HOD MADEN PRE-FEASIBILITY STUDY PRE-TAX NPV OF US$1.4 BILLION

Transcription

1 TH E G O L D STA N DA R D I N R OYA LTY I N V EST M ENTS JUNE 2018 HOD MADEN PRE-FEASIBILITY STUDY PRE-TAX NPV OF US$1.4 BILLION

2 CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION AND NON-IFRS MEASURES Except for the statements of historical fact contained herein, the information presented constitutes "forward-looking statements", within the meaning of the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business, operations and financial performance and condition of Sandstorm Gold Ltd. ( Sandstorm or the Company ). Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, the estimation of mineral reserves and resources, realization of mineral reserve estimates, the timing and amount of estimated future production. Forward-looking statements are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performances or achievements of Sandstorm to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Sandstorm will operate in the future, including the price of gold and anticipated costs. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, amongst others, gold and other commodity price volatility, discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries, mining operational and development risks relating to the parties which produce the gold Sandstorm will purchase, regulatory restrictions, activities by governmental authorities (including changes in taxation), currency fluctuations, the global economic climate, dilution, share price volatility and competition. Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, level of activity, performance or achievements of Sandstorm to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: the impact of general business and economic conditions, the absence of control over mining operations from which Sandstorm will purchase gold, other commodities or receive royalties from, and risks related to those mining operations, including risks related to international operations, government and environmental regulation, actual results of current exploration activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined, risks in the marketability of minerals, fluctuations in the price of gold and other commodities, fluctuation in foreign exchange rates and interest rates, stock market volatility, as well as those factors discussed in the section entitled Risks to Sandstorm in Sandstorm s annual report for the financial year ended December 31, 2017 and the Company s annual information form dated March 29, 2018 available at Although Sandstorm has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Sandstorm does not undertake to update any forward looking statements that are contained or incorporated by reference, except in accordance with applicable securities laws. Sandstorm has included certain measures in this presentation that do not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS). With respect to the Hod Maden project, these measures include (i) all-in sustaining cost per gold ounce on a co-product basis, (ii) all-in sustaining costs per gold ounce on a by-product basis and (iii) attributable gold equivalent ounce. As Sandstorm s operations are primarily focused on precious metals, the Company presents all three measures as it believes that certain investors use this information to evaluate the Company s performance in comparison to other mining companies in the precious metals mining industry who present results on a similar basis. Other companies may calculate these measures differently as a result of differences in the underlying accounting principles, policies applied and in accounting frameworks, such as in IFRS. The presentation of these 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. (i) With respect to the Hod Maden project, all-in sustaining cost per gold ounce on a co-product basis is calculated by removing the impact of other metals that are produced as a by-product of gold production and apportions the costs (operating costs, royalties, treatment and refining costs and sustaining capital) to each commodity produced on a percentage of revenue basis. These gold apportioned costs are then divided by the payable gold ounces produced. [(Operating Costs ($557.6m) + Royalties ($131.4m) + Treatment & Refining Costs ($164.9m ) + Sustaining Capital ($114.2m)) x Gold Revenue ($2,586.4m)/Total Revenue ($3,360.8m)] / Payable Gold Ounces (1,990k oz ) = $374/oz. (ii) With respect to the Hod Maden project, all-in sustaining cost per gold ounce on a by-product basis is calculated by deducting copper and silver revenue from the summation of certain costs (operating costs, royalties, treatment and refining costs and sustaining capital). The resulting figure is then divided by the payable gold ounces produced. [(Operating Costs ($557.6m) + Royalties ($131.4m) + Treatment & Refining Costs ($164.9m ) + Sustaining Capital ($114.2m) Copper Revenue ($771.8m) - Silver Revenue ($2.5m)] / Payable Gold Ounces (1,990k oz) = $97/oz Au. (iii) The Company s estimated royalty and other commodity stream income is converted to an attributable gold equivalent ounce basis by dividing the estimated royalty and other commodity stream income for the period by the estimated gold price per ounce for the same respective period. These attributable gold equivalent ounces when combined with the estimated gold ounces from the Company s gold streams equal total attributable gold equivalent ounces and may be subject to change. 2

3 Russia Hod Maden Summary Bulgaria Black Sea Georgia LOCATION Turkey OPERATOR Lidya Madencilik STAGE Development Turkey Hod Maden Iran SANDSTORM OWNERSHIP MINE TYPE Cyprus Syria Iraq 30% Interest, 2% NSR Underground Mediterranean ROYALTY MAP 7,394 ha Hwy Northern Extension Fault Zone High grade, low cost & low capex Resource Zone MainPOWER LI NES Southern Zone Pre-1923 Russian Mining Area Strong local operator 2 km Huge exploration upside 3

4 MINERAL RESERVES Effective Date May 31, 2018 CONTAINED Tonnes AuEq (g/t) Au (g/t) Cu (%) AuEq (koz) Au (koz) Cu (kt) Proven 4, ,600 Probable 4, ,895 Total Proven & Probable 9, ,495 1,191 1,418 2, NOTES: RESOURCES: NI Technical Report Hod Maden Project Pre-Feasibility Study, Artvin Province, Turkey; May 31, 2018; Webster, R. et al., AMC Consultants Pty Ltd. 1. The Mineral Reserve is estimated as of 31 May 2018 and using metal prices of US$1,250 oz Au and US$3.0 lb Cu. 2. CIM Definitions Standards (2014) were used in the preparation of the Mineral Reserve estimates. 3. Errors in the totals are due to rounding. 4. AuEq (g/t) is calculated as AuEq = Au g/t + [Cu % * (Metallurgical Recovery of Cu in % * Payable Cu in % * (Price of Cu in $/lb less realisation costs) less royalty * ) / (Recovery of Au in % * Payable Au in % * (Price of Au in $ per gram less realisation costs) less royalty)]. 5. Silver is not included in the AuEq calculation. It contributes only about 0.1% to the ore value. 6. The estimation was carried out using a cut-off grade of 2.60 g/t AuEq and a mining recovery of 95%. 7. Mineral Reserves are reported on the basis of mined ore to be delivered to the plant as mill feed. 8. Processing recovery and payable factors used were 77.1% and 93.9% respectively for gold and 94.2% and 95.0% respectively for copper. 9. Average planned and unplanned dilution factors of 12% and 6% respectively for Transverse LHOS and 44% and 10% respectively for longitudinal LHOS were assumed. 10. Exchange rate used is 3.78 TRY = USD $ Mineral Reserves are defined within an underground mine plan. See the PFS for key assumptions, parameters and methods used to estimate the Mineral Reserve. 4

5 MINERAL RESOURCES Effective Date May 31, 2018 Tonnes (kt) AuEq (g/t) Au (g/t) Cu (%) Ag (g/t) Main Area Measured 4, Indicated 4, Total 9, South Area Measured Indicated 2, Total 2, Total Area (Main and South) Measured Indicated 4,630 7, Total 11, RESOURCES: NI Technical Report Hod Maden Project Pre-Feasibility Study, Artvin Province, Turkey; May 31, 2018; Webster, R. et al., AMC Consultants Pty Ltd. NOTES: 1. Mineral Resources are stated as of 31 May 2018 and using metal prices of US$1,250 oz Au and US$3.0 lb Cu. 2. CIM Definition Standards (2014) were used for reporting of Mineral Resources. 3. The Mineral Resources are total and inclusive of any Mineral Reserves. 4. Errors in the totals are due to rounding. 5. The South Area is defined as being south of 4,542,025 mn. 6. No allowance has been made for any previous mining. 7. Mineral Resources that are not Mineral Reserves have not demonstrated economic viability. 8. See the PFS for complete list of key assumptions, parameters and methods used to estimate the Mineral Resource. 9. AuEq (g/t) is calculated as AuEq = Au g/t + [Cu % * (Metallurgical Recovery of Cu in % * Payable Cu in % * (Price of Cu in $/lb less realisation costs) less royalty * ) / (Recovery of Au in % * Payable Au in % * (Price of Au in $ per gram less realisation costs) less royalty)]. 5

6 PRE-FEASIBILITY STUDY HIGHLIGHTS AuEq Au Cu Average Annual Production 266 koz 200 koz 28 mlbs Average Grade 11.9 g/t 8.9 g/t 1.4% Average Recoveries 77% 94% Sandstorm s attributable annual average production estimated to be 80,000 gold equivalent ounces MINE LIFE 11 Years MILL CAPCAITY 900,000 tonnes/yr 6

7 PRE-FEASIBILITY STUDY HIGHLIGHTS All-In Sustaining Costs 1 Key Economics CO-PRODUCT BEFORE TAX AFTER TAX $374 Per Ounce NPV (5% discount rate) $1.4B IRR 60% Payback Period 1.3 Years NPV (5% discount rate) $1.1B IRR 50% Payback Period 1.5 Years Price Assumption: Gold $1,300/oz, Copper $3.00/lb 1 Refer to Non-lFRS Measures on Page 2 7

8 ALL-IN SUSTAINING COST COMPARISON 1 Co-Product Basis Hod Maden $97/oz by-product $374/oz co-product Fosterville Kumtor Canadian Malartic Musselwhite Young-Davidson Mulatos Macassa Los Filos Porcupine Detour Lake Eleonore Red Lake $0 $200 $400 $600 $800 $1,000 $1,200 1 All-In Sustaining Costs per ounce ( AISC ) figures are 2017 actuals per operator s disclosure. Hod Maden AISC (co-product basis) is estimated based on 2018 Pre-feasibility Study. Refer to Non-lFRS Measures on Page 2 8

9 PROJECT FINANCING ESTIMATE 65% of initial capex to come from debt financing. Sandstorm s contribution expected to be less than $30M $28.5M $177M $272M Total Initial Capex $66.5M Sandstorm Lidya Debt Financing 9

10 DEVELOPMENT TIMELINE Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Pre-feasibility Study Feasibility Study Permitting and Land Assembly Construction Commissioning Estimated production in 2022 Production 10

11 LEVERAGED TO METAL PRICES, RESILIANT TO INCREASING COSTS NPV Sensitivity (Post-Tax) $US in Billions NPV Sensitivity to: changes in Metal Prices changes in Operating Costs changes in Capital Costs $1.5 $1.4 ~ 31% US$1.4B $1.3 $1.2 $1.1 Base Case $1.0 $0.9 4% US$1.1B $0.8 5% 0% +5% +10% +15% Change in Sensitivity Factor 11

12 SANDSTORM S PRODUCTION PROFILE 140K 133% 120k 100k Industry Leading Growth 60K 80k 60k 40k 20k

13 TRADING AT A DISCOUNT TO PEERS EV/EBITDA Comparison 25x 20x Franco-Nevada 19x Royal Gold 20x 17x Wheaton 15x 14x Osisko 10x 5x 5x Sandstorm 0x

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