Sandstorm Gold Announces Financial Results for Q1, 2014

Sandstorm Gold Ltd. (“Sandstorm” or the “Company”) (NYSE MKT: SAND, TSX: SSL) has released its unaudited results for the first quarter ended March 31, 2014 (all figures in U.S. dollars).

First Quarter Highlights

• Strong balance sheet with over $110 million in cash.
• Revenue of $15.3 million.
• Attributable Gold Equivalent ounces sold1 of 11,966 ounces, which includes 1,849 of attributable gold ounces from our portfolio of royalties.
• Average cash cost per ounce1 of $355 resulting in cash operating margins1 of $923 per ounce.
• Operating cash flow of $9.2 million (excluding changes in non-cash working capital).
• Net income of $3.8 million.
• Exercised option to purchase an amount equal to 20% of the gold produced from the Santa Elena underground mine. In consideration and as complemented in the original purchase agreement, Sandstorm agreed to make an upfront payment of $10 million which represents approximately 20% of the upfront capital expenditures relating to gold production and will continue to make ongoing per ounce payments equal to $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 $450.

Sandstorm’s President and CEO, Nolan Watson commented, “Most of the mines underlying Sandstorm’s gold streams are in production and ramping up, which has helped to offset the effects of the current gold price environment that we find ourselves in.” Watson continued, “We expect to see consistent production over the next few quarters and as we continue to add to our cash balance, our focus is to put that cash to use by acquiring new streams and royalties.”

Financial Results

Revenue and Gold Sales
Revenue was $15.3 million in the first quarter of 2014, generated from the sale of 11,966 attributable gold equivalent ounces. Revenue declined slightly compared with the comparable period in 2013, largely due to a 22% decrease in the average realized selling price of gold which was partially offset by a 27% increase in the number of attributable gold equivalent ounces sold.

Costs and Expenses
The average cash cost per attributable ounce was $355 during the period, resulting in a cash operating margin of $923 per ounce. Compared to the first quarter of 2013, the cash operating margin decreased by 26%, driven by a lower average realized gold price. The Company is on track to meet its cost reduction commitments, decreasing administrative expenses by $1.1 million and project evaluation by $0.4 million compared with the comparable period in 2013.

Earnings and Operating Cash Flow
For the three months ended March 31, 2014, net income and cash flow from operations were $3.8 million and $9.2 million (excluding changes in non-cash working capital), respectively, compared with a net loss and cash flow from operations of $17.6 million and $9.0 million (excluding changes in non-cash working capital) for the comparable period in 2013.

Balance Sheet
Total assets increased by $20.6 million from December 31, 2013 to March 31, 2014 primarily resulting from operating cash flows and the exercise of warrants, which were partially offset by depletion expense. At the end of the first quarter, the Company had $111 million in cash and cash equivalents and working capital of $112.8 million. In addition, the Company has $100.0 million in available capital under its revolving bank debt facility.

Streams and Royalties

The Company’s stream and royalty segments for the three months ended March 31, 2014 are summarized in the table below:

Attributable gold equivalent ounces sold were 11,966 in the quarter, an increase of 27% from the comparable period in 2013. The increase is largely attributable to increased production from Luna Gold Corp.’s (“Luna”) Aurizona mine in Brazil (“Aurizona”) and Metanor Resources Inc.’s (“Metanor”) Bachelor Lake mine in Quebec (“Bachelor Lake”), partially offset by a decrease in production from Primero Mining Corp.’s Black Fox mine in Ontario.

Aurizona Mine
Sandstorm sold close to 4,000 ounces of attributable gold from Aurizona during the quarter representing a 23% increase from the first quarter of 2013. The increase is largely related to Luna’s continued ramp up of operations and progress towards the Phase 1 Expansion. Luna is well capitalized as they closed a $20 million equity financing in February 2014, have $4.2 million in committed capital coming from Sandstorm for the Phase 1 Expansion project and subsequent to the end of the first quarter, Sandstorm advanced a $10 million loan to Luna as part of a previously announced $20 million loan commitment ($10 million was advanced in 2013).

Bachelor Lake Mine
Compared to the first quarter of 2013, an additional 1,261 gold ounces were sold from the Bachelor Lake Mine . The increase is primarily related to the mine recently reaching commercial production and the continued ramp up of operations. Metanor recently announced positive results from its underground drilling campaign at Bachelor Lake. The intention of the campaign is to increase the resources at the mine.

Black Fox Mine
Attributable gold ounces sold from the Black Fox Mine decreased by 35% compared to the first quarter of 2013. The decline is primarily driven from insufficient underground development resulting in lower production during the three months ended March 31, 2014. Primero, the new owner/operator of the mine, recently announced that it intends on spending over $40 million on capital projects and exploration activities at Black Fox in 2014. The objective is to increase underground production such that 120,000 ounces of gold are produced annually from the mine. Primero also intends on achieving a mining and processing target of approximately 1,000 tonnes of ore per day by the end of 2014.

Outlook

Based on the existing gold streams and NSRs, attributable gold equivalent production for 2014 is forecasted to be between 40,000 to 50,000 attributable gold equivalent ounces, increasing to approximately 60,000 attributable 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 Friday, May 2, 2014 starting at 9:00am PDT to further discuss the first quarter results. To participate in the conference call use the following dial-in numbers:

Local/International: 647-788-4916
North American Toll-Free: 877-214-4966

It is recommended that participants dial in five minutes prior to the commencement of the conference call. To access an audio webcast of the conference call, use the following link:http://momentumstreaming.com/player/index.php?id=109048. The webcast will also be available on the Sandstorm website.

Sandstorm’s Management's Discussion and Analysis (MD&A) and Financial Statements for the first quarter will be accessible on the Company’s website and on SEDAR at www.sedar.com. The Company has also completed a Form 6-K filing with the SEC that will be accessible on EDGAR at www.sec.gov/edgar.shtml. Shareholders can request a hard copy of the MD&A and Financial Statements by emailing [email protected].