Sandstorm Gold Royalties (TSX:SSL) - Positioned for 30%+ Production Growth & Debt Reduction

[Music] hi I'm Nolan Watson president and CEO of Sandstorm Gold royalties and for those of you who aren't familiar Sandstorm is a streaming and royalty company we've got hundreds of royalties around the world many of which are are operating in cash flowing no you can see it Allen have we met us before thank you live I don't think I think this is our first time live yeah it's quite cool I'm like we're at the conference in Colorado Springs some big companies including yourselves in there a lot of money trying to find out what's going on what are you here for yeah this is one of those conferences where it's just great to talk to our institutional investors I know we've got a lot of retail investors tens of thousands of retail investors around the world but we've got about 200 institutional investors that own about 60 of the company and it's conferences like this where I get the opportunity to maybe with them face to face and hear what they're thinking and answer their questions right but what do you want out of it I think just hearing from investors I know there's a lot of CEOs who like to go into these meeting rooms and just tell investors what they're doing and why they're amazing and why the company is great and yeah we do a little bit of that but just this is an opportunity to sit down with some of the smartest Minds in the investing world in in precious metals and and hear how they're seeing the economy and they're seeing the world and and what they want out of us oh man what what are they saying I'm tricked I'm here conflicting versions of events from ECB pudding rates up last week will have fed to this week is that going to affect guys like you what do they saying yeah I think something that we're we're commonly hearing is that with interest rates as high as they are they're really surprised that gold is doing as well as it's doing and although people are nervous they're actually quite excited for can you imagine if the economy actually does turn over and interest rates start pulling back what gold has the potential to do there's a sheer amount of buying that's been happening out of central banks there's there's been a liquidation of gold out of institutional investors it's all being bought by central banks yeah and if you see that Institutional Investor you equation switch so they become net buyers I think the gold price could do really well so people are trying to position themselves in this market for a big upswing of gold but they're trying not to do it while taking on too much risk so I think that's where Sandstorm plays well because we're a bit boring we've got stable cash flow from a lot of world-class assets around the world and so they can buy us knowing that we're not going to blow up whereas development companies could blow up over the next year but position themselves for an upturn in the market I'm stuck with macro just for a second longer it's like it do you think the central banks are supporting some of the this offloading by institutional oh they are definitively yes so I'm on the board of the world gold Council and we get all the data who's buying Watson right there's just an enormous amount of net buying at Accenture Banks I mean you're seeing Banks like Russia liquidate a little bit of gold the fund of war and and some of the more fragile countries doing that but net net central banks are big buyers of gold still today why is it just okay we've got to support the the economy or is there some underlying factor that because you think you also seeing you you know Nations like China world's largest producer of Gold buying gold and paying a premium for it as well so what's happening out there yeah I think to answer that question you have to think like a central Banker I mean they've got large amounts of reserves that the countries themselves a large foreign currency reserves and they have to put it into something and historically it's been the US dollar and there's a big Push by many countries around the world for dedolarization they're for currency reserves I don't like the fact that so much their foreign currency reserves are subject to U.S sanctions if they fall a foul of the U.S there's a bunch of countries China included that may or may not do things in the future that they know if they do it the us is going to put sanctions on them so they don't want US dollars in their foreign currency reserves and if you look at what else do I put it in there's not a lot of great other currencies to put it in there's a lot of developing countries around the world that you know want you know what their currencies in your foreign currency reserves and goals starting to look very very good to a lot of countries right so Russia China India there's after St Petersburg maybe a whole bunch of African countries too looking for this de-dollarization um clearly obviously people want to kind of Link gold to the dollar they also one goal to kind of I don't know um support some of this predicament we find ourselves in this overprinting of capital wherever you are whatever currency in the world so what is the role of gold going forward yeah I think that gold you know there used to be 10 years ago people would say well we want to back the US dollar with gold I just I just don't see that realistically happening when I see happening is that gold is becoming a truly viable alternative to the US dollar and slowly it's going to erode the value of the US dollar and and well I think we're going to see that play over the next 20 years right so you're in the right commodity we've established that yep okay your opinion um I got I've got to say I'm looking at your share price I am confused it's a roller coaster just when I think I should be getting in it comes off and then a step and repeat what's going on yeah so I think the next year will be a little bit more boring compared to the past year the past year there were a bunch of uh underlying things that were happening to the stock based on large shareholders buying and or selling so for example when we bought a billion dollars worth of assets over a year ago we had to issue some shares to people that would not traditionally be shareholders of Sandstorm like Ximena ended up with 50 million dollars with them for science term shares and glencore ended up with 50 million dollars holding or selling down so in the last year they all sold down so there'd be times where our share price started doing well then in one month 100 million dollars of net sales happens so a lot of those sellers who are not logical long-term shareholders of Sandstorm they've all sold and we've seen those uh shares being picked up by large fundamental long-term buyers so literally in just the last four months this is all public information based on disclosure of the funds you know companies like Capital International and BlackRock have bought 20 million shares worth of Sandstorm so they basically bought all of those shares key of those sellers going forward word I think you're going to see sort of a little bit more plain vanilla trading based on the fundamentals right are we going to see some plain vanilla trading from you because there's a kind of been a again slightly erratic pattern of buying trying to get that growth and that scale which make you relevant I get I get that but the way that you've done those deals with the shares plus cash and raising money and so forth you you knew what was going to happen you prepared for that presumably and now we're going to a boring phase of accretive growth are we yeah so unfortunately we are or fortunately depending on who you talk to we are going to be a lot more boring for the next couple years don't mind that yeah so we uh we we bought a billion dollars worth of things we had to take on some debt and I had issue some Equity to do it those things a lot of them are in construction right now we have amazing Minds that are in construction and well so I'll talk about a minute but just from a high level perspective what we're hearing from our institutional investors and what we we can't lead us as a management team think is intelligent is with interest rates where they are there's no more intelligent Capital allocation than just paying down the debt that we took on to make those Acquisitions so looking at new acquisitions is not something that that is on the table for us this year we're going to be boring we're going to pay down debt we may sell some non-core assets to accelerate uh that debt repayment and we're just going to wait for those four amazing Minds to get into production so it wasn't uncool not gold so we own some debt and Equity investments in other companies that we've taken on historically uh that's that we don't need to own that some of that is non-core will look to potentially sell plus we also have some more longer dated non-cashlawing non-core royalties that there might be more logical owners of those and we'll see if we can monetize some of that and accelerate that repayment okay well let's look at Revenue because that's the name of the game here you go you afford near term producing assets uh to that Revenue you say tell us a bit about them and when that Revenue can be expected always expected yeah so you know this year we'll for example have about 95 000 royalty ounces and by 2027 so just a few years away we expect that number assuming we make no additional payments no additional Acquisitions there's no expiration upside no unplanned expansions at anything just based on four mines that are in construction that number will go to about 125 000 ounces so you know 30 plus percent growth at that number cash flow would be about 170 million dollars a year free cash flow for us at only 1800 gold so even higher of gold stays where it is the or gold goes higher which I think it will but those assets are Equinox is building their greenstone mine a big open low-cost mine in Canada that that mine should be up and running and producing next year we've got um Ivanhoe is building their plat Reef mine in South Africa we have a large Gold Stream on that that we inherited in The Nomad acquisition and there's multiple phases of expansion but that mine should be up and running and producing first gold next year uh we've got Barrick they're building their Robertson mine as part of the Cortez Trend in the U.S and then SSR recently bought a 40 and operating interest in HUD modern and they're going into construction with that next year and so those those four mines from you know large uh large companies and or Majors it's uh it's a pretty good place for us to be and there's not a lot of risk for us right okay so balance sheet first sit back and make intelligent allocation of capital for best return on that Capital that's it not a little effort yeah no it's it's uh it's gonna be boring yeah but what do you think that's going to do for the for the share price because like I say it's this erratic nature which people are going to look in not quite sure which what day of the week what's going to happen here how do you kind of smooth those curves do you think this view to the uh this hundred percent 127 000 answers 75 000 houses okay you think people should see it and say look this is just in terms of their investment in you I'm talking about the retail which is a big retail following here and I'm sure you're throwing the institutional guys and girls too but for them it's sit back and wait this is a what's company dividend paying company eventually we are dividend paying company now we've got a one percent yields and that will grow over time as we the battery well that I guess that's what they're looking to so what are we in this way you need to drive share price you need to increase dividends because one percent is there's better options out there for them if it's purely that yeah um when you do come back into the market to buy what have you learned in terms of the way that you structure it deals has it been the best way to do it yeah one of the things that we have the benefit of is so but these four Minds going in extraction over the next few years the next major purchase that we have we've actually already locked down so years ago we bought an option to acquire a stream for 225 million dollars on glencore's Mara project um they they are publicly saying now that they plan on beginning construction probably around 2026. yeah we'll have to spend 225 billion dollars at that time that'll give us uh you know 28 000 plus additional gold equivalent ounces per year which would take our production to close to 150 000 ounces a year you know today's gold price would be over 200 million dollars a year free cash flow for us as a company so we don't need to go out and buy things or be fancy or raise money or be creative or raise money or raise Equity uh you know no equity financing is coming for sure okay all good I like that yeah thank you thank you okay because like that has been tough in a couple years in terms of people I guess understanding The Narrative or understanding the intent by you but I get this boring is good thanks we'll see

Channel: Crux Investor

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Id: iL32pVIJAu4

Length: 11min 26sec (686 seconds)

Published: Wed Sep 20 2023