Sandstorm Gold Ltd. (NYSE MKT:SAND) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 08:30 am ET


Sandstorm Gold Ltd. (NYSE MKT:SAND) Q2 2020 Earnings Conference Call - Final Transcript


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Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sandstorm Gold Royalties' Second Quarter Conference Call. [Operator Instructions].

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. [Operator Instructions].

I would now like to turn the call over to Mr. Watson. Please begin.

Nolan Allan Watson

Well, thank you, Amy. Good morning, everyone, and thanks for calling into the second quarter earnings call for 2020. This morning, Erfan, our CFO, is going to walk us through the Q2 results; and then David Awram is going to provide a brief update about our asset base. And then as usual, we'll turn it over to the operator, Amy, for a question-and-answer period. And if anyone has any questions that do not necessarily need to be part of the live Q&A, you can ask those questions through the web portal, and we'll ensure that each question we get there will get a direct response from us after this call.

Before I hand it over to Erfan, I want to provide an update on how our business has been impacted by COVID-19 as well as answer some common questions of investors about our deal pipeline, Hod Maden as well as my expectation for where the market is going. At this time, we'll be going through a prepared PowerPoint presentation on the web portal. So if you're able to, please turn your attention there now.

So starting with an update about how our business was affected by COVID. You can see on this slide, each of the producing assets in our portfolio that were affected by COVID-related shutdowns. Nearly half of our producing assets were affected. Some were for short periods, others involved total shutdowns for most of the quarter. Perhaps the most material impacts came from Santa Elena and Fruta del Norte which were shut down for most of the quarter. This is one of the reasons I love being a royalty company because despite this, we still had $13.4 million in operating cash flow before working capital adjustments, which is a testament to the robustness of our business.

Because of COVID, we pulled our production guidance for 2020. However, I would like to provide a bit of clarification as to how these mine shutdowns may also affect our Q3 numbers. It's worth noting that all of these mines are currently back up and running, which means for Q3, we will be able to accrue revenue for the full quarter for each of our royalties. However, for our streams, we do not recognize the sales until we have actually received the gold from our counterparties and have actually sold it. In most cases, we delivered gold in the month following the