Earnings call transcript: Sandstorm Gold Q2 2025 beats estimates, stock rises

Sandstorm Gold Ltd. reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.05, slightly above the forecast of $0.0475. The company’s revenue reached $51.4 million, outperforming projections of $50 million. Following the announcement, Sandstorm’s stock rose by 3.15%, closing at $13.99, reflecting positive investor sentiment. According to InvestingPro analysis, the company maintains impressive gross profit margins of 44.13% and shows strong liquidity with a current ratio of 1.84, indicating robust financial health.

Key Takeaways

• Sandstorm Gold exceeded EPS and revenue forecasts for Q2 2025.
• The company reported a 24% increase in total revenue year-over-year.
• Stock price increased by 3.15% post-earnings announcement.
• Net income saw a significant 61% increase year-over-year.

Company Performance

Sandstorm Gold demonstrated robust performance in Q2 2025, with total revenue increasing by 24% year-over-year. The company sold 15,100 attributable gold equivalent ounces (GEOs) and benefited from a strong gold price environment. Net income rose by 61% compared to the same period last year, highlighting effective cost management and operational efficiency.

Financial Highlights

• Revenue: $51.4 million, up 24% year-over-year.
• Earnings per share: $0.05, exceeding the forecast of $0.0475.
• Net income: $16.9 million, a 61% increase year-over-year.
• Operating cash flow: $37.7 million.

Earnings vs. Forecast

Sandstorm Gold’s EPS of $0.05 exceeded the forecast of $0.0475, resulting in a 5.26% surprise. Revenue also surpassed expectations, coming in at $51.4 million against the projected $50 million, marking a 2.84% surprise. This performance reflects the company’s strong operational execution and favorable market conditions.

Market Reaction

The company’s stock rose by 3.15% following the earnings announcement, closing at $13.99. This increase reflects positive investor sentiment, driven by the earnings beat and strong financial performance. The stock’s current price is within its 52-week range, with a high of $14.46 and a low of $6.98. InvestingPro data indicates the stock is currently in overbought territory based on RSI indicators, while maintaining strong return metrics over various timeframes. For comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Looking forward, Sandstorm Gold expects the Royal Gold acquisition to complete in Q4 2025, which is anticipated to enhance its portfolio diversification. The company is also forecasting a production increase in the second half of 2025, with ongoing exploration and asset optimization efforts.

Executive Commentary

CEO Nolan Watson stated, "This transaction gives an immediate value bump and solidification of value to our investors." CFO Yifan added, "We delivered another record quarter in terms of revenue and operating margin," highlighting the company’s strong financial performance.

Risks and Challenges

• Volatility in gold prices could impact revenue and profitability.
• Integration risks associated with the Royal Gold acquisition.
• Potential geopolitical risks in regions where the company operates.
• Exploration and production challenges in expanding mining activities.

Sandstorm Gold’s Q2 2025 results reflect a strong financial performance and positive market reception, underpinned by strategic initiatives and favorable market conditions.

Full transcript - Sandstorm Gold Ltd. (SSL) Q2 2025:

John, Conference Operator: Good morning. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the SunStorm Gold twenty twenty five Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. Please be aware that some of the commentary may contain forward looking statements.

There can be no assurance that forward looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. After the speakers’ remarks, there will be a question and answer session. If would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number 2. Thank you.

Mr. Watson, you may begin your conference.

Nolan Watson, CEO, Sandstorm Gold: Thank you, John. Good morning, everyone, and thank you for calling into our Q2 earnings call. Morning, I’ll give an update on the sale of our business to Royal Gold as well as a quick reminder of why we like this transaction so much. Then I’m going to hand it over to Urfan, our CFO, to discuss the specific financial results and then Dave Oram to provide some asset specific updates. Overall, Sandstorm continues to recognize very strong cash flow with over US38 million dollars of operating cash flow in Q2.

Since the announcement of the acquisition of Sandstorm by Royal Gold, we’ve had a positive response from our shareholders and based on those conversations, we do not expect any challenges getting the required votes to complete the transaction from the Sandstorm side. And I’m told the response from Royal Gold institutional investors appears to be positive as well, so we’re looking forward to completing this transaction likely in Q4. The next step in the transaction is for Royal Gold to file their preliminary proxy statement, I understand is currently expected within the next week. After that, there will be a period of time for SEC comments, if any, and once the comment period is complete, Transform and Horizon will file our information circulars and all three companies will go to shareholder vote, after which we will complete the transaction. Our best estimate of timing to complete everything is somewhere toward the middle to end of Q4.

As we’ve been discussing the transaction with our investors, the story has been resonating and again the highlights as to why are because this transaction gives an immediate value bump and solidification of value to our investors, It maintains our exposure to gold. It improves the portfolio maturity and provides meaningful long term re rating potential, as well as diversification. Once this transaction is complete, Royal Gold will have an industry leading portfolio of diversified high quality and long life assets with growth potential. Their portfolio will have over 80 cash flowing royalties and streams and a total of nearly 400 royalties and streams. One of the things that I like most about the transaction is the diversification it brings to both Sandstorm and Royal Gold investors.

The main previous knock about Royal Gold was that it had the least diversification of the majors with the highest percentage of their NAV coming from their top 10 assets. Specifically, prior to announcing the Sandstorm acquisition, 79% of their NAV came from their top 10 assets. Now, after the Sandstorm acquisition, as well as the $1,000,000,000 Kansanshi Goldstream acquisition they recently announced, their top 10 assets now only represent 61% of their value, which puts their diversification approximately the same as Franco Nevada’s and more diversified than Wheaton, both of which trade at material NAV premiums to Royal Gold. When you look at the list of the top 11 assets that Royal will have pro form a this transaction, it is an impressive list, with no one asset being more than 12% of NAV and the list comprising of Mount Milligan, Kinsanchi, Pueblo Viejo, Cortez, Anacollo, Comacao, Podmodon, Platreef, Antamina and Mara. The dream list of quality anchor assets.

We’re looking forward to working to close this transaction over the coming months. With that, I’ll hand it over to Irvin.

Yifan, CFO, Sandstorm Gold: Thank you Nolan. Turning to the financial results for the three month period ended June 30, Sandstorm delivered another record quarter in terms of revenue and operating margin. Total revenue for the second quarter was $51,400,000 a 24% increase compared to the same period last year. This was driven by strong realized gold prices, which averaged over $3,300 per attributable ounce from our gold stream. Sandstorm sold approximately 15,100 attributable gold equivalent ounces in Q2, which was a decrease year over year in part due to the outperformance of gold relative to other commodities, which reduces the gold equivalent conversion of our copper and silver streams.

We also expect production to be slightly weighted the second half of the year based on operator guidance at certain assets, which I’ll discuss in a minute. Despite lower GEOs compared to Q1, the strong gold price environment offset this impact, driving our record revenue and operating margin. During the quarter, average cash cost per tubular ounce was $350 resulting in record cash operating margins of $2,981 per ounce. Robust operating cash flow of $37,700,000 excluding changes in non cash working capital, continued to support our deleveraging efforts, and the company made net debt repayments of $25,000,000 during the quarter. We ended the quarter with net income of $16,900,000 a 61% increase year over year.

Sandstorm’s attributable production in the 2025 totaled 33,590 GAA, and we continue to forecast full year production to be between 65,080 GEO. At Chapada, production in the second quarter was impacted by lower recoveries due to increased processing of lower grade stockpiles. However, Lundin Mining expects production in the latter half of the year to benefit from higher grade ore. On the exploration front, the Suave deposit, located 15 kilometers north of Chapada, represents a compelling growth opportunity and a pre feasibility study is underway and expected by year end. Another solid quarter of production from Bonacro was driven by increased throughput and operational improvements.

Allied Gold expects production stripping in the 2025 to expose higher grade material for the 2025 and for the full years 2026 and 2027. Allied Gold also continues to focus on exploration activities at several targets located on Sandstorm’s area of interest. At Greenstone, production continues to ramp up after achieving commercial production in November. Equinox Gold reported nearly 95,600 ounces of gold produced in the 2025, and full year guidance has been adjusted to be between 02/60000 ounces, which is in line with Sandstorm’s internal estimates, which is factored into our annual guidance range. Sandstorm received and sold nearly 1,200 ounces from Greenstone in Q2, and we expect this to increase in the second half as optimization efforts continue.

Equinox is implementing a comprehensive improvement plan, with continued ramp up through the remainder of the year. We saw increased mining activity on our royalty ground on the Hounde Gold Mine in Q2, which positively impacted attributable royalty revenue. Endeavour Mining is now sourcing ore from the Kari West Pit, with supplemental feed from Vindaloo Main and Vindaloo North, all within Sandstorm’s royalty claim. Furthermore, exploration at Vindaloo Dietz is ongoing with a maiden underground resource expected in the 2026. Sandstorm also received its first silver deliveries from the Woodlawn mine subsequent to quarter end.

Developed Global, the operator, reported that the site commissioning is proceeding to plan and ramp up is in line with the project schedule. Looking at the breakdown of our production by region and metal type, approximately 45% of attributable GEOs in Q2 came from South America, 34% from North America, including 19% from Canada, and 21% from other jurisdictions. On a metals basis, 82% of GOs were from precious metals, with copper contributing 11% and other base metals making up the remaining 7%. This distribution continues to reflect our strong exposure to gold and silver while maintaining meaningful leverage to copper. And with that, I’ll turn it over to Dave for a look at some of Sandstorm’s development assets.

Dave?

Dave Oram, Executive/Asset Specialist, Sandstorm Gold: Great. Thanks, Yifan, and good morning, everyone. Today, I’ll focus on a couple of projects in our pipeline map, starting with Greenstone, as Fran just talked about. So since Q1 twenty twenty five, Equinox’s Greenstone mine has demonstrated very clear improvements in production output and operational efficiency. In Q2 twenty twenty five, gold production from Greenstone rose to 51,274 ounces, up to 44,449 ounces from Q1.

This 15% quarter over quarter increase indicates that ramp up efforts are very much yielding results. Higher production was driven by mining more ore and more efficient milling process and processing. By mid-twenty twenty five, Equinox reported mining rates at Greenstone reached about 175,000 tonnes per day, roughly 25% higher than the average rate in Q1. This acceleration of mine output makes a substantial improvement from all previous quarters. Alongside mining rate improvements, the mill throughput and gold recovery rates have been improving as well.

While the company acknowledged that year to date processing performance is still below the ideal plan, the trend is positive. The processing plan is handling increased volume and extracting gold much more efficiently. This solid output of close to 96,000 ounces in the last two quarters positions Greenstone where it belongs at the top of Equinox’s portfolio. Even more improvements are anticipated in the coming months as operational optimizations continue. The project’s trajectory is clearly upward, evidenced by the quarter on quarter gains and expectation of even stronger results in that latter half of twenty twenty five.

At Plant Reef, first feed of ore into the phase one concentrator is scheduled to take place Q4 twenty twenty five, targeting initial production rates of around 100,000 ounces of platinum, palladium, rhodium and gold. As the project progresses to phase two and phase three expansions, Platte Reef is projected to be one of the largest and lowest cost PGM producers worldwide. Phase two life of mine costs are estimated to be $599 per ounce of platinum, palladium, rhodium and gold, which compares very well to the current spot basket prices of these same four precious metals of approximately $1,600 per ounce. On May 8, underground development commenced in ore for first time. The ore is being stockpiled on surface and will be used in the phase one concentrator ramp up in the coming months.

Shaft 3 is on schedule to be ready to hoist from Q1 twenty twenty six, which not only supports the phase one ramp up, but will also play a key part in the future phase two expansion. Of course, a key part of the phase two expansion is completion of Shaft 2, which now raised boring completed to nine fifty meters depth and the process of widening to the final 10 meter diameter is set for early twenty twenty six. Together, these two shafts will have hoisting capacity of over 12,000,000 tonnes per year. Overall, the development is on schedule and while phase one ramp up is imminent, the project is preparing for phase two targeting late twenty twenty seven. I was going to finish my asset update on this, but just didn’t feel right considering the extraordinary exploration results recently released by Lundin Gold on Fruta Del Norte.

Lundin Gold’s exploration program has delivered outstanding results since Q1, uncovering new high grade gold zones and even a new copper gold system. Near mine drilling is extending the known deposit, notably at FDN South and Eastside with multiple bonanza grade intercepts confirming additional gold resources. These successes have prompted Lundin to significantly expand its 2025 drill campaign as the company moves to convert these discoveries into reserves and extend Fruta’s twelve year mine life. Conversion drilling at Fruta Del Norte South returned some of the highest grades ever recorded at Fruta. For example, intercepts of 139.5 grams gold over nine meters and 43.8 grams gold over 9.8 meters.

These results confirm that the rich vein system continues to the south of the current mine with new gold zones discovered outside the previous resource model. Engineering studies are underway to integrate FDNS into the mine plan, potentially adding many more years into Fruta’s production profile. Drilling at FDNS East, a new target just 100 meters east of the mine, has expanded the mineralized zone with hits like 6.6 grams over 10 meters of depth. Multiple sub parallel veins have been delineated and the latest holes confirm that gold mineralization remains open to to the north, indicating room for further growth. I think these results successfully demonstrate FDN East as a significant new gold system that has a great chance of becoming the next new ore body adjacent to the main deposit.

Beyond the epithermal gold system, exploration has uncovered a large copper gold porphyry system at Tranquilloma, evidenced by a remarkably broad intercept of 0.5% copper equivalent over eight fifty eight meters. Additionally, drilling at Bonanza Sur outlined a broad near surface gold zone, for example 101.1 grams over 162 meters, suggesting a sizable mineralized envelope that may connect with Tranquiloma system. These finds highlight a district scale potential around Fruta Del Norte with geologists now eyeing other targets like the nearby Castillo and Sandia prospects for similar mineralization. Spurred by these successes, Lundin has expanded its twenty twenty five drill program from 80,000 meters to 108,000 meters. 17 drill rigs are active on-site.

Certainly the largest annual drill campaign ever at FRUDA, but also the largest in all The Americas and probably the entire world. So with that, I’ll pass the call over to the operator, John, and we can begin the question and answer period.

John, Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the number two.

If you’re using a speakerphone, please lift the handset before pressing any keys. Once again, it is 1 if you wish to ask a question. As a reminder, if you have any questions, please press 1.

Nolan Watson, CEO, Sandstorm Gold: Sounds good. Looks like there are no questions. And, as normal, we’ll be here. If anyone has any follow-up questions, we’ll be in the office. So thanks everyone for calling in, and have a good day.

John, Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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