Sandstorm Gold Ltd (British Columbia) (SAND) 2024 Q4 法說會逐字稿

Good morning. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sandstorm Gold Royalties Annual 2024 Fourth Quarter Results 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. (Operator Instructions)

Thank you. Mr. Watson, you may begin your conference.

Thank you, Ina. Good morning, everyone, and thank you for calling in to our Q4 and Annual 2024 Earnings Call.

Before I hand things over to Erfan, our CFO, to review the financial statement highlights, I'd like to give an update on a number of things in our business. And specifically, number one, a brief characterization of our Q4 production and what we're seeing so far in Q1 of 2025. Number two, I'd like to provide an explanation of our 2025 guidance as well as our long-term production outlook. Number three, with that backdrop, I'd like to talk about our cash flow expectations and our balance sheet strength. And then four, I'd like to explain our latest strategy for capital allocation because once I walk through each of these points, you'll see that we have a strong balance sheet, lots of cash flow and therefore, significant capital allocation decisions. And I think it's important for shareholders to understand how we are allocating capital and why.

So starting off with a brief characterization of our Q4 sales. We had strong revenue of USD47 million, strong operating cash flow of $36 million being driven by gold equivalent of production of 17,721 ounces, which is similar ounces to the past couple of quarters.

What's worth noting is that there were a couple of one-time events in Q4, one of which increased in ounces and one of which was a one-time decrease in ounces that effectively offset each other. Specifically, during the quarter, Americas Gold and Silver successfully completed their merger and they raised capital and brought in a new management team. And as part of that, they requested to deliver some gold to us early so that they could reduce their indebtedness and show a stronger balance sheet. Therefore, in Sandstorm's Q4, there was an extra 1,500 ounces from Americas Gold and Silver. We made an adjustment to our stream in the future to allow for a corresponding lower delivery over time for the remaining portion of the stream.

Also during Q4, at both Caserones and Chapada, both Lundin mining assets, there was an abnormal one-time drop in deliveries of copper to Sandstorm because during their Q3. Even though production was normal, there were delays when they shipped and sold the concentrate. And under our contract, the deliveries and payments that Sandstorm are entitled to in Q4 are based on what was shipped and sold in Q3. Therefore, that delay resulted in a material drop in our Q4 sales. The good news is that the production of the underlying mines was normal through these periods. So for Lundin in Q4, they sold more concentrate than during a normal quarter, which means that Sandstorm will get catch-up deliveries in Q1. So we're expecting a relatively strong Q1 to start off 2025.

So moving on to item 2 and our 2025 guidance and long-term outlook. 2024 was a dip year in production for us with a few of our mines having lower-than-average years from a production perspective, but also soaring gold prices meant that our silver and our copper revenue turned into fewer gold equivalent ounces than originally anticipated.

When we set our budget for 2024, we assumed $1,800 gold prices. And internally, we were expecting 83,000 ounces as a base case. But with gold prices going up so much, our silver and copper revenue turned into fewer gold equivalent ounces than expected. In the end, for 2024, we missed our internal GEO production targets by 10,700 ounces. About 8,300 ounces of that, nearly 80% of the miss, was from price fluctuations.

In the 15-year history of Sandstorm, we have hit our annual guidance range 13 out of 15 times. And the only two times we missed were, one, during COVID when a number of the mines were temporarily shut down and two, in 2024 because of soaring gold prices. We want to be able to give guidance to the market that investors can be confident in so that we do not miss two years in a row because of soaring gold prices. So we've decided to provide a very conservative range guidance for 2025 of 65,000 to 80,000 ounces.

That might seem low to some people, but please know that part of this is us trying to ensure that we don't make the same mistake twice back-to-back, as gold prices continue to go up, which will be absolutely amazing for our business and for our cash flow and for our balance sheet. And I want to make sure that our reputation, as far as guidance is concerned, stays strong even if gold prices continue to go up, which I certainly hope they do.

We definitely don't expect to have production close to 65,000 ounces for the year. However, if there are unexpected softness in deliveries for some of our assets, or Bear Creek has trouble delivering their ounces, or if Greenstone has unexpected challenges ramping up, and then simultaneously gold prices go through the roof, can paint a picture of a scenario where GEO production could look soft.

I think it's also important to note that guiding this way is a double-edged sword because there are scenarios where the mines do what we think they do and gold prices soften a bit, and we could dramatically miss guidance to the upside. For example, we ran a scenario where the mines delivered according to their public guidance, and the silver prices stayed above $30 an ounce and the copper prices stayed somewhere in the mid-4s. And we said, well, what if gold prices go down to $2,000 an ounce. And our model kicked out a number of 90,000 gold equivalent ounces for the year way outside of our guidance range to the upside. All of this to say that I believe we are guiding conservatively and either way, our cash flow will be strong and there are scenarios for upside surprises.

I'll talk more about this later, but one of the things that I love about now having a strong balance sheet is that if the market doesn't understand this dynamic and how strong we are and our share price dips because of the conservative guidance, we are happy to step into the market in size now and buy back our shares and cancel them. It's days like today, for example, where if we weren't in blackouts because of our earnings, that we would be in the market in size buying and canceling those shares. So tomorrow, when we come out of blackout, we will be stepping into the market to the maximum we are allowed and buying back shares for investors who don't get the big picture, and we will cancel those shares that the remaining investors will own a higher percentage of our company, and therefore, we'll get a higher percentage of our future growth. It's time to back up the truck on share buybacks, and that's what we're going to do.

One of the reasons we're particularly happy to buy back shares and cancel them is because of our belief in our long-term guidance. Based on what we're hearing from our mining partners at the moment, it's our expectation that our production will increase to over 150,000 gold equivalent ounces per year over the next five years. Again, this is from a ramp-up at Greenstone, which is now in production as well as a phased build approach to Ivanhoe's Platreef mine, which is now in construction and Ivanhoe updated the market this morning on their progress at Platreef, and that's consistent with our guidance as well as Barrick's Robertson mine, which just got its permits and is expected to be completed in 2027 as well as the Hod Maden mine, which based on my most recent understanding, SSR will be giving updated development time lines and capital commitment decisions and guidance to the market within the next month.

And our growth also now includes the development of the Deep Carbonates Project at Gualcamayo, which Dave is going to talk about in later detail on this call. Around the same time that Gualcamayo is coming online should also be when Glencore's MARA mine will be coming towards completion, which I believe is our most valuable stream in our whole portfolio. And I'm told this morning, Gary Nagle, the CEO of Glencore, mentioned that they would be putting in their RIGI application in Argentina in the next six months. Shortly after that, Rio Tinto should be mining on the Entree joint venture grounds on Oyu Tolgoi in Mongolia, which is one of the world's most significant copper mines and will be a significant stream for us for many years to come. Based on all of this, you can see how, yes, we have strong cash flow now. We have a strong balance sheet finally, but the future is in construction, and it's going to be incredible.

You can see on this updated production forecast chart where we now color code the production that we expect from our different growth assets. You can see that these assets come online and as they come online, our production will double and stay high for a long period of time. 2025, there will be continuous key catalysts as each of these big projects keep getting pushed forward. So this is an exciting year for us.

When you look at what that production profile can generate in terms of annual cash flows, we have this updated slide to show that our portfolio can now generate after-tax cash flows of around $150 million per year based on $2,600 gold. And by the way, gold prices are much higher than that now, and we're just trying to be conservative with our figures. But that cash flow ramps up so that by 2030, it should be closer to USD260 million per year. And again, that's at $2,600 gold, $30 silver, $4 copper. At today's spot prices, the cash flow would be closer to USD300 million per year. So you can see, based on that, we're still confident in our balance sheet right now.

A couple of years ago, at the peak of our debt, we owed $640 million. We now only owe $340 million, and we expect that number to go below $300 million sometime between the end of Q2 and Q3 of this year and to continue dropping rapidly.

One of the things that will help accomplish this is that for Vatukoula stream, which has been a non-performing stream for some time and for which we have not been recognizing revenue, we have come to an agreement for a buyout option of $14 million, which, in order to be used, has to be exercised shortly. The stream has not been paying us for an extended period. But with the incremental $14 million, we would then have all of our capital back plus a profit on this deal. So not a bad situation for us, and we'll use those proceeds to repay debt.

Once our debt is below $300 million, that is the point where we are extremely comfortable and happy to stay at indefinitely, if necessary, if our shares continue to trade at a material discount to their fundamental value. Although $300 million is not particularly a magic number, it feels magic for us because not only does it mean that our debt is below 2 times today's EBITDA and approximately 1 times our forward-looking EBITDA for 2030, it's also the number that makes our debt less than our investments in other mining companies' debt and equity. We have over $300 million worth of investments in other companies' debt and equity, which is actually yielding us a higher return than our debt is costing us.

What I'm trying to paint is a mental picture of a situation whereby the middle of this year, we no longer have any need to continue to prioritize debt repayment when we have other potential capital allocation alternatives, whether they be growth or share buybacks. We don't anticipate getting cash called on our MARA stream option until the latter half of next year once permitting is complete. And when we finally do start contributing to that stream, it will only consume a portion of our operating cash flow for a few years. What this means is that we are now finally in a position with a strong balance sheet and lots of cash flow where we can start increasing the priority of our share buybacks, which leads me to this next slide.

In this new slide, we're trying to show that of the Big 6 streaming royalty companies, we are the ones that have been returning the most capital to shareholders over the last 9 to 12 months on a relative basis. Over the last nine months, for every gold equivalent ounce that we have received and sold, we have returned USD540 to shareholders through either dividends or share buybacks. This is more than any of our peers.

Why I bring this up? Is it because we believe our balance sheet is now so strong and our shares are still undervalued that we plan on increasing this even further in the months to come, and we'll be ramping up our share buybacks? We believe in the long-term strength and growth profile of our company, and we're looking forward to that future. We're trying to shrink our share flows and cancel our shares that when we get to that future, we will have way more cash flow and fewer shares outstanding. As a significant shareholder of Sandstorm myself, I believe this will be the most profitable path for us all.

And with that, I'll hand it over to Erfan to talk about the specific financial results.

Thanks, Nolan. Good morning, everyone, and thank you for joining us today. Our 2024 results delivered total revenue of approximately $176 million despite a drop in attributable gold equivalent ounces sold from 97,000 ounces in 2023 to approximately 73,000 ounces in 2024. While the majority of the operations in the portfolio met our budgeted forecast, as Nolan mentioned, the outperformance of gold relative to other metals impacted the company's gold equivalent production, that is other commodities like copper, silver and iron ore translate into less gold ounces when the gold price is comparatively higher.

And as Nolan mentioned, at year end, an increase of 30% in the average realized gold price compared to our 2024 budgeted results impacted the difference of over 8,000 fewer gold equivalent ounces than we had anticipated. However, higher gold price environment is welcome, and continues to drive healthy operating margins and strong cash flows for the company.

Cash costs in 2024 were $275 per attributable ounce, resulting in cash operating margins of approximately $2,100 per ounce. And when excluding changes in non-cash working capital, these record margins led to strong cash flows from operating activities of $139 million. While not a record in terms of cash flows, they were certainly robust and allowed us to make good progress on debt repayment, decreasing the balance in our credit facility by $80 million as well as returning over $28 million to shareholders in the form of dividends and share buybacks, as Nolan discussed.

In the fourth quarter, Sandstorm renewed its revolving credit facility for another four-year term with reduced interest rates above SOFR. The combination of debt repayments and lower interest rates throughout 2024 reduced the company's finance expense by $4.5 million.

Net income for 2024 was $15.5 million, down from $42.7 million in 2023. The decrease in net income was largely driven by valuation adjustments in the company's investment portfolio as well as a one-time contractual payment received in 2023 related to the company's Mount Hamilton royalty. Sandstorm's tax expense in 2023 was lower due to previously unrecognized tax attributes.

Turning to the next slide. This is a detailed asset breakdown of attributable gold equivalent production in 2024. First gold deliveries from the Greenstone mine were certainly a highlight this past year. Greenstone represents the first material development asset from the investments we made in 2022 to commence production and marks the beginning of the new growth chapter that Nolan highlighted. By the end of the year, Sandstorm received and sold approximately 2,000 gold ounces from Greenstone. Equinox is continuing to ramp up operations in the mine, and we look forward to an increase in attributable production throughout 2025.

With Greenstone at full design capacity, we expect gold deliveries to be approximately 8,000 to 10,000 ounces per year attributable to Sandstorm. As one of Canada's largest open pit gold mines with an initial 15-year mine life, Greenstone is a welcome addition to our producing mine portfolio and will play an important part as we aim to double our production profile over the next several years.

The company's Bonikro stream was one of the top contributing assets in 2024. Production at Bonikro has recently benefited from higher grades due to mine sequencing and improved plant throughput from various optimization efforts.

In the third quarter of 2024, Allied Gold announced the closing of a CAD53 million third-party financing package for advancement initiatives at Cote d'Ivoire Complex, including the Bonikro mine. Allied allocated $6.5 million in 2024 for the investment of high priority targets, which are located within the area of interest of Sandstorm stream. In conjunction with the third-party financing, Sandstorm amended its gold stream in the Bonikro mine to include minimum annual deliveries, which are between 4,000 and 6,000 ounces in 2025 and 2026.

Lundin Gold reported record production at Fruta del Norte in 2024. Commissioning of the plant expansion continues to progress and Lundin Gold has also identified opportunities to further increase average throughput to 5,500 tonnes per day starting in 2026.

In December, Lundin Gold announced that it had surpassed 56,000 meters of drilling in 2024, the largest-ever exploration drilling program conducted on the land package at an estimated cost of $44 million when combined with its regional drill program. Drilling has been focused on further delineating the recently discovered Bonza Sur deposit of Fruta del Norte. Lundin plans to complete an additional 65,000 meters of drilling in 2025 and release an initial mineral resource and PA on the Bonza Sur deposit this year.

At the Antamina mine, the approval of the modified EIA has extended operations through to 2036. As a result of the updated mine plan and re-estimation of future closure costs, an adjustment to the asset retirement obligation of the mine was recognized in 2024, impacting royalty revenues in the fourth quarter. However, we expect this impact to be offset long term with the potential for throughput expansion of up to 40% and more certainty around future mine life extension.

At Chapada, one of our larger copper streams, 2024 production is expected to be sufficient to meet Sandstorm's annual copper delivery cap. However, as Nolan indicated, the timing of settlements shifted approximately 20% to 30% of annual deliveries in the first quarter of 2025.

Lundin Mining continues to implement several optimization initiatives and reported a 46% decrease in mining costs compared to 2022 following various optimization efforts. A redesigned mining plan is expected to streamline operations while maintaining output, further improving free cash flow generated from the mine. In 2025, Lundin Mining is planning a 20,000-meter drill program at Chapada with a goal to grow resources. We are also expecting the results of a scoping study on the Sauva deposit an updated technical report to be filed this year.

In the fourth quarter, Sandstorm amended the terms of its Relief Canyon stream agreement relating to the timing of fixed ounces. And as Nolan explained, Sandstorm received an additional 1,500 ounces of gold in the fourth quarter. Under the amended stream terms, the company expects fixed deliveries of approximately 5,000 ounces in each of 2025 through 2027. These stream amendments follow $50 million financing completed by Americas Gold and Silver in conjunction with their consolidation of the Galena Complex in Idaho. And Americas Gold is now being led by Mr. Paul Huet and is focused on unlocking value at Galena and deleveraging the company's balance sheet.

In 2024, Sandstorm attributable production remained predominantly from South America at 45%, followed by 35% from North American operations and the remaining 20% from other countries around the world. In terms of metal side, attributable production was 75% precious metals, approximately 61% from gold.

We expect increasingly more gold exposure from the portfolio as Greenstone ramps up and other gold streams to begin contributing over the next few years. In 2025, we're already off to a good start with a strong gold market. This has allowed us to pay back an additional $15 million of debt since January 1. And as Nolan discussed, we plan to increase the rate of our share buyback program over the course of the year.

In terms of production, we are forecasting between 65,000 and 80,000 gold equivalent ounces in 2025. And as the year progresses, we plan on tightening that range as we get better clarity on various commodity price scenarios and the ramp-up progress at Greenstone.

Long term, we are raising our production outlook based on various positive advancements at our development assets. We anticipate production to reach 150,000 attributable gold equivalent ounces in 2030 based on our existing streams and royalties plus the exercise of Sandstorm's gold stream option on the MARA project.

And with that, I'll pass it over to Dave for some more details on our growth assets. Dave?

Great. Thanks, Erfan, and good morning, everyone. Today's asset update will focus on a couple of less well-understood asset exposures in our portfolio in the Oyu Tolgoi joint venture area and the Gualcamayo mine with a small mention on Vale's Northern System iron and copper projects.

On the topic of Oyu Tolgoi, I'd like to begin by addressing the formalization of the joint venture agreement initially proposed in 2008 between OTLLC, the operating entity, and Entree Resources. Following this, I'll highlight some of the recently released drill results.

Finalized at the start of February, the joint venture agreement puts in place mechanisms like the transfer of licenses into OTLLC, which is crucial to avoid delays in the development work planned for 2025 within the Hugo North Extension. The arbitration decision also sets the stage for a potential conversion of the JV agreement into a more efficient arrangement, which should benefit all the stakeholders and align with Mongolian laws regarding economic benefit sharing. We expect Entree to release more information on this as it progresses.

On to the drilling, which although released recently was actually completed as far back or completed in 2022 and 2023. Many of the drill holes were infill into the existing resource on the Hugo North Extension, which is the image that we're showing in the plan map on the right. However, many of the drill holes were drilled outside the existing resource and wire frames.

It's a little hard to see on the slide, but there are intercepts of 400 meters of 1.41% copper equivalent, 448 meters of 1.62% copper equivalent, 613 meters of 0.77% copper equivalent, 638 meters of 1.05% copper equivalent, 398 meters of 2.07% copper equivalent and 175 meters of 1.73% copper equivalent. All these holes are currently outside of any resource, but they exceed the resource cutoff of 0.41% copper equivalent and may be incorporated within the lift 1 and lift 2 footprint. There are still results pending from eight more holes from the 2023 program.

Additionally, 23 underground holes and nearly 2,500 meters of surface drilling were completed in 2024 to target a potential lift 2 footprint. The objective of this drilling is to update the Hugo North Extension resource estimate and for geotechnical characterization. Entree will announce these results as they are received.

These results are nothing short of extraordinary, effectively setting the new benchmark in the global mining industry. The sheer magnitude of this copper-gold project continues to amaze me, and I'm confident that future findings will be equally impressive. I'm immensely grateful that Sandstorm has the privilege of being a part of this remarkable venture, which promises to deliver even more astonishing outcomes.

I really want to speak to Gualcamayo as well, as this is one of our most surprising projects in our portfolio, both for us and for our investors. The first royalty came in the Premier Royalty's acquisition, and this asset produced for the better part of a decade as a heap leach operation under a number of different operators.

In 2023, a subsidiary of the well-funded international conglomerate, Aisa Group acquired the asset. Since then, the group has invested into the existing heap leach operation to improve the secondary recovery of the heap leach, where they uncovered a recoverable leach inventory of 303,000 ounces. They began revising the plan on the heap that involved a slope reprofiling plan to improve infiltration and percolation of the heaps. They created a line filtration plant and improved solution flow, which should allow for a significant increase in recoverability of the residual gold in the heaps. This means potential production of greater than 30,000 ounces per year just from residual leaching.

Historically, for the first part -- and for the first part of 2025, Sandstorm has held a 1% NSR on the oxide material. Once production reaches a 396,000 ounces threshold expected in the first half of 2025, the royalty increases to 3% for all remaining oxide material. However, this is just the beginning of the upside for Sandstorm as the long-awaited sulfide portion of the Deep Carbonates Project is now in motion.

The Aisa Group has submitted a $1 billion investment plan to Argentina's incentive regime for major investments or RIGI, as Nolan mentioned before, making it the first mining project to do so and the first project in San Juan. Feasibility studies are scheduled for completion this year, which will pave the way for the development of a new underground mine, along with a milling system and a flotation plant. The proposed processing capacity with these facilities is estimated to be between 3,500 and 4,000 tonnes per day.

The Deep Carbonates Project aims to produce 120,000 ounces of gold annually for at least 17 years with an investment of $485 million. There is also a $52 million exploration program expected to start this year, which will look for potential porphyry mineralization in addition to expanding the sulfide zones of the current epithermal deposit. For Sandstorm, a $30 million bullet payment must be made to us upon declaration of commercial production, which we are now estimating in either 2029 or 2030. In addition, there is a 2.5% NSR on the Deep Carbonates Project, which means we could receive up to 3,000 ounces per year in addition to that one-time payment. In 2022, under previous ownership, Gualcamayo was slated for closure, but in the hands of this ambitious, well-capitalized group and with the involvement of the RIGI program, the best may be ahead for Gualcamayo.

Finally, it's worth a quick mention of Vale's recent announcement of their almost USD12.5 billion investment into the Carajas region over the next five years. This investment is expected to increase our annual iron ore production from the region to 200 million tonnes per year. The copper production is projected to increase by 32% within the region. Our royalty will benefit from both of these increases. As more information comes out, we'll update our forecast.

And with that, I'll hand it over to Ina, the operator, for the Q&A session. Please feel free to ask questions about any of our royalties and streams. Thank you.

(Operator Instructions) Josh Wolfson, RBC Capital Markets.

First question is on the Vatukoula stream and royalty buyback. Having checked the prior quarters, there was no signs of any distress to the operator. So I'm wondering when did they stop paying the stream? And what was sort of the motivation to resolve it in the way that it was disclosed in the sense that there doesn't seem to be much compensation beyond just the base stream repayment and nothing for the royalty.

Yes. They stopped paying us quite a while ago. We haven't recognized revenue from them in quite some time. And it's one of those situations where it's -- they're insolvent at the mining operating level. The parent company had no money. But a large Chinese company is coming in as a shareholder of their parent company on the condition that they buy us out. And so they've already made a $4 million deposit to our lawyers' account that's non-refundable. So if they don't pay the additional $10 million, then we get to keep the $4 million and we keep our stream. So they have to pay us the next $10 million by next month is how that works.

Okay. And then on the guidance that now includes Gualcamayo, what could be, I guess, a larger contributor? I'll say, having covered the mine previously, this was a project that was more technically complicated. The CapEx number that's in the release is quite large. I'm not familiar at all with the operator or the parent company. So with that in mind, what gives the team the confidence that this should be incorporated in the formal guidance?

Yes. So we've been tracking it for a while now. And that big CapEx number that you're seeing in the news reports, that includes a whole bunch of sustaining capital and whatnot. So the upfront capital is not that big than that. The entity that has bought it, I'm not particularly familiar with them, but they are multibillion dollar Argentinian company, and so very, very well capitalized.

Okay. And then sort of back to the first part, in terms of streams that might be more at risk of renegotiation, is there anything in the portfolio that we should be more aware of where that risk could materialize at some point or maybe where there's an opportunity of higher gold prices today that things could get renegotiated?

I would say the only two things that's in our portfolio for a while that I would call our problem children have been Americas Gold and Silver and Bear Creek and Americas Gold and Silver got solved last quarter with all of that new management team coming in, new cash coming in. I think our market cap is up to $0.5 billion now. So that problem children has gone away.

And the only one that remains is Bear Creek, and there's very few ounces in our guidance related to them. And I think one of the benefits is if they do go into some sort of needed process to sell their assets, they owe us $45 million in loans and other things. So -- and we have security of their assets. So I think if there's a positive -- one of our problem -- our only remaining material problem child has the potential to become a material positive for us in terms of monetizing what we're owning.

(Operator Instructions) Your next question comes from the line of Derick Ma.

When Sandstorm hits that $300 million debt threshold, to be clear, what are the priorities? Is it share buyback, debt reduction and then acquisition growth? Or how is Sandstorm thinking about that?

Share buybacks and share buybacks and share buybacks. Once our share price is closer to NAV, we'll then keep paying down our debt. I really do like getting debt really low. And -- but share buybacks is the number 1 priority and then debt reduction, we'll keep looking for deals. The deals have to come with a higher rate of return than debt reduction. And that's a really hard threshold to move.

Okay. And maybe what type of deal opportunities would impact Sandstorm then? And what kind of ticket sizes should we be thinking about?

Yes, we're not looking at anything seriously right now. I mean the only things that we're looking at are things that are $1 million here, $1 million there, where we're tying down what we think will be a really big opportunity in the future where we're getting right first field will be the stream provider five years from now, seven years from now.

We're not looking at allocating material capital in 2025. I think towards the end of this year, if we bought back a ton of shares, our share price is much higher and then our debt is into the $200 million, will we start looking for acquisitions that would be more near-term cash flow and we would pay over time as they go to mine? Yes, we'll start looking then, but we're not looking now.

Okay. Makes sense. And then in terms of MARA, if that's put forth into the RIGI in the next six months by Glencore, what does that mean in terms of the option window for Sandstorm? And when might Sandstorm be on the hook for deposits?

Yes. So our option is indefinite until they make the Board-approved decision and start building the mine, and that's what triggers our option. Once that is triggered, we will absolutely and of course, say yes.

And the way our deal is structured with Glencore was slightly different than the original deal was structured with Yamana. When Glencore came in as the operator, we renegotiated the mechanisms of when we pay. So now the way it works is when we elect yes, we do not have to write a $225 million check up front. We pay slowly over time with them as they build the mine. So if it's a 2.5-year, 3-year construction, we pay about $75 million a year per year over that three years and which is substantially less than what our cash flow will be. So at all points in time, we will be cash flow positive, and we'll start to divert a portion of our cash flow to this when it happens.

Good start in -- or deposits could be in 2027, potentially.

Yes.

Brian MacArthur, Raymond James.

My question relates to the sort of the 2027 guidance. And again, I take your comments about GEOs changing with prices, which, as you know, has always been a challenge here. But the other category drops off -- starts to drop off pretty substantially in '27, '28. What's actually going on there? I'm trying to determine because I would think Vale is up at that time. So some of the others is going up. What's actually dropping off in '27, '28 that causes that reset?

There's a couple of things going on. One is you'll notice that 2026 is an up year relative to 2025. And part of that is Woodlawn and that stream turning on, but it is a capped stream that we inherited when we acquired Nomad. And so we basically get a bunch of payments really fast at $30 million and then the stream drops off. So that's why you see a drop down in 2027 as the Woodlawn starts in 2026 and then goes away by the end of 2027. And then there's a little bit of tailing off of our Cerro Moro stream.

And just Woodlawn, it's a multi-commodity thing again, right? So there's a fair bit of price movement in there as well, right?

Yes.

Tanya Jakusconek, Scotiabank.

Some have been answered by my colleagues' questions. And I guess I'm intrigued about your 2025 guidance again. And I know, Nolan, you mentioned you don't see a sub down at that 65,000 GEOs. Was that -- when you risk adjusted and put this guidance in place, was that based on just solely the commodity price getting there? Or were there other risk adjustments to that guidance that could get you there, some assets that you're concerned about?

There are other risk adjustments that we've made. So if we look back at 2024, for example, and the things that caused us to miss, the number 1 thing was the gold price going up, as I explained before, because fewer GEOs. But there were things like Greenstone ramped up much slower than what they had guided, and that was a portion of our miss.

And there is an assumed ramp-up at Greenstone from their guidance in 2025. We've actually been so conservative that our base case model now is so conservative, it assumes no ramp-up from what they're currently doing. We do think it will ramp up. We're not seeing anything operationally that would suggest it doesn't. We just don't want to be wrong two years in a row for the same reasons.

Okay. So the risk would be anything to do with the ramp-up of Greenstone, although your numbers have lacked production, I gather from -- in the 2025 guidance.

Yes. Yes. So if Greenstone ramps up the way think it's going to and gold prices are cross, we could blow through our guidance.

Okay. And then for the 2025 guidance, I think I heard that Q1 is supposed to be a strong quarter. And so maybe you can just kind of lay out for us how the year looks. Like is it a strong Q1 and then the other three quarters are equal? Or how do you see it? Is it a 60/40 first half, second half? Just some guidance on that would be great.

Yes. I think we're expecting our quarters through 2025 to be relatively consistent with each other with a slight ramp-up towards the end of the year if Greenstone does ramp up. But what I would say is Q1 should have an extra bump of 1,000 to maybe 1,500 GEOs related to that concentrate timing of sales thing that we were missing in Q4 that's going to extra show up in Q1. So it will be sort of a one-time bump in Q1 and then things should be relatively flat for the year, trending upwards towards the end of the year.

Okay. So kind of how I see it is stronger Q1 and then sort of like maybe a little bit Q2, Q3 equal and then maybe a little stronger in Q4?

Yes.

Okay. That's very good. And then my final question, if I could, just coming back to on the debt level. So $300 million in debt by Q2, Q3, somewhere in there, you stopped paying down your debt. You look at your share buyback, obviously, depending on where your shares are, you buy back your shares and/or look at any other potential deals or transactions in the landscape. You don't really have a payment until 2027 for MARA. So if you don't find anything and you work through your share buyback program, do you look at your dividend as well in terms of moving that up?

Yes, that's a good question. I think that our intention with the dividend is -- has always been to establish it low and then start increasing it slightly every year for a very long period of time. We established it low and then took on a bunch of debt to do these transactions and then interest rates went up. So we just paused those increases. Our balance sheet is now strong enough that so we sort of look at the dividend once a year. And I would expect, barring any real surprises that the next time we look at it, it will be an increase.

There are no further questions at this time. I will now hand the call back to Mr. Nolan Watson for any closing remarks.

All right. Thank you very much, everyone, for calling in. I hope everyone has a good day. And again, if there are any further questions, we're here and around and able to answer them. Thank you.

Thank you. This concludes today's call. Thank you for participating. You may all disconnect.