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Sandstorm Gold Royalties Announces Results From Hod Maden Feasibility Study, Reaffirms Strong Project Economics with


Designated News Release

VANCOUVER, BC, Nov. 24, 2021 /CNW/ – Sandstorm Gold Ltd. (“Sandstorm Gold Royalties”, “Sandstorm” or the “Company”) (NYSE: SAND) (TSX: SSL) is pleased to provide a summary of the results from the Hod Maden Feasibility Study (“FS”). All figures are in U.S. dollars and are on a 100% project basis unless otherwise stated. Sandstorm has a 30% interest in the Hod Maden project.

Sandstorm Gold Royalties Logo (CNW Group/Sandstorm Gold Ltd.)

Sandstorm Gold Royalties Logo (CNW Group/Sandstorm Gold Ltd.)

FEASIBILITY STUDY HIGHLIGHTS

  • Pre-tax net present value (“NPV”) (5% discount rate) of $1.3 billion and an internal rate of return (“IRR”) of 41%

  • Post-tax NPV (5% discount rate) of $1.05 billion and an IRR of 36%

  • Estimated all-in sustaining costs (“AISC”) of $334 per ounce on a by-product basis1 and $595 per ounce on a co-product basis1

  • Upfront capital cost of $309 million

  • Proven and Probable Mineral Reserves of 2.45 million ounces of gold and 287 million pounds of copper

  • 13-year mine life with annual mill design capacity of 800,000 tonnes

  • Annual average production of approximately 195,000 gold equivalent (“AuEq”) ounces

  • Average head grade of 11.1 grams per tonne (“g/t”) AuEq

“The release of the Hod Maden Feasibility Study is a major turning point for not only the project, but for Sandstorm as well,” commented Nolan Watson, President and CEO of the Company. “When we purchased the stake in Hod Maden back in 2017, we knew that it would be a major growth catalyst for Sandstorm, and the positive results of this study spell out just how transformational it will be once in production. Along with the granting of the Environmental Impact Assessment that was previously announced, the Feasibility Study launches Hod Maden into the next stage of development. As a management team we’re excited to see this incredibly robust project make a big leap towards production.”

KEY PARAMETERS & PROJECT ECONOMICS SUMMARY

Mill Design Capacity

800,000 tonnes per annum

Mine Life

13 years

Average Annual Production

Gold: 156,000 ounces

Copper: 19.6 million pounds

Total Production

Gold: 2,027,000 ounces

Copper: 255 million pounds

Average Recovery Rate

Gold: 85%

Copper: 93%

Average Head Grade

Gold: 8.8 g/t

Copper: 1.5%

All-in Sustaining Cost1

By-product1: $334/oz Au

Co-product1: $595/oz Au

Upfront Capital

$309 million

Base Case Commodity Prices

$1,599/oz Au

$3.19/lb Cu

NPV (5% discount rate)

Pre-tax: $1.3 billion

Post-tax: $1.05 billion

IRR

Pre-tax: 41%

Post-tax: 36%

Payback Period (from start of production)

Post-tax: 2.0 years

Mining & Processing

The FS contemplates Hod Maden as an underground mine divided into two distinct mining zones with a modified drift and fill (“DAF”) technique applied to the upper mine area and a long hole stoping (“LHS”) technique applied to the lower mine area. The bulk of the mineralization is located in the lower mine area, which will be accessed through a single portal north of the deposit. The upper mine will be accessed through two shallow shafts located north and south of the mineralization. The mine capacity is 800,000 tonnes per annum with a total of 8.7 million tonnes of ore produced during the 13-year mine life.

The ore to be processed is classified into two main categories: regular ore and a pyrite ore with a flowsheet reconfiguration when processing pyrite ore to maximize gold recovery. Ore processing contemplates a single stage crush, milling, a bulk flotation concentrate, regrind through a secondary milling and a secondary flotation, ultimately producing a saleable copper concentrate and a saleable pyrite concentrate. The concentrates will be transported to a port located on the Black Sea in Turkey for shipment to smelting facilities.

Infrastructure & Capital Costs

The majority of the proposed project infrastructure, including the process plant, paste plant, water treatment facility, transformer station and mining offices, will be located in the Maden Valley near the deposit. The tailings facility, mining waste dump, and quarry will be located to the north in the Salicor Valley. A tunnel will be constructed to connect the Maden Valley to the Salicor Valley. Grid power is available on site and some workforce can be based out of Artvin city nearby.

The upfront capital cost estimate of $309 million includes a contingency of $31 million.

US$ Million

Mining Predevelopment Costs

$63

Mining Surface Infrastructure

2

Other Site Infrastructure

78

Process Plant Infrastructure

56

EPCM Fees, Indirect Costs & Construction Facilities

37

Owners’ Costs

42

Project Contingency

31

Total Upfront Capital Expenditure

$309

Economics

The post-tax NPV of $1.05 billion, using a 5% discount rate, has an IRR of 36% and payback period of 2 years. The AISC1 for gold with copper as a by-product credit is $334 per ounce.

By-Product Basis US$/oz

Mining Operating Cost

$230

Processing Operating Cost

104

TC/RCs (net of credits & penalties) & Transport Costs

95

G&A Operating Cost & Other

55

Revenue from Sales of Payable Copper

(401)

C1 Cost1

$84

Royalties

172

Sustaining Capital Depreciation

57

Corporate Costs

13

Closure Costs

8

AISC1

$334

Timeline

With the release of the FS, the Hod Maden project moves into the next stage of development. The operator, Lidya Madencilik Sanayi ve Ticaret A.S. (“Lidya”), commenced the application process for the forestry permit after receiving the final approval of the Environmental Impact Assessment (“EIA”) from the Ministry of Environment, Urbanization and Climate Change of Turkey in November 2021. Production from Hod Maden is currently expected in the second half of 2024.

MINERAL RESERVES AND RESOURCES

Mr. Simon Kusabs of AMC Consultants Pty Ltd is the Qualified Person for reporting of the Mineral Reserve estimates. The Mineral Reserve is reported in accordance with the disclosure standards of Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and Canadian Institute of Mining (CIM) Definition Standards for Mineral Resources and Mineral Reserves (2014).

CONTAINED METAL

Reserve
Classification

Tonnes
(kt)

AuEq
(g/t)

Au
(g/t)

Cu
(%)

AuEq
(koz)

Au
(koz)

Cu
(Mlb)

Proven

1,899

19.4

16.7

1.7%

1,186

1,021

71

Probable

6,798

8.8

6.5

1.4%

1,928

1,431

216

Proven & Probable

8,696

11.1

8.8

1.5%

3,114

2,452

287

Notes

1)

CIM Definitions Standards (2014) were used in the preparation of the Mineral Reserve estimates.

2)

The Mineral Reserve is estimated using metal prices of US$1,300 per oz Au and US$3.00 per lb Cu.

3)

Effective Date of Mineral Reserve is 31 July 2020.

4)

Errors in the totals are due to rounding.

5)

Mineral Reserves are reported on the basis of mined ore to be delivered to the plant as mill feed.

6)

The estimation was carried out using a breakeven cut-off value of USD82/t and incremental cut-of values of USD63/t for stopes and USD40/t for development.

7)

The average mining recovery and dilution factors applied were 94% and 10% respectively.

8)

Process recovery and payable factors averaged 85% and 98% respectively for gold and 93% and 95% respectively for copper.

9)

Probable reserve gold grade and contained metal is higher than the indicated resource grade and contained metal due to the inclusion of measured resource from the modified DAF mining area above the 783m elevation.

10)

Calculation of the gold equivalent grade (AuEq) is by the following formula: AuEq = [(Au Ounces + (Cu Pounds x 3/1300)) x 31.10348]/Tonnes

Mr. Chris Arnold 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 an NSR cut-off of $63/tonne, is shown below.

CONTAINED METAL

Resource
Category

Tonnes
(kt)

AuEq
(g/t)

Au
(g/t)

Cu
(%)

AuEq
(koz)

Au
(koz)

Cu
(Mlb)

Measured

2,461

24.3

20.7

2.3%

1,920

1,634

124

Indicated

5,683

8.8

6.2

1.7%

1,608

1,133

206

Measured & Indicated

8,143

13.5

10.6

1.8%

3,530

2,768

330

Notes

1)

CIM Definitions Standards (2014) were followed for Mineral Resources.

2)

Mineral Resources are inclusive of Mineral Reserves.

3)

Effective Date of Mineral Resource is 27 July 2019.

4)

Mineral Resources are estimated at NSR cut-offs of $63/t for gold/copper zones.

5)

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

6)

Totals may not match due to rounding.

7)

Metal prices used as input into the NSR cut-off calculation are US$1,300/oz for gold, and US$6,614/tonne for copper.

8)

Calculation of the gold equivalent grade (AuEq) is by the following formula: AuEq = [(Au Ounces + (Cu Pounds x 3/1300)) x 31.10348]/Tonnes

DETAILED SCHEDULES2

Mill Feed

YR1

YR2

YR3

YR4

YR5

YR6

YR7

YR8

YR9

YR10

YR11

YR12

YR13

Total

Mill Feed

Ore processed (kt)

449

560

800

800

802

800

800

787

722

720

599

480

378

8,696

Copper grade (%)

1.5

1.5

1.5

1.5

1.5

1.4

1.4

1.6

1.4

1.6

1.4

1.8

1.5

1.5

Gold grade (g/t)

12.6

13.0

8.7

7.5

6.4

5.9

5.3

7.7

8.3

9.5

9.6

13.9

13.4

8.8

Copper Concentrate

Concentrate mass (kt, dmt)

26

33

47

48

47

46

44

48

41

43

34

30

21

508

Copper grade (%)

24

23

23

23

24

23

23

25

24

24

23

26

25

24

Gold grade (g/t)

158

176

108

96

81

81

70

98

118

123

137

169

182

115

Pyrite Concentrate

Concentrate mass (kt, dmt)

31

23

41

35

47

32

41

41

27

39

20

54

33

461

Gold grade (g/t)

17

15

15

15

13

13

13

14

13

15

14

15

11

14

Payable Metal

Copper (Mlb)

13

16

23

23

24

22

22

25

21

22

16

17

11

255

Gold (koz)

147

193

178

159

135

127

110

162

162

184

154

184

132

2,027

Site Cost (Life of Mine Average)

Mining

$53.71/t

Processing

$24.26/t

G&A

$11.04/t

Site subtotal

$89.01/t

OffSite Cost (Life of Mine Average)

COPPER
CONCENTRATE

PYRITE
CONCENTRATE

Freight

$62.50/wmt

$35.50/wmt

Treatment charge

$90.00/dmt

$125.00/dmt

Copper refining

$0.09/lb

Gold refining

$6.50/oz

$8.00/oz

Capital Expenditures

CAPEX BREAKDOWN

INITIAL

SUSTAINING

CLOSURE

TOTAL

Year -2

$71M

$71M

Year -1

$151M

$151M

Year 0

$87M

$87M

Years 1-5

$80M

$80M

Years 6-10

$35M

$35M

Years 11+

$9M

$16M

$25M

Total

$309M

$124M

$16M

$449M

The Hod Maden FS was prepared in accordance with NI 43-101 by GR Engineering Services Limited (Perth, Australia), AMC Consultants Pty Ltd. (Perth, Australia), and Hacettepe Mineral Teknolojileri Ltd. Şti. (Ankara, Turkey).

Sandstorm will file or furnish, as applicable, a Technical Report prepared in accordance with NI 43-101 for the FS entitled “Hod Maden Project Feasibility Study NI 43-101 Technical Report” (the…



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2021-11-24 11:00:00

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