Sandstorm Gold Ltd. (“Sandstorm” or the “Company”) (NYSE MKT: SAND, TSX: SSL) has released its results for the second quarter ended June 30, 2015 (all figures in U.S. dollars).

— SECOND quarter Highlights
•Record Attributable Gold Equivalent ounces sold 1 of 12,901;
•Revenue of $15.4 million;
•Average cash cost per Attributable Gold Equivalent ounce1 of $304 resulting in cash operating margins1 of $892 per ounce;
•Operating cash flow of $9.5 million;
•Net loss of $13.5 million;
•Announced the closing of the restructuring of the Aurizona Gold Stream and its outstanding loan with Luna Gold Corp. (“Luna”); and
•Announced the closing of the acquisition of Gold Royalties Corporation (“Gold Royalties”). Gold Royalties has over $1 million in cash and a portfolio of royalties on 12 mining projects located in Canada, including one royalty that is generating cash flow from gold production.

Sandstorm President & CEO Nolan Watson commented, “The second quarter delivered solid operating cash flow to the company driven by record gold sales from our 14 producing royalty and stream assets. With over $50 million in cash at quarter end, Sandstorm is in a position to be a buyer in what is a struggling gold market, and we believe that as we execute on the opportunities that are in front of us, we will build significant shareholder value.”

— Financial Results

Revenue and Gold Sales
Revenue was $15.4 million in the second quarter of 2015, generated from the sale of 12,901 Attributable Gold Equivalent ounces at an average realized selling price of $1,196 per ounce. Revenue in the second quarter of 2014 was $13.2 million with the increase in 2015 primarily being driven by a 27% increase in the number of Attributable Gold Equivalent ounces sold.

Costs and Expenses
The average cash cost per attributable ounce was $304 during the quarter, resulting in a cash operating margin of $892 compared to $310 and $986 respectively for the second quarter of 2014. Administrative expenses and project evaluation costs together increased by $0.8 million compared to the second quarter of 2014 due to the vesting of previously granted stock based compensation and professional fees relating to increased corporate activity. Earnings and Operating Cash Flow

Earnings and Operating Cash Flow
For the three months ended June 30, 2015, the net loss and cash flow from operations were $13.5 million and $9.5 million, respectively, compared with net income and cash flow from operations of $3.0 million and $9.4 million for the comparable period in 2014. The change is attributable to a combination of factors including a $8.1 million increase in income tax expense related to a reduction of the Company’s deferred income tax assets which is a non-cash expense, a $3.5 million non-cash increase in depletion expense largely driven by an increase in Attributable Gold Equivalent ounces sold, a $3.3 million non-cash impairment relating to the Summit Gold Stream, a $1.1 million non-cash loss on revaluation of the Company’s investments, an increase project evaluation costs and a number of non-recurring items.

— Streams and Royalties

The Company’s stream and royalty segments for the three months ended June 30, 2015 are summarized in the table below:

In $000’s Attributable ounces sold Sales and royalty revenues Cost of sales (excluding depletion) Depletion Impairment of mineral interest Income (loss) before taxes Cash flow from operations
Aurizona 2,921 $ 3,519 $ 1,192 $ 346 $ - $ 1,981 $ 2,327
Bachelor Lake 2,125 2,537 1,063 1,263 - 211 1,474
Black Fox 1,378 1,630 714 985 - (69) 916
Diavik 1,345 1,609 - 1,665 - (56) 1,409
Ming 416 488 - 497 - (9) 488
Santa Elena 2,659 3,186 948 1,943 - 295 2,238
Royalties 2,057 2,460 - 3,522 - (1,062) 2,152
Other - - - - (3,323) (3,323) -
Corporate - - - - - 674 (1,525)
Consolidated 12,901 $ 15,429 $ 3,917 $ 10,221 $ (3,323) $ (1,358) $ 9,479

Attributable Gold Equivalent ounces sold for the three months ended June 30, 2015 was 12,901 ounces compared with 10,149 ounces for the comparable period in 2014. The ounces sold during the 2015 quarter represented a 27% increase from 2014, and a record for the Company. The increase in ounces was largely attributable to increases in gold ounces sold from the Santa Elena Mine in Mexico (“Santa Elena”) and the Aurizona Mine in Brazil (“Aurizona”) as well as an additional 1,345 Attributable Gold Equivalent ounces arising from the recently acquired royalty on the Diavik mine in the Northwest Territories, Canada. The production increases were partially offset by decreases in gold ounces sold from the Bachelor Lake Mine in Quebec, Canada (“Bachelor Lake”).
Santa Elena Mine
SilverCrest Mines Inc. (“SilverCrest”) posted record production from Santa Elena during the second quarter of 2015 due to increased throughput and mill operating efficiencies which increased gold and silver recoveries. As a result, Sandstorm’s gold ounces sold from Santa Elena increased by 244% compared to the second quarter of 2014.

Sandstorm has a gold stream to purchase 20% of the gold produced at Santa Elena at a per ounce price of $357. When Sandstorm’s attributable production from Santa Elena reaches 50,000 ounces of gold, the on-going per ounce payments will increase to US$450.

Subsequent to quarter end, First Majestic Silver Corp. (“First Majestic”) and SilverCrest announced that the companies had entered into a definitive agreement whereby First Majestic would acquire all of the issued and outstanding common shares of SilverCrest (the “Acquisition”). Sandstorm’s Santa Elena Gold Stream will not be affected by the Acquisition.

Aurizona Mine
Gold ounces sold from the Aurizona mine was 25% higher when compared to the second quarter of 2014. Luna is processing ore from a stockpile and it is expected that the stockpile will be depleted and Luna will cease milling operations during the third quarter of 2015.

The Company has a 3% to 5% sliding scale net smelter returns (“NSR”) royalty on the production from Aurizona. At gold prices less than or equal to $1,500 per ounce, the royalty is a 3% NSR. In addition, Sandstorm holds a 2% NSR on Luna’s 200,000 hectares of greenfields exploration ground. At any time prior to the commencement of commercial production, Luna has the ability to purchase one-half of the greenfields NSR for a cash payment of $10 million.

Bachelor Lake Mine
Compared to the second quarter of 2014, there was a 15% decrease in gold ounces sold from Bachelor Lake, primarily related to the mine experiencing lower feed grade which was largely driven by higher than expected dilution from some stopes. Metanor considers this occurrence to be isolated and expects grades to increase in the following quarters. Metanor recently released positive drill results from its exploration activities at the Bachelor Lake Mine. For detailed results refer to the Metanor website at www.metanor.ca.

Sandstorm has a gold stream to purchase 20% of the gold production at Bachelor Lake for US$500 per ounce.


— outlook

Based on the Company’s existing gold streams and royalties, production for 2015 is forecasted to be between 40,000 to 50,000 Attributable Gold Equivalent ounces. The Company is forecasting Attributable Gold Equivalent production of approximately 50,000 ounces per annum beginning in 2018.

— other

Tax
During the three months ended June 30, 2015, the Company recognized a non-cash reduction in its deferred income tax assets of $8.1 million. This is a non-cash based expense and the Company continues to have substantial loss-carryforward pools in Canada for tax purposes.
Gold Stream Settlement
As contemplated in the Deflector gold purchase agreement, the Company provided notice to Doray Minerals Ltd. that it was requesting back the $6.0 million that Sandstorm had advanced under the purchase agreement. As part of a settlement agreement, the Company received $7.0 million in June 2015. The difference between the $7.0 million received and the carrying value of the Deflector mineral interest of $6.3 million was recognized in other income. As a result of the settlement, both parties’ obligations were extinguished under the gold purchase agreement.

Impairment
The lack of progress with respect to Santa Fe Gold Corp. (“Santa Fe”) raising additional capital to satisfy the terms and conditions of the negotiated restructuring of its senior secured indebtedness, prompted the Company to evaluate its investment in the Summit Gold Stream. As a result of its review, the Company recorded an impairment charge of $3.3 million for the full balance of the mineral interest.