Mr. Nolan Watson reports
SANDSTORM GOLD ROYALTIES RELEASES HOD MADEN PFS AND INCREASES PRODUCTION GUIDANCE
Sandstorm Gold Ltd. has provided a summary of the results from the Hod Maden prefeasibility study (PFS). All figures are in U.S. dollars and are on a 100-per-cent project basis unless otherwise stated. Sandstorm has a 30-per-cent interest in the Hod Maden project.
Prefeasibility study highlights
Economics:
Pretax net present value (NPV) (5-per-cent discount rate) of $1.4-billion and an internal rate of return (IRR) of 60 per cent; After-tax NPV (5-per-cent discount rate) of $1.1-billion and an IRR of 50 per cent; All-in sustaining costs are estimated to be $374 per ounce on a co-product basis; Upfront capital cost of $272-million;
Reserves:
Proven and probable mineral reserves of 2.61 million ounces of gold and 129,000 tonnes of copper.
Production:
Mine life of 11 years with average annual mill throughput of 900,000 tonnes; Annual average production of approximately 266,000 gold equivalent ounces; Average head grade of 11.9 grams per tonne gold equivalent.
"Hod Maden was discovered only three years ago and has since made remarkable progress towards production at a pace that few projects in the mining industry could match, and Sandstorm is pleased to be partnered with one of the best Turkish mining operators," said Nolan Watson, president and chief executive officer of Sandstorm. "The PFS outlines total production of more than 2.6 million gold equivalent ounces over an 11-year mine life and with the byproduct credits from copper, we expect gold to be produced at a low all-in sustaining cost. The current financing plan is 65 per centdebt financing, leaving Sandstorm's capital contribution at less than $30-million. I look forward to continued development at Hod Maden, and, as further exploration and technical work is completed, we expect this resource base to grow even larger than currently outlined."
SUMMARY OF KEY PARAMETERS AND PROJECT ECONOMICSMill capacity 900,000 tonnes per yearMine life11 yearsAverage annual productionGold: 200,000 ouncesCopper: 12,600 tonnes Total production Gold: 2,030,000 ouncesCopper: 122,800 tonnesAverage recovery rate Gold: 77 per centCopper: 94 per centAverage head gradeGold: 8.9 grams per tonne Copper: 1.4 per cent All-in sustaining cost Co-product: $374 per ounce Upfront capital$272-millionBase-case commodity price assumption Gold: $1,300 per ounce Copper: $3 per pound NPV (5-per-cent discount rate) Pretax: $1.4-billion After tax: $1.1-billionIRR Pretax: 60 per cent After tax: 50 per cent Payback period (from start of production) Pretax: 1.3 yearsAfter tax: 1.5 years
The PFS contemplates Hod Maden as an underground mine utilizing mechanized methods, including transverse 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 mine production of 900,000 tonnes per year and a total of 9.1 million tonnes of ore produced during the 11-year mine life. Ore processing contemplates a single-stage crush, various stages of milling, bulk-flotation roughing, various stages of copper cleaning and regrind to produce a single copper concentrate containing gold. That concentrate will be transported to the Hopa port located on the Black Sea in Turkey for shipment to smelting facilities.
The mill will be built in the 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. Grid power is available on site and some work force can be based out of the nearby city of Artvin. The capital cost estimate of $272-million includes a contingency of more than $32-million and mining costs are based on owner-managed-and-operated assumptions.
With the release of the PFS, the Hod Maden project moves into the next stage of development. The majority operator, Lidya Madencilik Sanayi ve Ticaret AS, has commenced the permitting process and is concurrently working on a gap analysis and trade-off studies. A feasibility study will begin by the end of 2018.
Mineral reserves and resources
Andrew Hall of AMC Consultants Pty. Ltd. is the qualified person for the reporting of the mineral reserve estimates. The mineral reserve is reported in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects, and Canadian Institute of Mining (CIM) definition standards for mineral resources and mineral reserves (2014). The mineral reserve estimate is reported above a cut-off grade of 2.6 grams per tonne gold equivalent.
ReserveTonnesAuEq Au CuContained AuEqContained Au Contained Cuclassification(000s t) (g/t)(g/t)(%) (000s oz) (000s oz) (000s t)Proven4,28911.68.61.4 1,600 1,191 59 Probable4,83112.29.11.4 1,895 1,418 70Total 9,12011.98.91.4 3,495 2,609129Notes:(1) The mineral reserve is estimated as at May 31, 2018, and using metal prices of $1,250 (U.S.) per ounce gold and $3 (U.S.) per pound copper.(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) Gold equivalent (grams per tonne) is calculated as gold equivalent equals gold grams per tonne plus (copper per cent multiplied by (metallurgical recovery of copper in per cent multiplied by payable copper in per cent multiplied by (price of copper in dollars per pound less realization costs) less royalty multiplied by 22.046) divided by (recovery of gold in per cent multiplied by payable gold in per cent multiplied by (price of gold in dollars per gram less realization costs) less royalty)).(5) Silver is not included in the gold equivalent calculation. It contributes only about 0.1 per cent to the ore value.(6) The estimation was carried out using a cut-off grade of 2.60 grams per tonne gold equivalent and a mining recovery of 95 per cent.(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 per cent and 93.9 per cent,respectively for gold and 94.2 per cent and 95.0 per cent, respectively, for copper. (9) Average planned and unplanned dilution factors of 12 per cent and 6 per cent,respectively for transverse stoping and 44 per cent and 10 per cent, respectively,for longitudinal stoping were assumed. (10) The exchange rate used is 3.78 Turkish lira to $1 (U.S.). (11) Mineral reserves are defined within an underground mine plan. See the PFS for key assumptions, parameters and methods used to estimate the mineral reserve.
Rodney Webster of AMC Consultants Pty. Ltd. is the qualified person for reporting of the mineral resource estimates. The mineral resource is reported in accordance with NI 43-101 and CIM definition standards for mineral resources and mineral reserves (2014). The mineral resource estimate reported above a cut-off grade of 2.0 grams per tonne gold equivalent for the two areas being considered is shown in the attached table.
ResourceTonnes AuEq AuCu Agclassification (kt)(g/t)(g/t) (%)(g/t)Main area Measured 4,630 12.89.6 1.52.6 Indicated4,507 14.09.8 2.05.1 Total9,137 13.49.7 1.83.9 South areaMeasured --- --Indicated2,5224.23.5 0.30.9 Total2,5224.23.5 0.30.9 Total main plus south areas Measured 4,630 12.89.6 1.52.6 Indicated7,029 10.57.6 1.43.6 Total 11,659 11.48.4 1.53.2 InferredMain area4473.71.6 1.01.6 South area 4163.63.0 0.30.7 Total inferred 8643.72.3 0.71.2 Notes:(1) Mineral resources are stated as at May 31, 2018 and using metal prices of $1,250 (U.S.) per ounce gold and $3 (U.S.) per pound copper.(2) CIM definition standards (2014) were used for thereporting 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) Gold equivalent (grams per tonne) is calculated as gold equivalent equals gold grams per tonne plus (copper per cent multiplied by (metallurgical recoveryof copper in per cent multiplied by payable copper in per cent multiplied by (price of copper in dollars per pound less realization costs) less royalty multiplied by 22.046) divided by (recovery of gold in per cent multiplied by payable gold in per cent multiplied by (price of gold in dollars per gram less realizationcosts) less royalty)). (6) The south area is defined as being south of 4,542,025 mN. (7) No allowance has been made for any previous mining. (8) Mineral resources that are not mineral reserves have not demonstrated economic viability. (9) See the PFS for a complete list of key assumptions, parameters and methods used to estimatethe mineral resource. (10) The inferred resources reported herein have not been considered for the purposes of the PFS.
AMC is not aware of any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other similar factors that could materially affect the stated mineral resource estimates. For complete discussion of risks that could affect the estimates disclosed, refer to the PFS.
The Hod Maden PFS was prepared in accordance with NI 43-101 by AMC Consultants (Melbourne, Australia), GR Engineering Services Ltd. (Perth, Australia) and Hacettepe Mineral Teknolojileri Ltd. Rti. (Ankara, Turkey).
Sandstorm will file or furnish, as applicable, a technical report prepared in accordance with NI 43-101 for the PFS titled "Hod Maden Project Pre-Feasibility Study NI 43-101 Technical Report," with an effective date of May 31, 2018. This technical report will be available on June 26, 2018, on SEDAR, on EDGAR or on Sandstorm's website.
Revised outlook and conference call details
Based on Sandstorm's existing portfolio, attributable gold equivalent ounces sold are forecasted to be between 54,000 ounces and 60,000 ounces in 2018 and between 63,000 ounces and 73,000 ounces in 2019. By 2023, with Hod Maden in its second year of production, Sandstorm forecasts attributable production to increase to 140,000 gold equivalent ounces.
A conference call will be held on Wednesday, June 27, 2018, starting at 8:30 a.m. PDT, to further discuss the Hod Maden PFS results. To participate in the conference call, use the following dial-in numbers and conference ID or join the webcast.
Local/international: 1-416-764-8688
North American toll-free: 1-888-390-0546
Conference ID: 70139830
Qualified persons
Mr. Hall of AMC Consultants is a chartered professional (MAusIMM CP (mining)) of the Australasian Institute of Mining and Metallurgy and a qualified person as defined by NI 43-101. He has reviewed and approved the mineral reserves and technical information in this press release.
Mr. Webster of AMC Consultants is a member (MAIG) of the Australian Institute of Geoscientists and a qualified person as defined by NI 43-101. He has reviewed and approved the mineral resources in this press release.
Paul Newling of GR Engineering Services is a chartered professional (FAusIMM CP (metallurgy)) of the Australasian Institute of Mining and Metallurgy and a qualified person as defined by NI 43-101. He has reviewed and approved the technical information in this press release.
Dr. Zafir Ekmekci of Hacettepe Mineral Teknolojileri is a registered member (418810RM) of the Society for Mining, Metallurgy and Exploration and a qualified person as defined by NI 43-101. He has reviewed and approved the technical information in this press release.
Data verification
The qualified persons noted herein have satisfied themselves that the data disclosed have a reasonable basis, including sampling, analytical and test data underlying the information contained in this news release. Geological, mine engineering and metallurgical reviews included, among other things, reviewing mapping, core logs, review of geotechnical and hydrological studies, environmental and community factors, the development of the life-of-mine plan, capital and operating costs, transportation, and review of existing metallurgical test work. In the opinion of the qualified persons responsible for the preparation of the technical report, the data, assumptions and parameters used to estimate mineral resources and mineral reserves, the metallurgical model, the economic analysis and the preliminary feasibility study are sufficiently reliable for those purposes. The technical report will contain more detailed information concerning associated quality assurance and quality control and other data verification matters, as well as the key assumptions, parameters and methods used.
About Sandstorm Gold Ltd.
Sandstorm is a gold royalty company that provides upfront financing to gold mining companies that are looking for capital and, in return, receives the right to a percentage of the gold produced from a mine for the life of the mine. Sandstorm has acquired a portfolio of 188 royalties, of which 20 of the underlying mines are producing. Sandstorm plans to grow and diversify its low-cost production profile through the acquisition of additional gold royalties.
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