Sandstorm Gold Royalties: Leveraging High-Grade Discoveries for Scalable, Low-Risk Growth

Sandstorm Gold Royalties (SAND) is positioning itself as a leading pure-play royalty and streaming company, with a portfolio designed to capitalize on high-grade discoveries and near-term production catalysts. By strategically acquiring interests in world-class projects such as Mexico's Santa Elena, Ecuador's Fruta del Norte, and Mongolia's Oyu Tolgoi, Sandstorm is creating a diversified, low-cost pipeline of gold and copper production. Recent drilling results across these assets suggest 2025 could be a pivotal year for value accretion, driven by scalable resource growth and royalty-triggered cash flows.

Key Projects: High-Grade Discoveries Powering Production

Santa Elena (Mexico): The Santo Niño Gold-Silver Bonanza

First Majestic Silver Corp's Santo Niño discovery at Santa Elena has delivered exceptional results, with intercepts like SE-25-15 showing 27.5 g/t gold and 641 g/t silver over 0.43 meters. This high-grade vein system, extending 1 km along strike and 400 meters down-dip, is within Sandstorm's 20% gold stream (purchased at $487/oz). The stream covers all gold production from the deposit, directly linking Sandstorm's revenue to the project's expansion.

With drilling planned to expand the mineralized footprint in 2025, Santa Elena's potential to grow into a multi-million-ounce gold asset is clear. Sandstorm's fixed-cost structure here—$487/oz versus current spot prices around $2,000/oz—ensures high margins as production ramps up.

Fruta del Norte (Ecuador): Trancaloma's Copper-Gold Potential

Lundin Gold's aggressive drilling at Fruta del Norte, including the FDN-C25-196 intercept of 72.80 g/t gold over 7.95 meters, highlights the mine's ongoing resource growth. Sandstorm's 0.9% net smelter return (NSR) royalty captures all precious metals production, including from the newly explored Trancaloma copper-gold porphyry.

The Trancaloma target, which returned 0.54% copper and 0.14 g/t gold over 858 meters in TRL-2024-220, adds base-metal exposure to Sandstorm's portfolio. With Lundin's 2025 drilling program targeting 108,000 meters, the mine's life could extend beyond expectations, benefiting the royalty holder.

Oyu Tolgoi (Mongolia): Copper-Gold Stream with Fixed Pricing

At Oyu Tolgoi's Hugo North Extension (HNE), recent assays from UGD876 show 3.83% copper equivalent over 112 meters, underscoring the deposit's grade consistency. Sandstorm's stream here is particularly advantageous: it receives 4.47% of gold/silver at a fixed $220/oz gold price and 0.33% copper at $0.50/lb. These terms are “bought down,” meaning costs drop if the Mongolian government exercises its 34% stake option.

The HNE's planned 2027 production start aligns with Oyu Tolgoi's goal to become the world's fourth-largest copper mine by 2030. Sandstorm's fixed-price terms insulate it from commodity volatility, ensuring predictable cash flows even if copper prices weaken.

Portfolio Diversification: Mitigating Risk Through Metals and Geography

Sandstorm's portfolio spans gold, silver, copper, and polymetallic deposits across Mexico, Ecuador, Mongolia, and other jurisdictions like Côte d'Ivoire and Guyana. This diversification reduces reliance on any single commodity or region. For example:
- Odienné (Côte d'Ivoire): A 2.0% NSR on high-grade gold projects like BBM and Charger.
- Omai Gold Mines (Guyana): 1.0% NSR on intercepts like 28.04 g/t gold over 9.3 meters.

This spread not only hedges against regional political risks (e.g., Mongolia's licensing delays) but also balances exposure to both precious and base metals, critical for investors seeking inflation hedges and green energy demand plays.

Royalty/Stream Advantages: Low Risk, High Upside

Sandstorm's model minimizes operational risks by transferring exploration, development, and production costs to the operators. Its royalties and streams are non-dilutive—the company benefits from rising production without taking on capital expenditure. For instance:
- Santa Elena's 20% gold stream ensures Sandstorm's revenue grows proportionally as First Majestic expands mining.
- Oyu Tolgoi's fixed-price terms lock in margins even if copper prices decline.

This structure also allows Sandstorm to leverage optionality: if a project underperforms, it doesn't impact the company's balance sheet.

Near-Term Catalysts: 2025's Milestones and Royalty Triggers

• Santa Elena: Follow-up drilling to define the Santo Niño vein's full extent could lead to a resource upgrade, triggering higher gold deliveries.
• Fruta del Norte: Integration of FDN South into the 2026 mine plan and Trancaloma's potential as a satellite deposit could boost NSR cash flows.
• Oyu Tolgoi: Resolution of licensing and tax issues in 2025 is critical to avoid delays in HNE's underground development.

These catalysts, combined with Sandstorm's 150,000 oz gold-equivalent production target by 2030, suggest the company is well-positioned for growth.

Risks and Considerations

• Political Risk: Mongolia's tax disputes and Ecuador's regulatory environment remain concerns.
• Commodity Volatility: Gold and copper prices are tied to macroeconomic factors like inflation and energy demand.
• Operational Delays: Permitting and technical execution at HNE or Fruta del Norte could lag, affecting timelines.

Investment Thesis: A Prudent Bet on Commodity Growth

Sandstorm's portfolio offers a rare combination of low operational risk, diversified exposure, and near-term catalysts. With its royalty/stream model shielding it from capital costs and its assets delivering high-grade intercepts, the company is primed to benefit from rising production and commodity prices.

For investors seeking leveraged exposure to gold and copper without the volatility of direct mining equities, Sandstorm presents an attractive opportunity. The stock's valuation—currently trading at a discount to its NAV (net asset value)—suggests it could re-rate as 2025's catalysts materialize.

Action Items:
1. Monitor Sandstorm's Q3 2025 updates for drilling results at Santo Niño and HNE.
2. Track Oyu Tolgoi's progress on resolving licensing issues, which could unlock HNE's value.
3. Consider a position in SAND as a core holding for precious metals exposure, with a target price aligned to rising gold prices.

In a market where operational execution and commodity demand are key, Sandstorm Gold Royalties is building a robust case for long-term growth.

Disclaimer: This analysis is for informational purposes only. Always conduct your own research or consult a financial advisor before making investment decisions.