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Good day. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sandstorm Gold Royalties 2022 Third Quarter Results Conference Call. [Operator Instructions] Please be aware that some of the commentary may contain forward-looking statements. There will 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. After the speaker's remarks, there will be a question-and-session. [Operator Instructions] Thank you. Mr. Kazemi, you may begin your conference.
Thank you, Michelle, and thank you to everyone who is joining us today. This has been another record quarter, not just in terms of results, which I'll get into later, but it's also been a record in terms of transactions and acquisitions. As we mentioned on the last few conference calls, all of us at Sandstrom are truly excited about the foundation of portfolio we're creating. Over the last 10 months, we've made some big moves in terms of acquisitions and improving our royalty portfolio. Behind the scenes, the team has been -- they're working tirelessly as we continue to build the new Sandstorm and solidify a clear vision for the company going forward.
Right now, as we speak, Nolan Watson is at a global summit meeting with various world leaders to discuss and see how Sandstorm can play a role in an ever-advancing world on one where energy transition is playing a more central role in business and in industry.
As much as he regrets not being here today, exciting things are happening for the company and our shareholders. And we're excited to continue to share updates and videos on our progress. So you'll see more of those over the coming months. As you can see, in the third quarter, we completed multiple significant transactions, adding several new assets to the portfolio. And the financial results that we released yesterday are an early reflection of the hard work that has gone into increasing the size and quality of the company's portfolio. I'd like to start with a quick look at Sandstorm's balance sheet.
The first column on this slide highlights Sandstorm bank debt as of yesterday and investments in other mining companies. It's important to note that since we closed the Nomad acquisition, there were 2 large payments owed under the streaming agreement. One, for approximately $56 million for the Platreef stream and another for $82 million under the Greenstone stream.
While the exact timing of those payments were dependent on certain milestones being achieved, I'm happy to report that both those payments have now been made, and there are no further upfront payments remaining.
The $505 million drawn on our revolving credit facility not only accounts for the equity financing that the company completed in October but as well as the 2 payments I mentioned earlier, meaning Sandstorm has over $120 million in credit capacity. As a management team, we're committed to focusing our efforts to debt repayment while also assessing any new accretive opportunities that may present themselves.
It's also worth noting that the significant investments that Sandstorm has in other mining companies, included in the $152 million worth of investment, is the first debenture with Horizon Copper, which formed part of the consideration for the transfer of the Hod Maden interest, an on-trade resources equity stake. The column on the right shows estimated pro forma figures after the final component of the Horizon Copper deal closes. As you can see, after the Antamina NPI sale, Sandstorm will hold nearly $300 million of investments in other mining companies. Of course, these investments are in addition to the portfolio of cash flows that are brought and paid for in our existing royalties portfolio.
The third quarter of 2022 was another record for Sandstorm in terms of both revenue and gold equivalent production. The company realized $39 million in revenue, a 41% increase compared to the same period in 2021, and sold 22,606 attributable gold equivalent ounces, a 46% increase from the comparable period in 2021.
These strong operating results were despite a decreasing commodity price environment. The average realized gold price from the company's stream was approximately $1,700 per ounce, which is nearly a 10% decrease from the second quarter in 2022.
Rapidly rising interest rates around the world and depressed commodity prices can make for a very challenging market for many companies. However, I find some comfort in the fact that Sandstorm continue to break new records even in this environment. I'm also excited for when the tide inevitably turn and we see Sandstorm's portfolio benefit from more bullish commodity markets. Looking at the quarterly results in a bit more detail on this next slide. Of the $39 million in total revenue, approximately $24 million was attributable to sales from the company's stream agreement and approximately $15 million was royalty revenue.
Average cash cost for the 3 months ended September 2022 was $323 per attributable ounce. This resulted in cash operating margins of $1,383 per ounce, a 10% decrease when compared to the third quarter of 2021. Cash flows from operating activities, excluding changes in noncash working capital, was 50% higher than the comparable period in 2021, coming in at around $31 million. Sandstorm's net income for the quarter was $31.7 million, which included a $24.9 million gain resulting from the sale of the company's Hod Maden interest to Horizon Copper. Sandstorm received a flagship gold stream on the Hod Maden project, along with a portion of debt equity in Horizon Copper in consideration for the transfer.
With the BaseCore-Nomad transaction, Sandstorm added 30 new streams and royalties to its portfolio, 10 of which are now cash flowing to the company. This slide shows the breakdown of Sandstorm streaming and royalty assets, and you'll see that we have several new additions on this list.
Beginning with the largest contributor to gold equivalent production during the quarter is the Cerro Moro mine under the Yamana Silver Stream agreement. Sandstrom received and sold 122% more silver ounces in Cerro Moro during the third quarter when compared to the same period in 2021. This increase was partially offset by a decrease in the average selling price of silver.
The second biggest contributor was the Mercedes mine in Mexico. Many of you will recall that Sandstrom completed a transaction with Bear Creek Mining at the end of 2021, which included a gold stream agreement on the Mercedes mine. Deliveries to Sandstorm commenced in April 2022 under this agreement.
In addition to the Sandstorm gold stream, the company acquired additional streaming contracts through the Nomad acquisition. The gold equivalent production attributable to Mercedes shown here includes delivery from the Nomad agreements as well, which [ compense ] after the completion of the acquisition in August 2022.
Antamina Royalty is another addition to this list, which was acquired in the BaseCore transaction that closed in July of this year. I would highlight the fact that Sandstorm currently owns the full 1.66% net profits interest.
As the company announced in May 2022 and further discussed in the second quarter conference call, Sandstorm has agreed to transfer the Antamina Royalty to Horizon Copper and retain a silver stream and a residual royalty on the project as part consideration. This component of Horizon Copper deal is expected to close in the coming months. In the interim, Sandstorm is receiving payments under the Antamina NPI.
Other notable additions to this list are the Bonikro gold stream, an asset located in Cote d'Ivoire, the Blyvoor gold stream in South Africa and the Caserones [ Royalty ] in Chile.
In total, the new assets acquired in the Nomad and BaseCore transaction account for approximately 30% of Sandstorm's production for the third quarter. That's an immediate and meaningful increase to revenue, which show an increase of other assets from these transactions begins to cash flow to Sandstorm over the next several years.
In terms of geographical breakdown of the third quarter's attributable gold ounces, 40% of production came from operations located in North America, with nearly half of that coming from Canadian mines. In total, the Americas accounted for over 85% of gold equivalent production. Clearly, it was a strong quarter for Sandstorm. And I'm pleased to say that the company is on track to meet its guidance of between 80,000 to 85,000 attributable gold equivalent ounces in 2022. Sandstorm continues to be a growth-oriented company, and we're forecasting over 80% growth by 2025, when we anticipate attributable gold equivalent production to be over 150,000 ounces.
And with that, I'll turn it over to Dave for some asset update. Dave?
Great. Thanks, Erfan. So with the recent takeover activity on Yamana, I thought it would make sense to discuss 2 important assets we have that are operated by them.
Starting with the Mara project in Argentina, with just over 56% owned by Yamana and the rest of 44% -- just under 44% owned by Glencore, just recently consolidated from Newmont. With feasibility study unpublished until next year, we have yet to have an estimated time frame to production.
However, in the background, activity is dynamic, and it's clear that a number of groups beyond Sandstorm are keen on pushing this project forward aggressively. For reasons like the uncertainty of timing for Mara that we wanted to ensure Sandstorm's financial capability to make the ongoing stream payment when the project gets into construction.
Looking back to the end of 2015, when this [ option ] was purchased, we did not have the balance sheet to do this on our own. But since then, Sandstorm has grown our credit facility and achieved a great cash flow growth profile.
Having the [ foresight ] to negotiate this gold stream in 2015 prices, even though we didn't have a financial capacity at the time to compete in, we find ourselves today in a position to handily complete $0.25 billion transactions because of our long-term focused financial planning. This is a very deep investment for us and a great bit of optionality for our shareholders.
As a reminder, the Mara project is the amalgamation of the Agua Rica project and the Alumbrera mine. Utilizing processing, infrastructure and tailings storage at Alumbrera, mined material from Agua Rica will be transported by conveyor to the mill. This project is a fundamental growth project within Yamana's portfolio and has been key in justification of the offered takeover premiums.
For the balance of 2022, the Mara joint venture is completing the feasibility study for a release in the first half of 2023. However, more importantly, the JV is busily working with the Intergovernmental Commission of Catamarca on the environmental and social impact assessment. Definition of this document is expected to be filed by the end of 2022, with the final ESIA filed at a later date.
Mara will be among the top 25 copper projects in the world when in production and expected to be one of the lowest capital intensity copper projects globally.
Moving on, I'll give a bit of an update on Cerro Moro, also within the Yamana portfolio of assets. Yamana has been speaking at length regarding the expansion potential of the project over the past year. Cerro Moro is a key component of what Yamana calls their 1.5 Plan, to see a self-funded expansion of 50,000 to 60,000 ounces of gold equivalent production at the mine.
The objective at Cerro Moro is to create a sustainable 10 years of production at a minimum of 160,000 ounces of gold equivalent per year. They're planning to achieve this through ore sorting, a plant expansion and potentially heap leach operations.
Exploration success would also be required for this plan to be executed, but that's one of the aspects of Cerro Moro that we appreciated the most when we first looked at the project. The plant -- the first plant expansion is underway, with some small modifications expected to increase throughput to 1,500 tonnes per day.
A further expansion to 2,200 tonnes per day is also planned as a Phase 2 program. Total capital for both expansion programs are estimated to be $30 million to $40 million.
Parallel to the plant expansions, there are ongoing tests to the heap leach potential at site. This would open up an entire new category of mineralization at the site that's never been considered resource.
So what is emerging is a vision that we had of Cerro Moro way back in 2015 when we completed this deal. With Yamana at the center of a number of takeover bids, clearly, others are seeing the potential of having these assets within the portfolios of larger companies.
This continues to demonstrate how Sandstorm takes an ultra long-term view of our investments, attempting to envision how they perform under new management and new ownership.
So with that, I'll pass over the call back to the operator, Michelle, to begin the Q&A. Please feel free, of course, to ask questions about any of our streams and royalties.
[Operator Instructions] Your first question comes from Trevor Turnbull of Scotiabank.
I just wanted to ask about debt reduction, going forward. You talked about it in the intro, and there's certainly a significant amount of value from the equity stakes that you hold in Horizon Copper and Sandbox and so forth.
I just wondered if you could give us a bit of an update on when those potentially would be free trading and you would be in a position to think about those as ways to potentially reduce debt.
Yes. Thanks for the question, Trevor. And there are some investments that we hold that are not just a Horizon and Sandbox. But for the -- for some of those transactions with respect to the Horizon component, there's a requirement that Sandstorm retained a certain ownership percentage to maintain its ROFR on existing or future streams and royalties.
So for the near term, we don't anticipate selling any of those blocks. But some of our another noncore investments, certainly we have been liquidating over the last year, and we'll continue to be liquidating over that time as well.
And as you can see, we do have some cash flow coming in from the reduction in the stream for Vatukoula, which we announced just in the last week.
Right. And is there anything else that we should be thinking about other than the operational cash flow, which obviously is -- we see that continuing to grow? And like you said, there's the odd thing like the buyback that comes in. Are there other kind of things that we should think about just moving forward?
I guess how aggressive are you thinking about being in terms of reducing debt? Is that something you're comfortable just kind of pay it as operations allow? Or are there other things that you're thinking about?
Yes. With the financing that was completed last month, we don't feel any pressure to reduce debt aside from operating cash flow and liquidation of noncore investments. You saw us spin out a couple of royalties that people haven't given us any value for them, and we received some cash for that.
So you may see some of that on the sideline, but predominantly the cash flow that we bring in are going to use that to pay down debt, and we're comfortable with those levels that exist now.
[Operator Instructions] Your next question comes from Heiko Ihle of H.C. Wainwright.
I understand that your cash costs are only a very small fraction of metals prices, obviously, streaming all in all. But nonetheless and knowing fully well, you don't actually need to do this. Given recent volatility in the price of gold, is there a price where you consider entering into some sort of cashless collars on at least some of your attributable ounces?
I mean I know you want to keep the exposure to the metal. And so I'm not meaning anything close to the spot price, but call it something clearly white reaching, plus 100, minus 100 on it from spot, something like that?
Heiko, thanks for the question. Certainly, I think over the last several years, we've done research into collars and the use of them. I think the industry as a whole has had very mixed results on its success. I would say that if we had significantly higher levels of debt, the looking to collars would be something that we consider researching more.
But based on our existing debt levels, even if commodity prices decline, we're still comfortable with the risks associated with not entering to collars. And we're quite bullish in the long run with respect to commodity prices.
Fair enough. Yes, so am I. I mean it's the life of the mining analyst. Your balance sheet is -- was actually a good layover into my next question as well. Your balance sheet is extremely healthy, especially after the recent capital raise. There was some talk about distressed asset sales in the market.
In fact, just going through mental calls I've had with your calls, I've had with people mentally, I don't think I've heard this many rumors of assets being for sale in quite a long time. Is it fair to assume, again, given that you now have all this newfound cash, that your list of targets has increased in sizing, dollar sizing that is?
And building on that, given recent geopolitical trends in Latin America, is it fair to think that your focus might be slightly less Latin America, going forward?
Yes. Heiko, I'll answer that one. I think the overall feeling that we have and I think the strategy that we have for growth, and we still are focused on further growth, it still is in terms of jurisdictionally. I'll address that first. It's really asset base for us. We do have great diversification amongst our assets, amongst jurisdictions.
So we're really more concerned at the asset level, how well it's going to perform. Of course, as always, it needs to -- we need to be able to administer the streaming or the royalty contract, going forward.
We do see, though -- we certainly see the market opening up and more financings being required for a lot of projects, especially as a lot of these bigger projects really figure out how they're going to get to this decarbonization market that's coming up and the capital required for that. But a big part of the strategy, going forward, and really the reason why we wanted to have Horizon created is that's a good strategic partner going forward.
What we are focused on in the future is really avoiding more and more of those typical processes for your standard precious metal streams that are coming off of assets and really focusing on more accretive and really putting in the hard work to really kind of get these more accretive transactions, where we're working with groups like Horizon, going forward.
So for us, for sure, strategy going forward, jurisdictionally, we have great diversification, which allows us to focus more on really the technical aspects that we like on projects and the exploration success that we've been so famous for being able to achieve on our transactions in the past, that really helps to encapsulate, I think, our strategy, going forward.
Thank you. There are no further questions at this time. Please continue with closing remarks.
Great. Well, thank you, everyone, for taking the time and joining us for this conference call, recognizing it's a very busy week for earnings and companies releasing the results.
And to the extent there are any other further questions, feel free to reach out to Dave, Nolan and myself and Mark to get your questions answered. We'll be certainly at our desk [ ready and ] able to answer them. So thank you, everyone.
Ladies and gentlemen, this does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines.