an underground mine that will utilize mechanized methods, including traverse and longitudinal long hole open stoping with paste backfill.

The main area will be mined from the bottom up in primary and secondary stopes with expected production of 900,000 tonnes annually and a total of 9.1 million tonnes of ore produced during the life of the mine.

The mine will be built in nearby Salicor Valley to avoid contact with existing roads and housing. A tailings storage facility and waste dumps will be located on surface as will a main office, 120-person camp, laboratory, storage and water treatment facilities.

Meanwhile, now that results of the pre-feasibility for Hod Maden have been released, the project can move towards the next stage of development. Majority operator Lidya Madencilik Sanayi ve Ticaret has commenced the permitting process and is currently working on a gap analysis and trade-off studies.

A feasibility study is expected to begin by the end of 2018, Sandstorm said.

Sandstorm President and CEO Nolan Watson said the company is committed to using current cash on hand as well as operating cash flow to fully complete its 10% share buyback plan.

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