Exhibit 99.2



















|WHO
WE ARE






                                                                        
                           At
                           Sandstorm we are a forward thinking team that is focused, diligent and nimble, providing innovative
                           financing alternatives to mining companies with high quality assets in order to deliver strong risk
                           adjusted returns to shareholders. Risk analysis (including technical, financial, social and environmental)
                           and opportunity identification (including exploration and operational upside) are the foundational
                           building blocks of our business model. We focus on long-term growth, not short term success and although
                           our team is small, we think big. At our core, we value integrity, trust, innovation, creativity and
                           hard work. We are continually adapting and improving to ensure we become the resource sector’s
                           best risk-adjusted cash flow investment vehicle. | 
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|TABLE OF CONTENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Company Profile
        
        A
Message to our Shareholders
        Board
of Directors
        Management
Team
        Facts
& Figures
        Global
Assets Map
        
        Management's Discussion &
        Analysis
        
        Company
Highlights
        Overview
and Outlook
        Key
Producing Assets
        Other
        Producing Assets
        Development
Assets
        Summary
of Annual Results
        Summary
of Quarterly Results
        Quarterly
Commentary
        
        Consolidated Financial Statements
        
        Financial
Position
        (Loss)
Income
        Comprehensive
(Loss) Income
        Cash
        Flows
        Changes
in Equity
        Notes
to the Consolidated Financial Statements
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|                    |         
|------------------- | --------
|Section
    01      |         
|Company
    Profile | 05
    —







CORPORATE
& SHAREHOLDER INFORMATION





|STOCK
                                         EXCHANGE LISTINGS
        
        
        Toronto
        Stock Exchange
        TSX:
        SSL
        
        New
        York Stock Exchange
        NYSE.MKT:
        SAND
        
        
        
        TRANSFER
        AGENT
        
        Computershare
        Investor Services
        2nd
        Floor, 510 Burrard Street
        Vancouver,
        British Columbia
        V6C
        3B9
        T604 661 9400
        
        
        
        AUDITORS
        
        
        Deloitte
        LLP
        Suite
        2800, 4 Bentall Centre
        1055
        Dunsmuir Street
        Vancouver,
        British Columbia
        V7X
        1P4
        
        T604 669 4466
        F604 685 0395
        
        
        
        CORPORATE
        SECRETARY
        
        Christine
        Gregory | CORPORATE
                                         OFFICES
        
        
        Vancouver
        Head Office
        Suite
        1400, 400 Burrard St.
        Vancouver,
        British Columbia
        V6C
        3A6
        
        T604 689 0234
        F604
        689 7317
        
        info@sandstormltd.com
        www.sandstormgold.com
        
        Toronto
        Office
        Suite
        1110, 8 King St. East
        Toronto,
        Ontario
        M5C
        1B5
        T416 238 1152
        
        Barbados
        Office
        2nd
        Floor, Lime Lifestyle Centre
        Holetown,
        St. James
        BB24016
        West
        Indies, Barbados
        
        
        
        BOARD
        OF DIRECTORS
        
        Nolan
        Watson
        David
        Awram
        David
        De Witt
        Andrew
        T. Swarthout
        John
        P.A. Budreski
        Mary
        L. Little
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------















|         |                    
|-------- | -------------------
|         | Section
    01     
|—
    06 | Company
    Profile







TO
OUR



SHAREHOLDERS,







| | The
    inherent cyclicality of the mining industry is such that investor interest can swing from hysteria to apathy, and back to
    hysteria in relatively quick succession. Amid this volatility, it is those companies who position themselves as buyers in
    periods of depressed asset valuations (like what we saw during 2015) that can create long-term wealth for their shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | When
                                         the resource market began to turn negative a few years ago, we were excited about the
                                         potential for Sandstorm to acquire attractive assets at depressed valuations. We knew
                                         that if we managed our balance sheet and were patient, there would be opportunities for
                                         foundational growth and for company defining acquisitions. We expected there to be some
                                         pain along the way, as comes with every bear market, but at the outset of 2015, it felt
                                         like the challenges that we had faced were mostly behind us and that we were entering
                                         a year where our focus would be forward. As it turned out, we witnessed one of the busiest
                                         years on record for stream and royalty finance and saw asset valuations reach levels far
                                         below what many market experts thought was probable.
                                                          
                                                          With
                                         our available cash, credit facility and incoming cash flow, we were able to aggressively
                                         pursue transactions and I’m pleased that the result was the allocation of over
                                         US$200 million and the acquisition of 30 new streams

























|interests,
                                         generated more value than the ounces that were produced during the 2015 year. Even in
                                         down markets and with reduced exploration budgets, we continue to be the beneficiaries
                                         of exploration upside, without having to make additional capital contributions to those
                                         efforts. I am also encouraged that our royalty portfolio has grown to include 90 exploration
                                         stage assets. Although little to no value is being attributed to these projects by the
                                         market at present, these assets represent seeds of upside that we believe, in some cases,
                                         will take root and grow into meaningful value contributors.
                                                                                
                                                                                To
                                         fund our 2015 acquisitions, we deployed the bulk of our cash and fully drew down on our
                                         revolving credit facility. With the help of a modest equity raise we reduced the debt
                                         position to US$83.5 million by year-end and because of our belief in the importance of
                                         a strong balance-sheet, our goals have shifted for 2016. We intend to exercise financial
                                         discipline and use the majority of our free cash flow to | pay
                                         down debt. At the same time, we want to continue growing our diversified portfolio of
                                         gold streams and royalties and we are therefore looking to raise cash by monetizing non-core
                                         assets.
                                                                                
                                                                                Going
                                         into 2016, I am encouraged as Sandstorm’s asset base and cash flow have never been
                                         more diversified, our counterparty risk has never been lower, our portfolio has never
                                         before had so much precious metals optionality and I believe that there is significant
                                         growth ahead for the company and our shareholders.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | NOLAN
    WATSON              
| | ------------------------------
| | PRESIDENT,
    CEO AND FOUNDER















|         |                    
|-------- | -------------------
|         | Section
    01     
|—
    08 | Company
    Profile











BOARD
OF DIRECTORS







|1  
    Mary L. LittleFounder and Director of Mirasol Resources. Ms. Little led
    Mirasol’s growth as a successful prospect generator, and spearheaded corporate development activities, including the
    negotiation of joint ventures and the sale of a principal asset.          | 3
      David AwramCofounder of Sandstorm and former Director, Investor Relations
    for Silver Wheaton Corp. Mr. Awram has overseen the company’s corporate development, evaluating hundreds of projects
    and completing on-site due diligence on dozens of mining projects across the globe.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                   
|2
    Andrew T. SwarthoutCEO and Director of multi-asset silver company, Bear Creek
    Mining. Mr. Swarthout has participated in several discoveries and reserve expansions on projects in North and South America
    that are in production or will be in production in the future. | 4  
    Nolan WatsonCofounder of Sandstorm and former CFO of Silver Wheaton.
    Mr. Watson has been involved in over $2 billion in streaming and royalty transactions and has won numerous awards for his
    professional and charitable achievements.                                          























|                    |         
|------------------- | --------
|Section
    01      |         
|Company
    Profile | 09
    —









|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | MANAGEMENT
                                         TEAM                                                                                                                                                                                 
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                          
|5
                                         John P. A. Budreski
                                                                                                           

President
and CEO of bulk commodities royalty company, Morien Resources. Prior to Morien, Mr. Budreski was the Vice Chairman of Cormark
Securities and has over 25 years of experience in the resource and resource financing industries.




6
David E. De Witt


Founder
and Chairman of venture capital firm, Pathway Capital. Mr. De Witt practiced corporate and securities law prior to Pathway and
has held directorships in many public companies involved in the natural resource field. | Nolan
                                         Watson

FCPA,
FCA, CFA


President,
CEO

and
Founder







Erfan
Kazemi

CPA,
CA, CFA


Chief
Financial

Officer







Tom
Bruington

P.
Eng., M.Sc.


Executive
VP,

Project
Evaluation



























Global
Asset Growth Asset Summary by operating stage Production Development Adv. Exploration Exploration 19 23 68 22 Production Development Exploration















































68%
NORTH AMERICA 17% SOUTH AMERICA 11% EUROPE/ASIA 4% AFRICA CANADA 61 USA 23 MEXICO 03 HONDURAS 02 BRAZIL 09 PERU 04 CHILE 05
ARGENTINA 04 FRENCH GUIANA 01 TURKEY 10 SWEDEN 03 MONGOLIA 02 SOUTH AFRICA 02 BURKINA FASO 02 GHANA 01 Section 2015 Asset
Summary by location Subsequent to year-end, Sandstorm acquired an additional 55 royalties on properties located in North America, South America,
Europe and Asia. The preceding figures include these royalties















SANDSTORM GOLD LTD.



MANAGEMENT’S DISCUSSION
AND ANALYSIS



Annual 2015



For The Year Ended December 31, 2015



This management’s discussion and analysis (“MD&A”) for Sandstorm Gold Ltd. and its
subsidiary entities (“Sandstorm”, “Sandstorm Gold” or the “Company”) should be read in conjunction
with the audited consolidated financial statements of Sandstorm for the year ended December 31, 2015 and related notes thereto
which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”). The information contained within this MD&A is current to March 30, 2016 and
all figures are stated in U.S. dollars unless otherwise noted.



company HIGHLIGHTS



Operating Results



| | · | Attributable Gold Equivalent ounces sold, for the three months and year ended December 31, 2015 were 8,951 ounces and 45,146
ounces, respectively, compared with 10,424 ounces and 44,821 ounces for the comparable periods in 2014. Attributable Gold Equivalent
ounces sold for the most recently completed year represented a record for the Company.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Revenue for the three months and year ended December 31, 2015 was $9.9 million and $52.7 million, respectively, compared with
$12.5 million and $56.5 million for the comparable periods in 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Operating cash flows for the three months and year ended December 31, 2015 were $5.0 million and $30.8 million, respectively,
compared with $8.9 million and $35.2 million for the comparable periods in 2014.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Average cash costs for the three months and year ended December 31, 2015 of $2581 and $3001 per Attributable
Gold Equivalent ounce, respectively, compared with $3081 and $3211 per Attributable Gold Equivalent ounce
for the comparable periods in 2014.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 1) | Refer to section on non-IFRS measures of this MD&A.
| | -- | ---------------------------------------------------



Significant Acquisitions



| | · | On January 27, 2015, the Company announced that it had entered into 10 royalty agreements on properties located in Africa and
the USA, which include a 0.45% NSR on Orezone Gold Corp.’s Bomboré gold project located in Burkina Faso.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On March 23, 2015, the Company announced that it had acquired a 1% gross proceeds royalty over property in Lac de Gras in the
Northwest Territories, Canada, including property constituting the Diavik Diamond Mine operated by Rio Tinto plc.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------













| | · | On April 28, 2015, the Company closed its previously announced agreement to acquire 100% of the outstanding
common shares of Gold Royalties Corp., which had 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.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On October 27, 2015, the Company entered into three agreements with Yamana Gold Inc. that included commodity streams from up
to five of Yamana's mining projects. For consideration of $152 million in cash and 15 million warrants of the Company, Sandstorm
received a multi-asset silver stream that includes production from Chapada, Minera Florida and Cerro Moro, a copper stream on Chapada,
and an early deposit gold stream on Agua Rica. The transaction provides:
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Imminent Cash Flow: New silver and copper streams are expected to contribute $8 million to $10 million of cash
flow annually starting in 2016, increasing to $20 million annually by 2019 representing a 55% increase in the Company’s 2019
forecasted cash flow;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Asset Diversification: Multi-asset silver stream that includes production from Chapada, Minera Florida and Cerro
Moro, a copper stream on Chapada, and an Early deposit gold stream on Agua Rica;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Downside Protection: 24-month silver stream backstop from the El Peñon mine if Cerro Moro does not reach
production by 2019 and an additional backstop from the Chapada mine under certain conditions;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Asset Quality: The projects underlying the transaction are low cost, economically robust assets with significant
exploration upside;
| | - | ------------------------------------------------------------------------------------------------------------------------------------

| | o | Improved Counterparty Profile: Approximately 90% of Sandstorm’s cash flow to come from majors, mid-tiers
and debt-free junior mining companies by 2019; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Precious Metal Focus: Precious metals and diamonds to contribute over 80% of the Company’s cash flow by 2019.
| | - | -------------------------------------------------------------------------------------------------------------

| | · | On January 19, 2016, the Company announced that
it had agreed to acquire 55 royalties from Teck Resources Limited and its affiliates for total consideration of up to $22 million,
payable in $1.4 million cash and $20.6 million in common shares of the Company. The transaction provides asset diversification;
immediate cash flow and significant cash flow growth potential with estimated cash flow in 2016 of $1.5 million to $2.0 million,
growing to $10 million to over $15 million in cash flow per year; and strong counterparties including Barrick Gold Corporation,
Glencore plc, KGHM Polska Miedz SA, Newmont Mining Corporation, Kinross Gold Corporation, New Gold Inc. and
Imperial Metals Corporation.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Other



| | · | On June 30, 2015, the Company closed its previously announced restructuring of its Aurizona Gold Stream and its outstanding
loan. Under the terms of the restructuring, the Gold Stream was terminated and replaced by two net smelter return royalties and
a convertible debenture. Additionally, the maturity date of the existing loan was extended from June 30, 2017 to June 30, 2021.
As part of the restructuring, Luna completed a $30 million financing with Pacific Road Resources Funds. Management believes the
restructuring puts Luna Gold on a development path to move the Aurizona mine toward sustainable, long-term production.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On October 26, 2015, the Company amended its revolving credit agreement, to allow the Company to borrow
up to $110 million for acquisition purposes. As part of the Yamana transaction, the Company fully drew on the $110 million in available
credit.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | On November 3, 2015, the Company completed an equity financing for aggregate gross proceeds of $28.8 million. Upon closing
of the equity financing, the majority of the net proceeds were used to reduce the balance of the Company’s revolving credit
facility.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





2







Overview



Sandstorm is a growth-focused company that seeks
to acquire gold and other precious metal purchase agreements (“Gold Streams” or “Silver Streams”) and royalties
from companies that have advanced stage development projects or operating mines. In return for making upfront payments to acquire
a Gold Stream, Sandstorm receives the right to purchase, at a fixed price per ounce, a percentage of a mine’s gold, silver,
or other commodity ("Gold Equivalent") production for the life of the mine. Sandstorm helps other companies in the resource
industry grow their businesses, while acquiring attractive assets in the process. The Company is focused on acquiring Gold Streams
and royalties from mines with low production costs, significant exploration potential and strong management teams. The Company
currently has 132 Gold Streams and net smelter returns royalties (“NSR”s), of which 19 of the underlying mines are
producing.



Outlook



Based on the Company’s existing Gold Streams and NSRs, attributable Gold Equivalent production (individually
and collectively referred to as “Attributable Gold Equivalent”) for 2016 is forecasted to be between 40,000 –
50,000 Attributable Gold Equivalent ounces. The Company is forecasting Attributable Gold Equivalent production of approximately
65,000 ounces per annum by 2020.



Key Producing Assets



Yamana Silver Stream



Yamana Gold Inc.



During the year ended December 31, 2015, the Company
acquired a Silver Stream on Yamana Gold Inc.’s (“Yamana”) gold-silver Cerro Moro project, located in Santa Cruz,
Argentina (the “Cerro Morro Project” or “Cerro Moro”) and interim silver deliveries during years 2016 to
2018 from a number of Yamana’s currently operating mines.



In acquiring the Yamana Silver Stream, the Chapada
copper stream (refer to Chapada copper stream section) and a potential gold stream on the Agua Rica project, the Company agreed
to upfront consideration consisting of a cash payment of $152 million, of which $4 million is payable in April 2016, and 15 million
Sandstorm warrants. The warrants have a 5 year term, a strike price of $3.50 per Sandstorm common share and are exercisable upon
achievement of specific milestones with respect to the construction of the Cerro Moro mine.





3







Silver deliveries



Under the terms of the Yamana Silver Stream, Sandstorm
has agreed to purchase, for on-going per ounce cash payments equal to 30% of the spot price of silver, an amount of silver from
Cerro Moro equal to 20% of the silver produced (up to an annual maximum of 1.2 million ounces of silver), until Yamana has delivered
to Sandstorm 7.0 million ounces of silver; then 9.0% of the silver produced thereafter.



As part of the Yamana Silver Stream, during the
year 2016 through 2018, Sandstorm has also agreed to purchase, for on-going per ounce cash payments equal to 30% of the spot price
of silver, an amount of silver from:



| | (i) | the Minera Florida mine in Chile equal to 38% of the silver produced (up to an annual maximum of 200,000 ounces of silver);
and
| | --- | -------------------------------------------------------------------------------------------------------------------------------

| | (ii) | the Chapada mine in Brazil equal to 52% of the silver produced (up to an annual maximum of 100,000 ounces of silver).
| | ---- | ---------------------------------------------------------------------------------------------------------------------



Downside protection



If by January 1, 2019, the Cerro Moro processing
facility has not averaged 80% of its daily nameplate production capacity over a 30-day period (the "Commencement of Production"),
then Yamana ́s producing El Peñon mine in Chile will provide a 24 month backstop until the Commencement of Production
has begun. During the 24 month backstop, if applicable, Sandstorm will purchase, for on-going per ounce cash payments equal to
30% of the spot price of silver, an amount of silver equal to 16% of El Peñon ́s silver production up to a maximum
of 1.2 million ounces per annum.



About Cerro Moro



The Cerro Moro project is located approximately
70 kilometres southwest of the coastal port city of Puerto Deseado in the Santa Cruz province of Argentina. Cerro Moro contains
a number of high grade epithermal gold and silver deposits, some of which will be mined via open pit and some via underground mining
methods. In February 2015, Yamana announced that it would proceed with the construction of the Cerro Moro mine. The current plan
indicates average annual production in the first three years of 135,000 ounces of gold and 6.7 million ounces of silver, with the
life of mine annual production averaging approximately 102,000 ounces of gold and 5 million ounces of silver at a throughput of
1,000 tonnes per day.



The procurement of long lead items is underway
and Yamana anticipates that construction on Cerro Moro will begin in 2016.



Chapada Copper Stream



Yamana Gold Inc.



During the year ended December 31, 2015, the Company
acquired a copper Stream on Yamana’s open pit gold-copper Chapada mine located 270 kilometres northwest of Brasília
in Goiás state, Brazil (“Chapada” or the “Chapada Mine”). Under the terms of the Yamana copper stream,
Sandstorm has agreed to purchase, for on-going per pound cash payments equal to 30% of the spot price of copper, an amount of copper
from the Chapada Mine equal to:



| | i) | 4.2% of the copper produced (up to an annual maximum of 3.9 million pounds of copper) until Yamana has delivered 39 million
pounds of copper to Sandstorm (the “First Chapada Delivery Threshold”); then
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





4







| | ii) | 3.0% of the copper produced until, on a cumulative basis, Yamana has delivered 50 million pounds of copper to Sandstorm (the
“Second Chapada Delivery Threshold”); then
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii) | 1.5% of the copper produced thereafter, for the life of the mine.
| | ---- | -----------------------------------------------------------------



Downside protection



If Cerro Moro has not achieved the Commencement
of Production and Sandstorm has not received cumulative pre-tax cash flow equal to $70 million from the Yamana Silver Stream, then
the First Chapada Delivery Threshold and the Second Chapada Delivery Threshold will cease to be in effect and Sandstorm will continue
to purchase 4.2% of Chapada’s payable copper production (up to an annual maximum of 3.9 million pounds of copper), until
such time as Sandstorm has received cumulative pre-tax cash flow equal to $70 million, or Cerro Moro has achieved the Commencement
of Production.



About Chapada



Chapada has been in production since 2007 and is
a relatively low-cost operation. The ore is treated through a flotation plant with capacity of 22 million tonnes per annum. Yamana
has benefitted from significant discoveries at Chapada in the past and expects to complete 10,000 metres of exploration drilling
and 12,000 metres of infill drilling over the course of 2015.



Diavik Royalty



Rio Tinto PLC



During the year ended December 31, 2015, the Company
acquired a 1% gross proceeds royalty based on the production from the Diavik mine located in Lac de Gras, Northwest Territories,
Canada (“Diavik” or the “Diavik Mine”) which is operated by Rio Tinto PLC (“Rio Tinto”).



For consideration the Company paid $52.5 million
in cash and 3 million warrants of Sandstorm to IAMGOLD Corporation (the previous owner of the 1% royalty). The warrants have a
strike price of $4.50 per Sandstorm common share, an expiration date of March 23, 2020 and will only be exercisable following initial
production from the Diavik Mine’s A21 pipe.



The Diavik Mine is Canada’s largest diamond
mine. The mine began producing diamonds in January 2003, and has since produced more than 90 million carats from three kimberlite
pipes (A154 South, A154 North, and A418). Rio Tinto recently approved the development of open pit mining from a fourth pipe (A21)
which is targeted for production in 2018. Recent public announcements have indicated that the development of A-21 pipe continues
to progress according to plan.





5







Black Fox Gold Stream



Primero Mining Corp.



The Company has a Gold Stream to purchase 8% of
the life of mine gold produced from Primero Mining Corp.’s (“Primero”) open pit and underground Black Fox mine,
located in Ontario, Canada (the “Black Fox Mine”), and 6.3% of the life of mine gold produced from Primero’s
Black Fox Extension, which includes a portion of Primero’s Pike River concessions, for a per ounce cash payment equal to
the lesser of $524 and the then prevailing market price of gold.



The Black Fox Mine began operating as
an open pit mine in 2009 (depleted in 2015) and transitioned to underground operations in 2011.Current activities at the Black
Fox Mine include:



| | · | Recent drilling by Primero has discovered the Froome zone, which is located approximately 1 kilometer east of the current Black
Fox open pit. The zone continues to be a priority for surface exploration through the 2016. Furthermore, Primero anticipates $8.9
million in 2016 exploration expenditures at the Black Fox complex.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Santa Elena Gold Stream



First Majestic Silver Corp.



The Company has a Gold Stream to purchase 20% of
the life of mine gold produced from First Majestic Silver Corp.’s (“First Majestic”) open-pit and underground
Santa Elena mine, located in Mexico (the “Santa Elena Mine”), for a per ounce cash payment equal to the lesser of $357
and the then prevailing market price of gold until 50,000 ounces of gold have been delivered to Sandstorm, at which time the on-going
per ounce payments will increase to the lesser of $450 and the then prevailing market price of gold.



The Santa Elena Mine was successfully transitioned
from an open pit heap leach operation to an underground mining and milling operation and commercial production for the 3,000 tonne
per day processing plant was declared in 2014.



Current activities at the Santa Elena
Mine include:



| | · | First Majestic recently closed its previously announced transaction whereby it acquired SilverCrest Mines Inc.
| | - | --------------------------------------------------------------------------------------------------------------



Bachelor Lake Gold Stream



Metanor Resources Inc.



The Company has a Gold Stream to purchase 20% of
the life of mine gold produced from Metanor Resources Inc.’s (“Metanor”) Bachelor Lake gold mine located in Quebec,
Canada (the “Bachelor Lake Mine”), for a per ounce cash payment equal to the lesser of $500 and the then prevailing
market price of gold.



The Bachelor Lake Mine is a long hole mining operation
with an operating mill and surface infrastructure, which began production in early 2013.





6







Current activities at the Bachelor Lake
Mine include:



| | · | Metanor recently released positive drill results from its exploration activities at the Bachelor Lake Mine and the newly discovered
south zone. For more information refer to www.metanor.ca.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Bracemac-McLeod Royalty



Glencore PLC



Sandstorm has a 3% NSR based on 100% of the production
from the Bracemac-McLeod property located in Matagami, Quebec, Canada (“Bracemac-McLeod” or the “Bracemac-McLeod
Mine”) which is owned and operated by a subsidiary of Glencore Xstrata plc (“Glencore”).



The Bracemac-McLeod Mine is a high grade volcanogenic
massive sulphide deposit. Continuous mining and milling operations have been active in the Matagami district for almost fifty years
with ten previously operating mines and one other currently producing mine. The Bracemac-McLeod Mine began initial production in
the second half of 2013.



Ming Gold Stream



Rambler Metals & Mining PLC



The Company has a Gold Stream to purchase approximately
25% of the first 175,000 ounces of gold produced and 12% of the life of mine gold produced thereafter, from Rambler Metals &
Mining PLC’s (“Rambler”) Ming Copper-Gold mine, located in Newfoundland, Canada (the “Ming Mine”).
There are no ongoing per ounce payments required by Sandstorm in respect of the Ming Mine Gold Stream. In the event that the metallurgical
recoveries of gold at the Ming Mine are below 85%, the percentage of gold that Sandstorm shall be entitled to purchase shall be
increased proportionally. Based on 2014 metallurgical recoveries, Sandstorm’s 2015 gold purchase entitlement was adjusted
to 31%.



Current activities at the Ming Mine
include:



| | · | Rambler released a favorable prefeasibility study (“PFS”) that identifies the potential for an expansion of the
Ming Mine into the Lower Footwall Zone. The PFS defines a staged, low capital strategy to optimize existing infrastructure to be
able to operate at approximately 1,250 metric tonnes per day by 2018. The PFS outlines a plan to have Lower Footwall Zone material
with current massive sulphide reserves. See www.ramblermines.com for more information.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





7







Other Producing
Assets



Emigrant Springs Royalty



Newmont Mining Corp.



The Company has a 1.5% NSR on the Emigrant Springs
mine (the “Emigrant Springs Mine”) which is located in the Carlin Trend in Nevada, U.S.A. and is owned and operated
by Newmont Mining Corp. (“Newmont”). The Emigrant Springs Mine is an open pit, heap leach operation. In the third quarter
of 2012, construction of the mine was completed and commercial production commenced.



Mine Waste Solutions Royalty



Anglogold Ashanti Ltd.



The Company has a 1% NSR on the gold produced from
Mine Waste Solutions tailings recovery operation (“MWS”) which is located near Stilfontein, South Africa, and is owned
and operated by AngloGold Ashanti Ltd. (“AngloGold”). MWS is a gold and uranium tailings recovery operation. The operation
processes multiple tailings dumps in the area through three production modules, the last of which was commissioned in 2011.



Gualcamayo Royalty



Yamana Gold Inc.



The Company has a 1% NSR on the Gualcamayo gold
mine (the “Gualcamayo Mine”) which is located in San Juan province, Argentina and owned and operated by Yamana. The
Gualcamayo Mine is an open pit, heap leach operation encompassing three substantial zones of gold mineralization. An expansion
of the operation is expected to increase sustainable production.



San Andres Royalty



Aura Minerals Inc.



The Company has a 1.5% NSR on the San Andres mine
(the “San Andres Mine”) which is located in La Únion, Honduras and owned and operated by Aura Minerals Inc.
(“Aura Minerals”). The San Andres Mine is an open pit, heap leach operation. The mine has been in production since
1983 and has well-developed infrastructure, which includes power and water supply, warehouses, maintenance facilities, assay laboratory
and on-site camp facilities.





8







Development Assets



Karma Gold Stream



True Gold Mining Inc.



The Company has a Gold Stream which entitles it
to purchase 25,000 ounces of gold over a five year period and thereafter 1.625% of the gold produced from True Gold Mining Inc.’s
(“True Gold”) open-pit heap leach Karma gold mine located in Burkina Faso, West Africa (“Karma” or the
“Karma Project”) for on-going per ounce cash payment equal to 20% of the spot price of the gold.



The Gold Stream, which on a gross basis requires
True Gold to deliver 100,000 ounces of gold over a five year period starting March 31, 2016 and thereafter 6.5% of the equivalent
gold production at the Karma Project, is being syndicated between Franco-Nevada Corp. (“Franco-Nevada”) and Sandstorm
(together the “Stream Syndicate”). Franco-Nevada will be providing 75% of the funding and Sandstorm will be providing
the remaining 25% of the funding. In consideration for acquiring the Gold Stream, the Stream Syndicate agreed to make payments
totaling $100 million. As of the date of the MD&A, Sandstorm had fully funded the initial $25 million of its commitment in
the following manner: (i) $14.4 million during the year ended December 31, 2014; (ii) $6.7 million during the year ended December
31, 2015; and (iii) $3.9 million in 2016. In addition, the Stream Syndicate has provided True Gold with an 18 month option to increase
funding by up to $20 million (the “Increase Option”) in exchange for eight quarterly deliveries totaling 30,000 ounces
of gold, or the pro-rata portion of the amount drawn thereunder, starting 18 months from when the first tranche under the Increase
Option is drawn down. Subsequent to year end, Sandstorm remitted $1.25 million of its $5 million commitment under the Increase
Option.



The Karma Project has five defined mineral deposits that make up the Karma Project with probable mineral
reserves of 949,000 ounces of gold. The mine is expected to produce an average of 97,000 ounces of gold per year over 8.5 years.
The mining operation is planned to employ conventional truck and shovel methods. True Gold recently reported that construction
at the Karma Mine is approximately 94% complete with commissioning activities underway and it remains on track for gold production
by the first half of 2016. Endeavour Mining Corp. recently announced that it had entered into a definitive agreement with True
Gold pursuant to which Endeavour Mining Corp. would acquire True Gold.



Aurizona Gold Royalty



Luna Gold Corp.



The Company has a 3% – 5% sliding
scale NSR on the production from Luna Gold Corp.’s (“Luna”) open-pit Aurizona mine, located in Brazil (the “Aurizona
Mine”). 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 190,073 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.



Luna has initiated a pre-feasibility study for
the restart of the Aurizona Mine and Sandstorm holds a right of first refusal on any future streams or royalties on the Aurizona
project and greenfields.





9







Restructuring



On June 30, 2015, the Company restructured its
previously existing Gold Stream and loan agreement with Luna (the “Restructuring”). Under the terms of the Restructuring,
the Gold Stream was terminated and replaced by two NSRs (described above) and a convertible debenture.



The convertible debenture is a $30 million instrument
bearing interest at a rate of 5% per annum (the “Debenture”). The Debenture is payable in three equal annual tranches
of $10 million plus accrued interest beginning June 30, 2018. Luna will have the right to convert the principal and interest owing
under the Debenture into common shares of Luna, so long as Sandstorm does not own more than 20% of the outstanding common shares
of Luna. The quantum of shares upon conversion will be dependent on a 20 day volume weighted average price (“VWAP”)
and if the VWAP is less than C$0.10 per share, the shares will be deemed to have been issued at C$0.10 per share.



Under the loan amendment, the maturity date of
the existing $20 million Luna loan was extended from June 30, 2017 to June 30, 2021, and the interest rate was revised to 5% per
annum, payable in cash on the maturity date. In the event that Luna is in default, the applicable rate of interest will increase
to 10% per annum.



Under the terms of the Restructuring and until
September 30, 2015, Sandstorm continued to purchase 17% of the gold that results from the processing of the remaining stockpile
from the Aurizona Mine for a per ounce cash payment equal to the lesser of $408 and the then prevailing market price of gold.



The Company recognized a gain of $4.3 million arising
from the difference between the fair value of the Debenture and two NSRs and the carrying value of the Aurizona mineral interest.



Hugo North Extension & Heruga Gold Stream



Entrée Gold Inc.



Subsequent to the year ended December 31, 2015,
Sandstorm amended its Gold Stream with Entrée Gold Inc. (“Entrée”) such that the Company will now purchase
an amount equal to 5.62% and 4.26% of the gold and silver by-products produced from the Hugo North Extension and Heruga deposits
located in Mongolia, (the “Hugo North Extension” and “Heruga”, respectively) for per ounce cash payments
equal to the lesser of $220 per ounce of gold and $5 per ounce of silver and the then prevailing market price of gold and silver,
respectively. Additionally, Sandstorm amended its copper stream such that the Company will now purchase an amount equal to 0.42%
share of the copper produced from Hugo North Extension and Heruga for per pound cash payments equal to the lesser of $0.50 per
pound of copper and the then prevailing market price of copper. In consideration for the amendment and subsequent to the year ended
December 31, 2015, Sandstorm received consideration of $6.8 million (of which $5.5 million was paid in cash and $1.3 million was
received by way of Entrée common shares).



The Company is not required to contribute any further
capital, exploration, or operating expenditures to Entrée.



The Hugo North Extension is a rich copper-gold
porphyry deposit and Heruga is a copper-gold-molybdenum porphyry deposit. Both projects are located in the South Gobi desert of
Mongolia, approximately 570 kilometers south of the capital city of Ulaanbaatar and 80 kilometers north of the border with China.
The Hugo North Extension and Heruga are part of the Oyu Tolgoi mining complex and are managed by Oyu Tolgoi LLC, a subsidiary of
Turquoise Hill Resources and the Government of Mongolia, and its project manager Rio Tinto PLC. Entrée retains a 20% interest
in the resource deposits of the Hugo North Extension and Heruga.





10









Entrée recently announced that an Oyu Tolgoi
underground mine development and financing plan had been signed by the Government of Mongolia, Entrée's joint venture partner,
Oyu Tolgoi LLC, Turquoise Hill Resources Ltd. and Rio Tinto. The plan provides a path forward to the eventual restart of underground
development, including Lift 1 of the Hugo North Extension. Recently, Entrée’s joint venture partner, announced that
it had signed a $4.4 billion finance facility for underground mine development at the Oyu Tolgoi project. The facility
is being provided by a syndicate of international financial institutions and export credit agencies representing the governments
of Canada, the United States and Australia, along with 15 commercial banks.



Hot Maden Royalty



Mariana Resources Ltd.



On January 19, 2016, the Company acquired a 2%
NSR on the Hot Maden gold-copper project which is located in the Artvin Province, northeastern Turkey (the “Hot Maden Project”).
The project is co-owned by Mariana Resources Ltd. and its Turkish partner, Lidya Madencilik Sanayi ve Ticaret A.S., which is currently
earning into a 70% interest in the project.



A 2015 drill campaign led to the release of a maiden
mineral resource estimate for the Hot Maden Project with an indicated resource of 2.0 million gold equivalent ounces and also included
an inferred resource of 1.0 million gold equivalent ounces.



Hackett River Royalty



Glencore PLC



On January 19, 2016, the Company acquired a 2%
NSR on the Hackett River property located in Nunavut, Canada (the “Hackett River Project” or “Hackett River”)
which is owned by a subsidiary of Glencore.



Hackett River is a silver-rich volcanogenic massive
sulphide project and is one of the largest undeveloped projects of its kind. The property is made up of four massive sulphide deposits
that occur over a 6.6 kilometre strike distance. A preliminary economic assessment updated in 2010 evaluated a possible large-scale
open pit and underground operation, processing up to 17,000 tonnes per day. The most recent technical report, completed in 2013,
reported 25.0 million tonnes of indicated resources containing 4.2% zinc and 130.0 grams per tonne silver plus 57.0 million tonnes
of inferred resources with 3.0% zinc and 100.0 grams per tonne silver.



Lobo-Marte Royalty



Kinross Gold Corp.



On January 19, 2016, the Company acquired a 1.05%
NSR on production from the Lobo-Marte project located in the Maricungha gold district of Chile (the “Lobo-Marte Project”
or “Lobo-Marte”) which is owned by Kinross Gold Corp. (“Kinross”).



Kinross completed a prefeasibility study at Lobo-Marte
that contemplated a heap-leach operation. As a result of changes in the plan of operations and other factors, Kinross withdrew
its previously submitted permit application. Future development and operations at Lobo-Marte will require the re-initiation of
the permitting process.



11







Agi Dagi & Kirazli



Alamos Gold Inc.



On January 19, 2016, the Company acquired a $10/ounce
royalty based on the production from the Agi Dagi and the Kirazli gold development projects located in the Çanakkale Province
of northwestern Turkey (“Agi Dagi” and “Kirazli”, respectively) which are both owned by Alamos Gold Inc.
(“Alamos Gold”). The royalty is payable by Newmont and is subject to a maximum of 600,000 ounces from Agi Dagi and
a maximum of 250,000 ounces from Kirazli.



A 2012 pre-feasibility study on Agi Dagi and Kirazli
contemplated both projects as stand-alone open-pit, heap-leach operations. Under the study, Agi Dagi is expected to produce an
average of 143,000 ounces of gold per year over a 7 year mine life while Kirazli is expected to produce an average of 99,000 ounces
of gold per year over a 5 year mine life.



Bomboré Royalty



Orezone Gold Corp.



On January 27, 2015, the Company acquired a 0.45%
NSR on the Bomboré gold project (“Bomboré” or “Bomboré Project”) located in Burkina
Faso, West Africa and owned by Orezone Gold Corp. (“Orezone”) for consideration of $3.0 million (the “Upfront
Royalty”). In addition, Sandstorm has committed to providing up to an additional $5.0 million in royalty financing (remittable
in cash and/or shares, subject to certain conditions) to Orezone on a drawdown basis until January 27, 2017 (the “Standby
Royalty”). The Standby Royalty, if fully exercised, would result in the granting of an additional 0.75% NSR. Orezone has
granted Sandstorm a right of first refusal on any future stream or royalty financings related to the Bomboré Project until
36 months following the achievement of commercial production at the mine. Orezone has the option to repurchase the Upfront Royalty
from Sandstorm for a period of 36 months, at a premium of 10% per year. The Standby Royalty can also be repurchased at a premium
of 10% per year if Orezone completes a gold stream financing and Sandstorm participates for no less than $30 million.



Orezone's 168 km2 Bomboré project
is the largest undeveloped oxide gold deposit in Burkina Faso, containing 4.6 million ounces of measured and indicated gold resources.



Prairie Creek Royalty



Canadian Zinc Corp.



The Company has a 1.2% NSR on the Prairie Creek project (“the “Prairie Creek Project”)
located in the Northwest Territories, Canada and owned by Canadian Zinc Corporation (“Canadian Zinc”). The Prairie
Creek Project is a zinc, silver and lead project that is 100%-owned by Canadian Zinc and currently reports a proven and probable
mineral reserve of 5.2 million tonnes grading 9.4% zinc, 151 grams per tonne silver and 9.5% lead. Canadian Zinc recently entered
into sale agreements with both Boliden and Korea Zinc for the sale of the zinc and lead concentrates produced at the Prairie Creek
mine. This represents a significant step forward in the development of the mine.



Canadian Zinc has provided Sandstorm with a right
of first refusal on any future royalty or commodity stream financing for the Prairie Creek Project.



12







Mt. Hamilton Royalty



Waterton Precious Metals Fund II Cayman,
LP



The Company has a 2.4% NSR on the Mt. Hamilton
gold project (the "Mt. Hamilton Project"). The Mt. Hamilton Project is located in White Pine County, Nevada, U.S.A. and
is owned by Waterton Precious Metals Fund II Cayman, LP (“Waterton”).



Sandstorm holds a right of first refusal on any
future royalty or gold stream financing for the Mt. Hamilton Project.



Acquisition



Gold Royalties Corp.



On April 28, 2015, the Company closed its previously
announced plan of arrangement pursuant to which Sandstorm Gold acquired all of the issued and outstanding shares (the “Gold
Royalties Shares”) of Gold Royalties Corporation (“Gold Royalties”). The transaction was implemented by way of
a statutory plan of arrangement (the “Arrangement”). Upon completion of the Arrangement, Sandstorm Gold issued to each
holder of a Gold Royalties Share 0.045 of a common share of Sandstorm Gold.



As a result of acquiring Gold Royalties, Sandstorm
has added a number of Canadian royalty assets to its portfolio along with over $1.0 million in cash.



In accordance with IFRS 3 – Business Combinations,
the total consideration of $4.8 million, consisting of (i) $4.3 million representing the value of the Sandstorm Gold common shares
issued (based on the April 28, 2015 closing price) and (ii) $0.5 million of Gold Royalties Shares previously owned by Sandstorm
Gold, was allocated to the identifiable assets acquired and liabilities assumed as follows:



|Consideration:                                    |  | In 000s |      
|------------------------------------------------- |  | ------- | -----
|Sandstorm Shares issued (1,161,720 common shares) |  | $       | 4,281
|Gold Royalties Shares owned by Sandstorm Gold     |  |         | 472  
|                                                  |  | $       | 4,753



|Allocation of acquisition costs: |  |   |      
|-------------------------------- |  | - | -----
|Cash and cash equivalents        |  | $ | 1,288
|Trade receivables and other      |  |   | 107  
|Mineral interests and royalties  |  |   | 1,852
|Deferred income tax assets       |  |   | 1,592
|Trade and other payables         |  |   | (86) 
|                                 |  | $ | 4,753



13







Sandstorm Gold has estimated the fair value of
the assets acquired to be equal to their carrying value except for the mineral interests and royalties which were estimated to
have a fair value of $1.9 million and deferred tax assets of $1.6 million, respectively. An income approach (being the net present
value of expected future cash flows) was used to determine the fair values of the mineral interests and royalties. Estimates of
future cash flows are based on estimated future revenues and expected conversions of resources to reserves at each of the mineral
properties.



Revolving credit
facility



On October 26, 2015, the Company amended its revolving
credit agreement, allowing the Company to borrow up to $110 million (the “Revolving Loan”) from a syndicate of banks
including the Bank of Nova Scotia, Bank of Montreal, National Bank of Canada, and Canadian Imperial Bank of Commerce. The amounts
drawn on the Revolving Loan remain subject to interest at LIBOR plus 3.00% – 4.25% per annum, and the undrawn
portion of the Revolving Loan remains subject to a standby fee of 0.75% – 1.05% per annum, dependent on the
Company’s leverage ratio. On October 26, 2015 and as part of the Yamana transaction, the Company fully drew on its credit
facility.



equity financing



On November 3, 2015 the Company completed a public
offering of 10,087,800 units at a price of $2.85 per unit, for gross proceeds of $28.8 million. Each unit was comprised of one
common share of the Company and one-half of one listed warrant. In connection with the offering, the Company paid agent fees of
$1.4 million, representing 5% of the gross proceeds. The amount attributable to common shares was $27.1 million, with the remainder
allocated to the warrants. As previously announced, the net proceeds from the public offering were primarily used to reduce the
balance of the Company’s Revolving Loan.



NORMAL COURSE ISSUER
BID



On December 15, 2014, the Company announced that it intended to proceed with a normal course issuer bid
(“NCIB”). Under the NCIB, the Company was able until December 16, 2015, to purchase up to 5,882,879 common shares,
representing 5% of the Company’s issued and outstanding common as at December 11, 2014. The NCIB provided the Company with
the option to purchase its common shares from time to time when the Company’s management believed that the Common Shares
were undervalued by the market. Subsequent to December 31, 2015, the Company reinitiated its NCIB, allowing it to purchase up to
6,896,539 common shares until April 2017.



During the year ended December 31, 2015 and pursuant
to the NCIB, the Company purchased and cancelled an aggregate of 518,123 common shares.



14







Other



Tax



As a result of an ongoing assessment of the Company’s
assets held in foreign subsidiaries, during the year ended December 31, 2015, the Company recognized a reduction of $8.1 million
in its deferred income tax asset relating to taxable income previously attributed to its Barbadian subsidiary. The assessment is
complex in nature and the reduction represents management estimates. The Company’s international transactions have not been
reviewed by the Canada Revenue Agency, and should such transactions be reviewed no assurances can be given that the tax authority
will concur with management’s estimates.



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 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 Deflector gold purchase agreement.



Impairments



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 mine Gold Stream. As a result of
its review, the Company, during the year ended December 31, 2015, recorded an impairment charge of $3.3 million for the full balance
of the mineral interest.



While assessing whether any indications of impairment exist for mineral properties, consideration is given
to both external and internal sources of information. Given the decline in the Company’s market capitalization during the
year ended December 31, 2015, the Company performed an impairment analysis of the Company’s mineral interests. As part of
this assessment, the Company recorded impairment charges related to its interests in the Serra Pelada project, the Emigrant Springs
Mine, and MWS in the amounts of $13.1 million, $5.8 million and $2.4 million.



Subsequent Events



Teck Royalty Package



On January 19, 2016, the Company announced that
it had agreed to acquire 55 royalties from Teck Resources Limited (“Teck”) and its affiliates for total consideration
of up to $22 million, payable in $1.4 million cash and $20.6 million in common shares of the Company.  Since that time, 36
of the royalties have been transferred to the Company with the remaining royalties expected to close by May 2016. The transaction
provides:



| | · | Asset Diversification: the royalty package consists of assets in North America (33), Asia (10), South
America (9) and Europe (3) and includes producing assets (4), development-stage projects (8), advanced exploration-stage projects
(8) and exploration-stage properties (35);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Immediate Cash Flow and Significant Cash Flow Growth Potential: the Company has estimated cash flow in 2016 of $1.5 million
to $2.0 million, growing to $10 million to over $15 million in cash flow per year;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



15







| | · | Strong Counterparties: royalty counterparties include Barrick Gold Corporation, Glencore plc, KGHM Polska Miedz SA, Newmont
Mining Corporation, Kinross Gold Corporation,  New Gold Inc. and Imperial Metals Corporation; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Long-Term Optionality: over two dozen royalties on exploration-stage properties, several of which are undergoing active
exploration programs.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



16







SUMMARY OF ANNUAL RESULTS



Year Ended





|In $000s                                                    |  | December
    31, 2015 |          |  | December
    31, 2014 |   |         | December
    31, 2013 | 
|----------------------------------------------------------- |  | --------------------- | -------- |  | --------------------- | - | ------- | --------------------- | 
|Total revenue                                               |  | $                     | 52,663   |  |                       | $ | 56,494  |                       | 
|Attributable Gold Equivalent ounces sold1                   |  |                       | 45,146   |  |                       |   | 44,821  |                       | 
|Gold sales                                                  |  | $                     | 38,585   |  |                       | $ | 43,690  |                       | 
|Royalty revenue                                             |  |                       | 14,078   |  |                       |   | 12,804  |                       | 
|Average realized gold price per ounce1                      |  |                       | 1,167    |  |                       |   | 1,260   |                       | 
|Average cash cost per ounce1                                |  |                       | 300      |  |                       |   | 321     |                       | 
|Cash flow from operations                                   |  |                       | 30,819   |  |                       |   | 35,224  |                       | 
|Cash flow from operations per share (basic)1                |  |                       | 0.26     |  |                       |   | 0.31    |                       | 
|Cash flow from operations per share (diluted)1              |  |                       | 0.26     |  |                       |   | 0.29    |                       | 
|Net (loss) income attributable to shareholders of Sandstorm |  |                       | (43,056) |  |                       |   | 11,515  |                       | 
|Net (loss) income                                           |  |                       | (43,056) |  |                       |   | 11,515  |                       | 
|Basic(loss) income  per share                               |  |                       | (0.36)   |  |                       |   | 0.10    |                       | 
|Diluted(loss) income  per share                             |  |                       | (0.36)   |  |                       |   | 0.09    |                       | 
|Total assets                                                |  |                       | 496,873  |  |                       |   | 431,070 |                       | 
|Total long-term liabilities                                 |  | $                     | 86,779   |  |                       | $ | 5,892   |                       | 



| | 1) | See non-IFRS measures section below.
| | -- | ------------------------------------



17







The Company’s operating segments for the
year ended
December 31, 2015 are summarized in the table below:



|In $000s      |  | Attributable ounces sold |        |  | Sales and royalty revenues |   |        | Cost of sales (excluding depletion) |  |   | Depletion |  |  | Impairment of mineral interests |        |  | Income (loss) before taxes |  |          | Cash flow from operations | 
|------------- |  | ------------------------ | ------ |  | -------------------------- | - | ------ | ----------------------------------- |  | - | --------- |  |  | ------------------------------- | ------ |  | -------------------------- |  | -------- | ------------------------- | 
|Aurizona      |  |                          | 9,061  |  |                            | $ | 10,773 |                                     |  | $ | 3,690     |  |  | $                               | 1,072  |  |                            |  | -        |                           | 
|Bachelor Lake |  |                          | 7,101  |  |                            |   | 8,285  |                                     |  |   | 3,550     |  |  |                                 | 4,220  |  |                            |  | -        |                           | 
|Black Fox     |  |                          | 5,891  |  |                            |   | 6,856  |                                     |  |   | 3,041     |  |  |                                 | 4,281  |  |                            |  | -        |                           | 
|Diavik Mine   |  |                          | 4,863  |  |                            |   | 5,656  |                                     |  |   | -         |  |  |                                 | 6,273  |  |                            |  | -        |                           | 
|Ming          |  |                          | 1,651  |  |                            |   | 1,855  |                                     |  |   | -         |  |  |                                 | 1,994  |  |                            |  | -        |                           | 
|Santa Elena   |  |                          | 9,171  |  |                            |   | 10,640 |                                     |  |   | 3,266     |  |  |                                 | 6,115  |  |                            |  | -        |                           | 
|Royalties     |  |                          | 7,242  |  |                            |   | 8,422  |                                     |  |   | -         |  |  |                                 | 11,292 |  |                            |  | (18,322) |                           | 
|Other         |  |                          | 166    |  |                            |   | 176    |                                     |  |   | 19        |  |  |                                 | 65     |  |                            |  | (3,323)  |                           | 
|Corporate     |  |                          | -      |  |                            |   | -      |                                     |  |   | -         |  |  |                                 | -      |  |                            |  | -        |                           | 
|Consolidated  |  |                          | 45,146 |  |                            | $ | 52,663 |                                     |  | $ | 13,566    |  |  | $                               | 35,312 |  |                            |  | (21,645) |                           | 



The Company’s operating segments for the
year ended
December 31, 2014 are summarized in the table below:



|In $000s      |  | 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      |  |                          | 12,361 |  |                            | $ | 15,527 |                                     |  | $ | 4,986     |  |  | $                              | 1,463  |  |                            | $ | -       |                           | 
|Bachelor Lake |  |                          | 9,324  |  |                            |   | 11,899 |                                     |  |   | 4,662     |  |  |                                | 5,541  |  |                            |   | -       |                           | 
|Black Fox     |  |                          | 5,487  |  |                            |   | 6,889  |                                     |  |   | 2,790     |  |  |                                | 3,920  |  |                            |   | -       |                           | 
|Ming          |  |                          | 1,964  |  |                            |   | 2,459  |                                     |  |   | -         |  |  |                                | 1,611  |  |                            |   | -       |                           | 
|Santa Elena   |  |                          | 5,516  |  |                            |   | 6,916  |                                     |  |   | 1,945     |  |  |                                | 3,359  |  |                            |   | -       |                           | 
|Royalties     |  |                          | 10,169 |  |                            |   | 12,804 |                                     |  |   | -         |  |  |                                | 12,019 |  |                            |   | (1,215) |                           | 
|Corporate     |  |                          | -      |  |                            |   | -      |                                     |  |   | -         |  |  |                                | -      |  |                            |   | -       |                           | 
|Consolidated  |  |                          | 44,821 |  |                            | $ | 56,494 |                                     |  | $ | 14,383    |  |  | $                              | 27,913 |  |                            | $ | (1,215) |                           | 



18







SUMMARY OF QUARTERLY RESULTS



(in accordance with IFRS)



Quarters Ended



|In
    $000s                                          |  | Dec.
    31, 2015 |          |  | Sep.
    30, 2015 |   |         | June.
    30, 2015 |  |   | Mar.
    31, 2015 | 
|----------------------------------------------------- |  | ----------------- | -------- |  | ----------------- | - | ------- | ------------------ |  | - | ----------------- | 
|Total revenue                                         |  | $                 | 9,863    |  |                   | $ | 12,086  |                    |  | $ | 15,429            | 
|Attributable Gold Equivalent ounces sold 1            |  |                   | 8,951    |  |                   |   | 10,834  |                    |  |   | 12,901            | 
|Gold sales                                            |  | $                 | 6,604    |  |                   | $ | 9,055   |                    |  | $ | 11,360            | 
|Royalty revenue                                       |  |                   | 3,259    |  |                   |   | 3,031   |                    |  |   | 4,069             | 
|Average realized gold price per attributable ounce  1 |  |                   | 1,102    |  |                   |   | 1,116   |                    |  |   | 1,196             | 
|Average cash cost per attributable ounce 1            |  |                   | 258      |  |                   |   | 307     |                    |  |   | 304               | 
|Cash flow from operations                             |  |                   | 4,987    |  |                   |   | 8,234   |                    |  |   | 9,479             | 
|Cash flow from operations per share (basic) 1         |  |                   | 0.04     |  |                   |   | 0.07    |                    |  |   | 0.08              | 
|Cash flow from operations per share (diluted) 1       |  |                   | 0.04     |  |                   |   | 0.07    |                    |  |   | 0.08              | 
|Net (loss) income                                     |  |                   | (24,960) |  |                   |   | (5,470) |                    |  |   | (13,451)          | 
|Basic (loss) income per share                         |  |                   | (0.20)   |  |                   |   | (0.05)  |                    |  |   | (0.11)            | 
|Diluted (loss) income per share                       |  |                   | (0.20)   |  |                   |   | (0.05)  |                    |  |   | (0.11)            | 
|Total assets                                          |  |                   | 496.873  |  |                   |   | 408.170 |                    |  |   | 415.944           | 
|Total long-term liabilities                           |  | $                 | 86,779   |  |                   | $ | 4,768   |                    |  | $ | 5,316             | 



|In $000s                                                     |  | Dec. 31, 2014 |         |  | Sep. 30, 2014 |   |         | Jun. 30, 2014 |  |   | Mar. 31, 2014 | 
|------------------------------------------------------------ |  | ------------- | ------- |  | ------------- | - | ------- | ------------- |  | - | ------------- | 
|Total revenue                                                |  | $             | 12,488  |  |               | $ | 15,559  |               |  | $ | 13,153        | 
|Attributable Gold Equivalent ounces sold 1                   |  |               | 10,424  |  |               |   | 12,282  |               |  |   | 10,149        | 
|Gold sales                                                   |  | $             | 9,463   |  |               | $ | 11,571  |               |  | $ | 9,724         | 
|Royalty revenue                                              |  |               | 3,025   |  |               |   | 3,988   |               |  |   | 3,429         | 
|Average realized gold price per ounce 1                      |  |               | 1,198   |  |               |   | 1,267   |               |  |   | 1,296         | 
|Average cash cost per ounce 1                                |  |               | 308     |  |               |   | 308     |               |  |   | 310           | 
|Cash flow from operations                                    |  |               | 8,854   |  |               |   | 9,962   |               |  |   | 9,383         | 
|Cash flow from operations per share (basic) 1                |  |               | 0.08    |  |               |   | 0.08    |               |  |   | 0.08          | 
|Cash flow from operations per share (diluted) 1              |  |               | 0.07    |  |               |   | 0.08    |               |  |   | 0.08          | 
|Net income (loss) attributable to  shareholders of Sandstorm |  |               | 2,608   |  |               |   | 2,076   |               |  |   | 3,039         | 
|Net income (loss)                                            |  |               | 2,608   |  |               |   | 2,076   |               |  |   | 3,039         | 
|Basic income (loss) per share                                |  |               | 0.02    |  |               |   | 0.02    |               |  |   | 0.03          | 
|Diluted income (loss) per share                              |  |               | 0.02    |  |               |   | 0.02    |               |  |   | 0.03          | 
|Total assets                                                 |  |               | 431,070 |  |               |   | 445,368 |               |  |   | 456,050       | 
|Total long-term liabilities                                  |  | $             | 5,892   |  |               | $ | 6,161   |               |  | $ | 5,922         | 



| | 1) | See non-IFRS measures section below.
| | -- | ------------------------------------



19







Changes in sales, net income and cash flow from
operations from quarter to quarter are affected primarily by fluctuations in production at the mines, the timing of shipments,
changes in the price of gold, as well as acquisitions of Gold Stream and royalty agreements and the commencement of operations
of mines under construction. For more information refer to the quarterly commentary discussed below.



The Company’s operating segments for the
three months ended
December 31, 2015 are summarized in the table below:



|In $000s      |  | Attributable ounces sold |       |  | Sales and royalty revenues |   |       | Cost of sales (excluding depletion) |  |   | Depletion |  |  | Impairment
    of mineral
    interests |       | Income (loss) before taxes |  |          | Cash flow from operations |  
|------------- |  | ------------------------ | ----- |  | -------------------------- | - | ----- | ----------------------------------- |  | - | --------- |  |  | --------------------------------------- | ----- | -------------------------- |  | -------- | ------------------------- | -
|Aurizona      |  |                          | 501   |  |                            | $ | 579   |                                     |  | $ | 204       |  |  | $                                       | 59    |                            |  | -        |                           | $
|Bachelor Lake |  |                          | 1,383 |  |                            |   | 1,523 |                                     |  |   | 692       |  |  |                                         | 822   |                            |  | -        |                           |  
|Black Fox     |  |                          | 1,274 |  |                            |   | 1,409 |                                     |  |   | 660       |  |  |                                         | 908   |                            |  | -        |                           |  
|Diavik Mine   |  |                          | 1,067 |  |                            |   | 1,176 |                                     |  |   | -         |  |  |                                         | 1,808 |                            |  | -        |                           |  
|Ming          |  |                          | 608   |  |                            |   | 645   |                                     |  |   | -         |  |  |                                         | 749   |                            |  | -        |                           |  
|Santa Elena   |  |                          | 2,062 |  |                            |   | 2,270 |                                     |  |   | 736       |  |  |                                         | 1,314 |                            |  | -        |                           |  
|Royalties     |  |                          | 1,890 |  |                            |   | 2,083 |                                     |  |   | -         |  |  |                                         | 2,512 |                            |  | (18,322) |                           |  
|Other         |  |                          | 166   |  |                            |   | 178   |                                     |  |   | 17        |  |  |                                         | 65    |                            |  | -        |                           |  
|Corporate     |  |                          | -     |  |                            |   | -     |                                     |  |   | -         |  |  |                                         | -     |                            |  | -        |                           |  
|Consolidated  |  |                          | 8,951 |  |                            | $ | 9,863 |                                     |  | $ | 2,309     |  |  | $                                       | 8,237 |                            |  | (18,322) |                           | $



THREE MONTHS ENDED
December 31, 2015
COMPARED TO THE THREE MONTHS ENDED December 31, 2014



For the three months ended December 31, 2015, net loss and cash flow from operations were $25.0 million
and $5.0 million, respectively, compared with net income and cash flow from operations of $2.6 million and $8.9 million for the
comparable period in 2014. The change is attributable to a combination of factors including:



| | · | A
                                         $6.5 million non-cash loss on the revaluation of the Company’s investments recognized
                                         during the three months ended December 31, 2015;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | An
$18.3 million non-cash impairment charge relating to the Company’s mineral interests with respect to the Serra Pelada project,
the Emigrant Springs Mine and MWS;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | A $1.0 million increase in administration expenses, during the three months ended December 31, 2015, resulting from increased
corporate activity and the granting of employee annual bonuses due to the Company’s performance and the allocation of over
$200 million of capital for the 2015 calendar year, resulting in the acquisition of over 25 Gold Streams and royalties; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | A $0.4 million increase in interest expense as the Company fully drew on its Revolving Loan in October 2015.
| | - | ------------------------------------------------------------------------------------------------------------



For the three months ended December 31, 2015, revenue
was $9.9 million compared with $12.5 million for the comparable period in 2014. The decrease is largely attributed to a number
of factors including:



20







| | · | 8% decrease in the average realized selling price of gold; and
| | - | --------------------------------------------------------------

| | · | 14% decrease in the number of Attributable Gold Equivalent ounces sold, due to:
| | - | -------------------------------------------------------------------------------

| | i. | 84% decrease in gold ounces sold from the Aurizona Mine as Luna finished processing ore from the stockpile and ceased mining
operations;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------

| | ii. | 18% decrease in gold ounces sold from the Bachelor Lake Mine primarily related to the mine experiencing lower feed grade largely
driven by higher than expected dilution from some stopes; partially offset by
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii. | 31% increase in gold ounces sold from the Santa Elena Mine primarily attributed to solid production from the property and an
improvement in the mining of underground stopes.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Year ENDED
December 31, 2015
COMPARED TO THE Year ENDED December, 2014



For the year ended December 31, 2015, net loss and cash flow from operations were $43.1 million and $30.8
million, respectively, compared with net income and cash flow from operations of $11.5 million and $35.2 million for the comparable
period in 2014. The change is attributable to a combination of factors including:



| | · | An $8.1 million non-cash income tax expense related to a reduction of the Company’s deferred income tax asset relating
to taxable income previously attributed to its Barbadian subsidiary;  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | A $21.6 million non-cash impairment charge relating to the Company’s mineral interests with respect
to the Serra Pelada project, the Emigrant Springs Mine, MWS and the Santa Fe Gold Stream;

| | · | A $7.4 million non-cash increase in depletion expense driven by a number of reasons including an increase in Attributable Gold
Equivalent ounces sold;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A $12.5 million non-cash loss on the revaluation of the Company’s investments;
| | - | ------------------------------------------------------------------------------

| | · | A $1.2 million increase in administration expenses largely driven by the vesting of previously granted stock based compensation
and increased corporate activity;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A number of non-recurring items recorded during the year ended December 31, 2014, including a one-time gain of $2.6 million
recognized on the acquisition of Sandstorm Metals & Energy which was partially offset by a non-cash impairment charge of $1.2
million relating the Company’s Bracemac-McLeod royalty; partially offset by
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A $5.0 million gain on the settlement of mineral interests largely driven by the Luna Gold Stream and loan restructuring; and
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | · | A foreign exchange gain of $1.5 million largely driven by the consolidation of subsidiary entities with a different functional
currency than the parent entity.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



For the year ended December 31, 2015, revenue
was $52.7 million compared with $56.5 million for the comparable period in 2014. The decrease is primarily related to a 7% decrease
in the average realized selling price of gold. While total Attributable Gold Equivalent ounces sold were fairly consistent when
comparing the two periods, there were some notable fluctuations in the year ended December 31, 2015, including:



| | i. | A 66% increase in gold ounces sold from the Santa Elena Mine primarily attributed to solid production from the property and
an improvement in the mining of underground stopes;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



21







| | ii. | An additional 4,863 Attributable Gold Equivalent ounces arising from the Company’s recently acquired Diavik royalty;
| | --- | --------------------------------------------------------------------------------------------------------------------

| | iii. | A 7% increase in gold ounces sold from the Black Fox Mine primarily driven from greater investments in underground development
in an effort to improve mining and processing targets going forward; partially offset by
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iv. | A 27% decrease in gold ounces sold from the Aurizona Mine as Luna finished processing ore from the stockpile and ceased mining
operations in 2015; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | v. | A 24% decrease in gold ounces sold from the Bachelor Lake Mine primarily related to the mine experiencing lower feed grade
largely driven by higher than expected dilution from some stopes.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



three MONTHS
ENDED December 31, 2015
COMPARED TO THE REMAINING QUARTERS



When comparing net loss of $25.0 million and cash flow from operations of $5.0 million for the three months
ended December 31, 2015 with net income/loss and operating cash flow for the remaining quarters, the following items impact comparability
of analysis:



| | · | An $8.1 million non-cash income tax expense related to a reduction of the Company’s deferred income tax asset relating
to taxable income previously attributed to its Barbadian subsidiary which was recorded during the three months ended June 30, 2015;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | An $18.3 million non-cash impairment charge relating to the Company’s mineral interests with respect
to the Serra Pelada project, the Emigrant Springs Mine and MWS which was recognized during the three months ended December 31,
2015;                 

| | · | A $4.3 million gain on the settlement of the Luna Gold Stream and loan which was recognized during the three months ended June
30, 2015;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | · | A $3.3 million non-cash impairment relating to the Santa Fe Gold Stream recognized during the three months ended June 30, 2015;
| | - | -------------------------------------------------------------------------------------------------------------------------------

| | · | A one-time gain of $2.6 million recognized on the acquisition of Sandstorm Metals & Energy which was recorded during the
three months ended June 30, 2014;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A non-cash impairment charge of $1.2 million relating the Company’s Bracemac-McLeod royalty recognized during the three
months ended June 30, 2014;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A general decrease in administration expenses when compared to previous quarters primarily driven by (i) the implementation
of cost reduction programs when the Company acquired 100% of the common shares of Premier Royalty and (ii) the elimination of duplicated
costs that were previously being consolidated;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Overall, Gold Attributable Equivalent ounces sold have increased over the course of the last three years as result of various
assets producing including: (i) the Aurizona Mine and the Santa Elena Mine began initial production late in 2010; (ii) the Company
acquired the Diavik royalty during the three months ended March 31, 2015; and (iii) the Company began purchasing gold from the
Black Fox Mine in 2011.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22







Change in Total
Assets



Total assets increased by $88.7 million from September 30, 2015 to December 31, 2015 primarily resulting
from the acquisition of the Yamana Silver Stream and copper stream which were largely funded by utilizing the Company’s Revolving
Loan; the increase was partially offset by depletion expense and a non-cash impairment charge on certain mineral interests. Total
assets decreased by $7.8 million from June 30, 2015 to September 30, 2015 primarily resulting from depletion expense, which was
partially offset by operating cash flows. Total assets decreased by $9.2 million from March 31, 2015 to June 30, 2015 primarily
resulting from (i) the reduction of the Company’s deferred tax assets; and (ii) depletion expense; partially offset by operating
cash flows. Total assets decreased by $5.9 million from December 31, 2014 to March 31, 2015 primarily resulting from (i) depletion
expense; and (ii) a decline in the fair value of investments; partially offset by operating cash flows. Total assets increased
by $51.4 million from December 31, 2013 to December 31, 2014 primarily resulting from (i) the assets acquired from the Sandstorm
Metals & Energy business combination; (ii) operating cash flows and (iii) the exercise of warrants; which were partially offset
by (i) depletion expense; (ii) a decline in the fair value of investments; and (iii) by a non-cash impairment charge on the Bracemac-McLeod
royalty.



Non-IFRS Measures



The Company has included, throughout this document,
certain non-IFRS performance measures, including (i) average cash cost per attributable ounce; (ii) cash flow from operations per
share (basic and diluted); and (iii) average realized gold price per attributable ounce.



| | i. | Average cash cost per ounce is calculated by dividing the Company’s cost of sales (excluding depletion) by the number
of Attributable Gold Equivalent ounces sold. The Company presents average cash cost per ounce as it believes that certain investors
use this information to evaluate the Company’s performance in comparison to other companies in the precious metals mining
industry who present results on a similar basis. Figure 1.1 provides a reconciliation of average cash cost of gold on a
per ounce basis.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Figure 1.1



|                                                   | 3 Months Ended
Dec. 31, 2015 | 3 Months Ended
Dec. 31, 2014 | Year Ended
Dec. 31, 2015 | Year Ended
Dec. 31, 2014
|-------------------------------------------------- | ---------------------------- | ---------------------------- | ------------------------ | ------------------------
|Cost of Sales (excluding depletion)                | $                            | 2,309                        | $                        | 3,212                   
|                                                   |                              |                              |                          |                         
|Cash cost of sales is comprised of:                |                              |                              |                          |                         
|Total cash cost of gold sold                       |                              | 2,309                        | $                        | 3,212                   
|Divided by:                                        |                              |                              |                          |                         
|Total Attributable Gold Equivalent ounces sold 1   |                              | 8,951                        |                          | 10,424                  
|Equals:                                            |                              |                              |                          |                         
|Average cash cost of gold
(per attributable ounce) | $                            | 258                          | $                        | 308                     





| | 1) | The Company’s royalty income is converted to an Attributable Gold Equivalent ounce basis
by dividing the royalty income for that period by the average realized gold price per ounce from the Company’s Gold Streams
for the same respective period. These Attributable Gold Equivalent ounces when combined with the gold ounces sold from the Company’s
Gold Streams equal total Attributable Gold Equivalent ounces sold.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





23









| | ii. | Cash flows from operations per share (basic and diluted) is calculated by dividing cash generated by operating activities by
the weighted average number of shares outstanding (basic and diluted). The Company presents operating cash flows per share as it
believes that certain investors use this information to evaluate the Company’s performance in comparison to other companies
in the precious metals mining industry that present results on a similar basis. Figure 1.2 provides a reconciliation of
cash flow from operations per share (basic and diluted).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Figure 1.2



|                                                       | 3 Months Ended
Dec. 31, 2015 | 3 Months Ended
Dec. 31, 2014 | Year Ended
Dec. 31, 2015 | Year Ended
Dec. 31, 2014
|------------------------------------------------------ | ---------------------------- | ---------------------------- | ------------------------ | ------------------------
|Cash generated by operating activities                 | $                            | 4,989                        | $                        | 8,854                   
|                                                       |                              |                              |                          |                         
|Divided by:                                            |                              |                              |                          |                         
|Basic weighted average number of shares outstanding    |                              | 124,719,241                  |                          | 117,833,349             
|Diluted weighted average number of shares outstanding1 |                              | 124,733,004                  |                          | 118,469,499             
|Equals:                                                |                              |                              |                          |                         
|Operating cash flow per share - basic                  | $                            | 0.04                         | $                        | 0.08                    
|Operating cash flow per share - diluted                | $                            | 0.04                         | $                        | 0.07                    



| | 1) | The diluted weighted average number of shares includes stock options and share purchase warrants
that would have been dilutive if the Company had positive net income for the period.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | Average realized gold price per ounce is calculated by dividing the Company’s sales by the number of Attributable Gold
Equivalent ounces sold. The Company presents average realized gold price per attributable ounce as it believes that certain investors
use this information to evaluate the Company’s performance in comparison to other companies in the precious metals mining
industry that present results on a similar basis. Figure 1.3 provides a reconciliation of average realized gold price per
ounce.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Figure 1.3



|                                               | 3 Months Ended
Dec. 31, 2015 | 3 Months Ended
Dec. 31, 2014 | Year Ended
Dec. 31, 2015 | Year Ended
Dec. 31, 2014
|---------------------------------------------- | ---------------------------- | ---------------------------- | ------------------------ | ------------------------
|Total revenue                                  | $                            | 9,863                        | $                        | 12,488                  
|                                               |                              |                              |                          |                         
|Divided by:                                    |                              |                              |                          |                         
|Total Attributable Gold Equivalent ounces sold |                              | 8,951                        |                          | 10,424                  
|Equals:                                        |                              |                              |                          |                         
|Average realized gold price per ounce          | $                            | 1,102                        | $                        | 1,198                   



The Company has also used the non-IFRS measure
of operating cash flows excluding changes in non-cash working capital. This measure is calculated by adding back the decrease in
changes in non-cash working capital to cash generated by operating activities. These non-IFRS measures do not have any standardized
meaning prescribed by IFRS, and other companies may calculate these measures differently.



The presentation of these non-IFRS measures
is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance
prepared in accordance with IFRS.



24







Liquidity and
Capital Resources



As of December 31, 2015, the Company had cash
and cash equivalents of $5.3 million (December 31, 2014 – $90.2 million) and working capital of $1.8 million
(December 31, 2014 – $89.3 million).



During the year ended December 31, 2015, the
Company generated operating cash flows of $30.8 million compared with $35.2 million during the comparable period in 2014, with
the decrease being primarily attributable to a decrease in the average realized selling price of gold; which was partially offset
by an increase in Attributable Gold Equivalent ounces sold.



During the year ended December 31, 2015, the
Company had cash outflows from investing activities of $221.4 million, which were primarily the result of: (i) the payment of $148
million to Yamana in connection with the Yamana commodity streams; (ii) the payment of $52.5 million to IAMGOLD Corporation in
connection with the Diavik royalty and $3.0 million to Orezone in connection with the Bomboré royalty; (iii) a $6.7 million
upfront payment related to the Karma Gold Stream; (iv) a loan of $2.0 million and (v) the acquisition of investments and other
assets; partially offset by (i) the receipt of $7 million as a result of the Doray Minerals Ltd Gold Stream settlement agreement
and (ii) the proceeds from the sale of other investments. During the year ended December 31, 2014, the Company had cash outflows
from investing activities of $74.6 million, which were primarily the result of (i) Sandstorm exercising the Santa Elena underground
mine option by making an upfront payment of $10.0 million; (ii) the acquisition of Sandstorm Metals & Energy; (iii) a $10.0
million loan to Luna; (iv) the $14.4 million upfront payment related to the Karma Gold Stream; (v) the acquisition of investments
totaling $27.5 million; and (vi) providing a $2.9 million loan.



During the year ended December 31, 2015, the
Company had net cash inflows from financing activities of $107.5 million largely related to: (i) drawing $110 million under the
Company’s Revolving Loan to finance the Yamana commodity streams; and (ii) $28.8 million raised in gross proceeds from the
Company’s November 2015 equity financing; which were partially offset by (i) the repayment of $26.5 million under the Company’s
Revolving Loan; (ii) share issuance and deferred financing costs of $3.1 million; and (iii) $1.7 million in the redemption of the
Company’s common shares under the NCIB. During the year ended December 31, 2014, the Company had net cash inflows from financing
activities of $32.1 million, which were primarily comprised of the proceeds from the exercise of warrants partially offset by deferred
financing costs and the redemption of the Company’s common shares under the NCIB.



25







Contractual
Obligations



In connection with its commodity
streams, the Company has committed to purchase the following:



|Stream               | % of Life of Mine Gold
or Relevant Commodity 5,6,7,8,9               | Per Ounce Cash Payment:
lesser of amount below and the then
 prevailing market price of the gold
 (unless otherwise noted) 1, 2, 3, 4
|-------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------
|Bachelor Lake        | 20%                                                                  | $500                                                                                                                                 
|Black Fox            | 8%                                                                   | $518                                                                                                                                 
|Chapada              | 4.2%                                                                 | 30% of copper spot price                                                                                                             
|Entrée Gold          | 5.62% on Hugo North Extension and 4.26% on Heruga                    | $220                                                                                                                                 
|Karma                | 25,000 ounces over 5 years and 1.625% thereafter                     | 20% of gold spot price                                                                                                               
|Ming                 | 25% of the first 175,000 ounces of gold produced, and 12% thereafter | $nil                                                                                                                                 
|Santa Elena          | 20%                                                                  | $357                                                                                                                                 
|Yamana Silver Stream | Varies                                                               | 30% of silver spot price                                                                                                             



| | 1) | Subject to an annual inflationary adjustment except for Ming.
| | -- | -------------------------------------------------------------

| | 2) | For the Entrée Gold Stream, after approximately 8.6 million ounces
of gold have been produced from the joint venture property, the price increases to $500 per gold ounce.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3) | For the Entrée Silver Stream, percentage of life of mine is 5.62%
on Hugo North Extension and 4.26% on Heruga which the Company can purchase for the lesser of the prevailing market price and $5
per ounce of silver until 40.3 million ounces of silver have been produced from the entire joint venture property. Thereafter,
the purchase price will increase to the lesser of the prevailing market price and $10 per ounce of silver.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4) | For the Santa Elena Gold Stream, the Company can purchase for a per ounce
cash payment equal to (i) the lesser of $357 and the then prevailing market price of gold for the open-pit mine and (ii) the lesser
of $357 and the then prevailing market price of gold until 50,000 ounces of gold have been delivered to Sandstorm (inclusive of
ounces already received from open-pit production), at which time the on-going per ounce payments will increase to the lesser of
$450 and the then prevailing market price of gold for the underground mine.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5) | For the Entrée Gold and Silver Stream, percentage of life of mine
is 5.62% on Hugo North Extension and 4.26% on Heruga if the minerals produced are contained below 560 metres in depth.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6) | For the Entrée Gold and Silver Stream, percentage of life of mine
is 8.43% on Hugo North Extension and 6.39% on Heruga if the minerals produced are contained above 560 metres in depth.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7) | For the Entrée copper stream, the Company has committed to purchase an amount equal to 0.42%
of the copper produced from the Hugo North Extension and Heruga deposits. If the minerals produced are contained above 560 metres
in depth, then the commitment increases to 0.62% for both the Hugo North Extension and Heruga deposits. Sandstorm will make ongoing
per pound cash payments equal to the lesser of $0.50 and the then prevailing market price of copper, until 9.1 billion pounds of
copper have been produced from the entire joint venture property. Thereafter, the on-going per pound payments will increase to
the lesser of $1.10 and the then prevailing market price of copper.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8) | For the Chapada copper stream, the Company has committed to purchase an amount equal to 4.2% of
the copper produced (up to an annual maximum of 3.9 million pounds of copper) until Yamana has delivered 39 million pounds of copper
to Sandstorm; then 3.0% of the copper produced until, on a cumulative basis, Yamana has delivered 50 million pounds of copper to
Sandstorm; then 1.5% of the copper produced thereafter, for the life of the mine. If Cerro Moro has not achieved the Commencement
of Production and Sandstorm has not received cumulative pre-tax cash flow equal to $70 million from the Yamana Silver Stream, then
the First Chapada Delivery Threshold and the Second Chapada Delivery Threshold will cease to be in effect and Sandstorm will continue
to purchase 4.2% of Chapada’s payable copper production (up to an annual maximum of 3.9 million pounds of copper), until
such time as Sandstorm has received cumulative pre-tax cash flow equal to $70 million, or Cerro Moro has achieved the Commencement
of Production.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 9) | Under the terms of the Yamana Silver Stream, Sandstorm has agreed to purchase an amount of silver
from Cerro Moro equal to 20% of the silver produced (up to an annual maximum of 1.2 million ounces of silver), until Yamana has
delivered to Sandstorm 7.0 million ounces of silver; then 9.0% of the silver produced thereafter. As part of the Yamana Silver
Stream, during the year 2016 through 2018, Sandstorm has also agreed to purchase an amount of silver from: (i) the Minera Florida
mine in Chile equal to 38% of the silver produced (up to an annual maximum of 200,000 ounces of silver); and (ii) the Chapada mine
in Brazil equal to 52% of the silver produced (up to an annual maximum of 100,000 ounces of silver).
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



26







In connection with the Karma Gold Stream, the
Stream Syndicate has provided True Gold with an 18 month option to increase funding by up to $20 million whereby Sandstorm’s
commitment would be up to $5 million of the increase. As of the date of the MD&A, the Company had remitted $1.25 million of
that commitment.



In connection with the Bomboré royalty,
Sandstorm has committed to providing up to an additional $5.0 million in royalty financing (remittable in cash and/or shares, subject
to certain conditions) to Orezone on a draw down basis until January 27, 2017.



As part of the Yamana transaction, the Company drew on its Revolving Loan. The Company will, from time
to time, repay balances outstanding on its Revolving Loan with operating cash flow and cash flow from other sources. The amounts
drawn on the Revolving Loan remain subject to interest at LIBOR plus 3.00% – 4.25% per annum, and the undrawn
portion of the Revolving Loan remains subject to a standby fee of 0.75% – 1.05% per annum, dependent on the
Company’s leverage ratio. The Revolving Loan matures in July 2019.



Share Capital



As of March 30, 2016, the Company had 137,930,795 common shares outstanding. As disclosed previously,
the funds from the issuance of share capital have been used to finance the acquisition of Gold Streams and royalties (recent acquisitions
are described earlier in greater detail), with the net proceeds of the 2015 equity financing used to reduce the balance of the
Company’s Revolving Loan.



A summary of the Company’s share purchase options as of March 30, 2016 are as follows:



|Numberoutstanding | Vested    | Exercise Priceper Share (C$) | Expiry Date      
|----------------- | --------- | ---------------------------- | -----------------
|66,000            | 66,000    | $6.30                        | August 25, 2016  
|1,129,000         | 1,129,000 | $6.35                        | November 25, 2016
|27,000            | 27,000    | $18.33                       | August 22, 2017  
|5,850             | 5,850     | $18.33                       | October 4, 2017  
|402,133           | 402,133   | $16.35                       | December 11, 2017
|150,000           | 150,000   | $11.78                       | December 21, 2017
|10,875            | 10,875    | $11.31                       | February 19, 2018
|3,625             | 3,625     | $10.62                       | March 1, 2018    
|12,375            | 12,375    | $8.89                        | December 13, 2018
|25,000            | 8,334     | $6.03                        | May 16, 2019     
|3,737,474         | 1,245,834 | $2.93                        | November 13, 2019
|1,084,000         | -         | $3.60                        | December 9, 2020 
|200,000           | -         | $3.64                        | December 22, 2020
|2,250             | 2,250     | $15.00                       | March 30, 2022   
|6,855,582         | 3,063,276 | $6.70                        |                  



27







A summary of the Company’s warrants as of March
30, 2016 are as follows:



|Numberoutstanding | Exercise Priceper Share | Expiry Date  
|----------------- | ----------------------- | -------------
|32,400            | C$11.11                 | May 1, 2016  
|1,155,873         | C$13.79                 | Dec. 4, 2016 
|5,002,500         | $14.00                  | Sep. 7, 2017 
|3,000,000         | $4.50                   | Mar. 23, 2020
|15,000,000        | $3.50                   | Oct. 26, 2020
|5,043,900         | $4.00                   | Nov. 3, 2020 
|29,234,673        |                         |              



The Company has 1,395,517 Restricted Share Rights (“RSRs”) outstanding as at March 30, 2016.



Key Management
Personnel Compensation



The remuneration of directors and those persons
having authority and responsibility for planning, directing and controlling activities of the Company are as follows:



|                                          | Year Ended
December 31, 2015 | Year Ended
December 31, 2014
|----------------------------------------- | ---------------------------- | ----------------------------
|Short-term employee salaries and benefits | $                            | 2,345                       
|Share-based payments                      |                              | 1,837                       
|Total key management compensation expense | $                            | 4,182                       



Financial Instruments



The fair value of the Company's other financial
instruments which include cash and cash equivalents, trade receivables and other, loans receivable, receivables and other, trade
and other payables and bank debt. All financial instruments are initially recorded at fair value.



Credit Risk



The Company’s credit risk is limited
to cash and cash equivalents, trade receivables and other, loans receivable, and receivables and other in the ordinary course of
business. The Company sells gold exclusively to third parties with a history in commodities. The Company’s trade receivables
and other is subject to the credit risk of the counterparties who own and operate the mines underlying Sandstorm’s royalty
portfolio. The Company’s loan receivable and convertible debenture due from Luna is subject to Luna’s credit risk and
the Company’s ability to realize on its security.



28







Currency Risk



Financial instruments that impact the Company’s
net (loss) income or other comprehensive (loss) income due to currency fluctuations include: cash and cash equivalents, trade receivables
and other, investments and trade and other payables denominated in Canadian dollars. Based on the Company's Canadian dollar denominated
monetary assets and monetary liabilities at December 31, 2015, a 10% increase (decrease) of the value of the Canadian dollar relative
to the United States dollar would (decrease) increase net loss by $0.4 million and other comprehensive loss by $1.5 million, respectively.



Interest Rate Risk



The Company is exposed to interest rate risk
on its outstanding borrowings. Presently, all of the Company’s outstanding borrowings are at floating rates. The Company
monitors its exposure to interest rates and has not entered into any derivative contracts to manage risk. During the year ended
December 31, 2015, the weighted average effective interest rate paid by the Company on the amount drawn on its outstanding borrowings
was 3.4% (2014- Revolving Loan facility was undrawn). A fluctuation in interest rates of 100 basis points (1 percent) would have
affected finance expense by approximately $0.2 million.



Other Risks



Sandstorm holds common shares, convertible debentures, and warrants of other companies with a combined
market value as at December 31, 2015, of $26.6 million (December 31, 2014 – $24.0 million). The daily exchange
traded volume of these shares, including the shares underlying the warrants, may not be sufficient for the Company to liquidate
its position in a short period of time without potentially affecting the market value of the shares. The Company is subject to
default risk with respect to any debt instruments. Aside from the outstanding balance on the Company’s revolving credit facility,
the Company is not subject to other price risks. Except for the Company’s exposure to liquidity risk with respect to the
Luna Debenture and the revolving credit facility, the Company’s exposure to these risks has not changed significantly from
the prior year.



29







Risks to Sandstorm



The primary risk factors affecting the
Company are set forth below. For additional discussion of risk factors, please refer to the Company’s annual information
form dated March 30, 2016, which is available on www.sedar.com.



Risks Relating To Mineral Projects



To the extent that they relate to the production
of gold from, or the operation of, the Chapada Mine, the Cerro Moro Project, the Diavik Mine, the Aurizona Mine, the Santa Elena
Mine, the Karma Project, the Ming Mine, the Black Fox Mine, the Bachelor Lake Mine, the Hugo North Extension and Heruga deposits,
the Mt. Hamilton Project, the Gualcamayo Mine, the Emigrant Springs Mine, MWS, the San Andres Mine, the Bomboré Project,
the Prairie Creek Project, the Bracemac-McLeod Mine, the Serra Pelada Mine, the Hot Maden Project, the Hackett River Project, the
Lobo-Marte Project, Agi Dagi and Kirazli or other royalties in Sandstorm’s portfolio (the “Mines”), the Company
will be subject to the risk factors applicable to the operators of such Mines. Whether the Mines will be commercially viable depends
on a number of factors, including cash costs associated with extraction and processing, the particular attributes of the deposit,
such as size, grade and proximity to infrastructure, as well as metal prices which are highly cyclical and government regulations,
including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental
protection. The Mines are also subject to other risks that could lead to their shutdown and closure including flooding and weather
related events, the failure to receive permits or having existing permits revoked, collapse of mining infrastructure including
tailings pond, as well as community or social related issues. The exact effect of these factors cannot be accurately predicted,
but the combination of these factors may result in the Mines becoming uneconomic resulting in their shutdown and closure. The Company
is not entitled to purchase gold if no gold is produced from the Mines.



No Control Over Mining Operations



The Company has no contractual rights relating
to the operation or development of the Mines. Except for any payments which may be payable in accordance with applicable completion
guarantees or cash flow guarantees, the Company will not be entitled to any material compensation if these mining operations do
not meet their forecasted gold or other production targets in any specified period or if the Mines shut down or discontinue their
operations on a temporary or permanent basis. The Mines may not commence commercial production within the time frames anticipated,
if at all, and there can be no assurance that the gold or other production from such properties will ultimately meet forecasts
or targets. At any time, any of the operators of the Mines or their successors may decide to suspend or discontinue operations.
The Company is subject to the risk that the Mines shut down on a temporary or permanent basis due to issues including, but not
limited to economics, lack of financial capital, floods, fire, mechanical malfunctions, social unrest, expropriation and other
risks. There are no guarantees the Mines will achieve commercial production, ramp-up targets or complete expansion plans. These
issues are common in the mining industry and can occur frequently.



Government Regulations



The Mines are subject to various foreign laws and
regulations governing prospecting, exploration, development, production, exports, taxes, labour standards, waste disposal, protection
and remediation of the environment, reclamation, historic and cultural resources preservation, mine safety and occupation health,
handling, storage and transportation of hazardous substances and other matters. It is possible that the risks of expropriation,
cancellation or dispute of licenses could result in substantial costs, losses and liabilities in the future. The costs of discovering,
evaluating, planning, designing, developing, constructing, operating and closing the Mines in compliance with such laws and regulations
are significant. It is possible that the costs and delays associated with compliance of such laws and regulations could become
such that the owners or operators of the Mines would not proceed with the development of or continue to operate the Mines. Moreover,
it is possible that future regulatory developments, such as increasingly strict environmental protection laws, regulations and
enforcement policies thereunder, and claims for damages to property and persons resulting from the Mines could result in substantial
costs and liabilities in the future.



30









International Operations



The Chapada Mine and the Aurizona Mine are located
in Brazil, the Santa Elena Mine is located in Mexico, the Emigrant Springs Mine and the Mt. Hamilton Project are located in the
United States of America, the Gualcamayo Mine and the Cerro Moro Project is located in Argentina, MWS is located in South Africa,
the Hugo North Extension and Heruga projects are located in Mongolia, the Karma Project and Bomboré Project are located
in Burkina Faso, the San Andres Mine is located in Honduras, the Hot Maden Project, Agi Dagi and Kirazli are located in Turkey,
the Lobo-Marte Project is located in Chile, and each of the Diavik Mine, the Ming Mine, the Black Fox Mine, Bachelor Lake Mine,
Prairie Creek Project, the Hackett River Project and the Bracemac-McLeod Mine are located in Canada and as such, the Mines are
exposed to various levels of political, economic and other risks and uncertainties. These risks and uncertainties include, but
are not limited to, terrorism, hostage taking, military repression, crime, political instability, currency controls, extreme fluctuations
in currency exchange rates, high rates of inflation, labour unrest, the risks of war or civil unrest, expropriation and nationalization,
renegotiation or nullification of existing concessions, licenses, permits, approvals and contracts, illegal mining, changes in
taxation policies, restrictions on foreign exchange and repatriation, and changing political conditions, and governmental regulations.
Changes, if any, in mining or investment policies or shifts in political attitude in Mexico, Brazil, Mongolia, the United States
of America, Burkina Faso, Argentina, Honduras, French Guiana, Chile, Turkey or Canada may adversely affect the operations or profitability
of the Mines in these countries. Operations may be affected in varying degrees by government regulations with respect to, but not
limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, expropriation of property,
foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use, mine safety
and the rewarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies
from, a particular jurisdiction. Any changes or unfavorable assessments with respect to (i) the validity, ownership or existence
of the Entrée concessions; as well as (ii) the validity or enforceability of Entrée’s joint venture agreement
with Oyu Tolgoi LLC may adversely affect the Company’s profitability or profits realized under the Entrée Gold Stream.
The Serra Pelada royalty cash flow or profitability may be adversely impacted if the Cooperative de Mineracao dos Garimpeiros de
Serra Pelada, which hold a 25% interest in the Serra Pelada Mine, continue to take unfavorable actions. In addition, Colossus’
Brazilian subsidiary has payables in excess of $30 million and accordingly, there is a risk that they may be unable to repay their
debts, resulting in insolvency and loss any rights to the Serra Pelada Mine. Moreover, there is no certainty that the Karma Project
will achieve its intended production and/or construction timeline, if ever. A failure to comply strictly with applicable laws,
regulations and local practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation
of entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or other interests.
The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on the
Mines.





31







Income Taxes



The Company has a subsidiary in Barbados, Sandstorm
Gold Bank Limited, which entered into Gold Streams in connection with the Aurizona, Karma, and Santa Elena transactions. No assurance
can be given that new taxation rules will not be enacted or that existing rules will not be applied in a manner which could result
in the Company’s past and future profits being subject to increased levels of income tax (refer to discussion earlier). The
Company’s international transactions have not yet been reviewed by the Canada Revenue Agency, and should such transactions
be reviewed no assurances can be given that the tax matters will be resolved favorably. The Company’s Gold Streams and royalties
in connection with Chapada, Cerro Moro, Diavik, Black Fox, Ming, Hugo North Extension and Heruga, MWS, Bachelor Lake, Mt. Hamilton,
Prairie Creek, San Andres, Hot Maden Project, Hackett River Project, Lobo-Marte Project, Agi Dagi, Kirazli and Bracemac-McLeod
transactions have been entered into directly by Canadian based subsidiaries and will therefore, be subject to Canadian, and/or
U.S./international taxation, as the case may be. The Gualcamayo NSR was entered into through an Argentinian subsidiary and therefore,
may be subject to Canadian, and/or Argentinian taxation, as the case may be. The Emigrant Springs NSR was entered into through
a US subsidiary and therefore, may be subject to Canadian, and/or US taxation, as the case may be.



Gold and Silver Prices



The price of the common shares, warrants, and the
Company’s financial results may be significantly adversely affected by a decline in the price of gold and silver. The price
of gold and silver fluctuates widely, especially in recent years, and is affected by numerous factors beyond the Company’s
control, including but not limited to, the sale or purchase of gold and silver by various central banks and financial institutions,
interest rates, exchange rates, inflation or deflation, fluctuation in the value of the U.S. dollar and foreign currencies, global
and regional supply and demand, and the political and economic conditions of major gold and silver producing countries throughout
the world. In the event that the prevailing market price of gold is less than $518 per ounce in the case of the Black Fox Gold
Stream, $500 per ounce in the case of the Bachelor Lake Gold Stream, $357 or $450 per ounce in the case of the Santa Elena Gold
Stream, and $220 per ounce in the case of the Hugo North Extension and Heruga Gold Stream, the purchase price will be the then
prevailing market price per ounce of gold and the Company will not generate positive cash flow or earnings on those Gold Streams.
Furthermore, if the gold or silver price drops below the cost of producing gold or silver at the Mines, then the Mines may not
produce any gold or silver. As a result, the Company will not be entitled to purchase any gold or silver.



Diamond Prices and Demand for Diamonds



The price of the common shares, warrants, and the
Company’s financial results may be significantly adversely affected by a decline in the price and demand for diamonds. Diamond
prices fluctuate and are affected by numerous factors beyond the control of the Company, including worldwide economic trends, worldwide
levels of diamond discovery and production, and the level of demand for, and discretionary spending on, luxury goods such as diamonds.
Low or negative growth in the worldwide economy, renewed or additional credit market disruptions, natural disasters or the occurrence
of terrorist attacks or similar activities creating disruptions in economic growth could result in decreased demand for luxury
goods such as diamonds, thereby negatively affecting the price of diamonds. Similarly, a substantial increase in the worldwide
level of diamond production or the release of stocks held back during recent periods of lower demand could also negatively affect
the price of diamonds. In each case, such developments could have a material adverse effect on the Company’s results of operations.





32







Copper Prices



The price of the common shares, warrants, and the
Company’s financial results may be significantly adversely affected by a decline in the price of copper. Copper prices fluctuate
widely and are affected by numerous factors beyond the Company’s control, including global supply and demand, expectations
with respect to the rate of inflation, the exchange rates of the U.S. dollar to other currencies, interest rates, forward selling
by producers, central bank sales and purchases, production and cost levels in major producing regions, global or regional political,
economic or financial situations and a number of other factors. Furthermore, if the copper price drops below the cost of producing
copper at the Mines, then the Mines may not produce any copper. As a result, the Company will not be entitled to purchase any copper.



Solvency Risk



The price of the common shares and the Company’s
financial results may be significantly affected by the Mines operators’ ability to continue as a going concern and have access
to capital. The lack of access to capital could result in these companies entering bankruptcy proceedings and as a result, Sandstorm
may not be able to realize any value from its respective streams or royalties.



Other



Critical Accounting Estimates



The preparation of consolidated financial statements
in conformity with IFRS requires management to make estimates and assumptions that affect the reported amount of assets and liabilities
and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues
and expenditures during the periods presented. Notes 2 and 4 of the Company’s 2015 annual consolidated financial statements
describes all of the significant accounting policies as well as the significant judgments and estimates.



Disclosure Controls and Procedures



Disclosure controls and procedures
are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including
the Company’s Chief Executive Officer and the Chief Financial Officer, on a timely basis so that appropriate decisions can
be made regarding public disclosure. The Company’s system of disclosure controls and procedures includes, but is not limited
to, the Disclosure Policy, the Code of Conduct, the Stock Trading Policy, Corporate Governance, the effective functioning of the
Audit Committee and procedures in place to systematically identify matters warranting consideration of disclosure by the Audit
Committee.





33









As at the end of the period
covered by this Management’s Discussion and Analysis, management of the Company, with the participation of Chief Executive
Officer and the Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures
as required by National Instrument 52-109 in Canada (“NI 52-109”) and under the Securities Exchange Act of 1934, as
amended, in the United States. The evaluation included documentation review, enquiries and other procedures considered by management
to be appropriate in the circumstances. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer
have concluded that, as of December 31, 2015, as a result of a material weakness in internal control over financial reporting,
the disclosure controls and procedures (as defined in Rule 13(a) – 15(e) under the Securities Exchange Act
of 1934) were not effective to provide reasonable assurance that information required to be disclosed in the Company’s annual
filings and interim filings and other reports filed or submitted under applicable securities laws, is recorded, processed, summarized
and reported within time periods specified by those laws and that material information is accumulated and communicated to management
of the Company, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.





Management’s Report on Internal Control
Over Financial Reporting





Management of the Company
is responsible for establishing and maintaining effective internal control over financial reporting as such term is defined in
the rules of the National Instrument 52-109 in Canada (“NI 52-109”) and under the Securities Exchange Act of 1934,
as amended, in the United States. The Company’s internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of the Company’s financial reporting for external purposes in accordance with IFRS as
issued by the IASB.



The Company’s internal
control over financial reporting includes:



| | · | maintaining records, that in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets
of the Company;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



| | · | providing reasonable assurance that transactions are recorded as necessary for preparation of the consolidated financial statements
in accordance with IFRS as issued by the IASB;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and
the directors of the Company; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets
that could have a material effect on the Company’s consolidated financial statements would be prevented or detected on a
timely basis.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





The Company’s internal control over financial reporting may not prevent or detect all misstatements
because of inherent limitations. Additionally, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because changes in conditions or deterioration in the degree of compliance with the
Company’s policies and procedures. Management assessed the effectiveness of the Company's internal control over financial
reporting as of December 31, 2015 based on the criteria set forth in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In connection with the assessment, management
identified a material weakness relating to the review control over the impairment of long-lived assets and because of this material
weakness management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2015.
The material weakness could have resulted in a material misstatement related to the understatement of impairment expense and overstatement
of mineral interests in the annual consolidated financial statement as at and for the year ended December 31, 2015.  These
misstatements were corrected prior to the issuance of the consolidated financial statements and therefore, there were no misstatements
in the Company’s current or prior period consolidated financial statements. In response to the identified material weakness,
management is taking specific actions to address the material weakness. The enhancements include the following: (i) the Company
had hired an additional resource to assist in its evaluation of the Company’s financial reporting; and (ii) the Company has
engaged an external search firm to assist in the hiring of a further additional resource to assist in the documentation and review
of its internal controls. Remediation will require that changed or new controls operate for a sufficient period of time such that
effectiveness of those changes is demonstrated with an appropriate amount of consistency. As the Company implements these plans,
management may determine that additional steps may be necessary.





34







Deloitte LLP, the Company's
Independent Registered Public Accounting Firm, have audited the annual consolidated financial statements of the Company for the
year ended December 31, 2015, and have also issued a report on the internal controls over financial reporting based on the criteria
established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.



Changes in Internal Controls



Other than the material weakness described above, during the year ended December 31, 2015, there has been
no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.



Limitations of Controls and Procedures



The Company’s management, including the Chief
Executive Officer and the Chief Financial Officer, believe that any disclosure controls and procedures or internal controls over
financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems,
they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented
or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons,
by collusion of two or more people, or by unauthorized override of the control. The design of any systems of controls also is based
in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost
effective control system, misstatements due to error or fraud may occur and not be detected.



Future Changes in Accounting Policies



The IASB has issued the following new standard
but it is not yet effective. Pronouncements that are not applicable to the Company have been excluded from this note.



IFRS 15 Revenue from Contracts with Customers— The final standard on revenue from contracts
with customers was issued on May 28, 2014 and is effective for annual reporting periods beginning after January 1, 2018 for public
entities with early application permitted. Entities have the option of using either a full retrospective or a modified retrospective
approach to adopt the guidance. The Company is assessing the impact of this Standard.









35







FORWARD LOOKING STATEMENTS



This MD&A and any exhibits attached hereto
and incorporated herein, if any, contain “forward-looking statements”, within the meaning of the U.S. Securities Act
of 1933, as amended, the U.S. Securities exchange Act of 1934, as amended, the United States Private Securities Litigation Reform
Act of 1995, and applicable Canadian and other securities legislation, concerning the business, operations and financial performance
and condition of Sandstorm. Forward-looking information is provided as of the date of this MD&A and Sandstorm does not intend,
and does not assume any obligation, to update this forward-looking information, except as required by law.



Generally, forward-looking information can be identified
by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”,
“is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases
or statements that certain actions, events or results “may”, “could”, “would”, “might”
or “will be taken”, “occur” or “be achieved”. Forward-looking information is based on reasonable
assumptions that have been made by Sandstorm as at the date of such information and is subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of activity, performance or achievements of Sandstorm to be materially
different from those expressed or implied by such forward-looking information, including but not limited to: the impact of general
business and economic conditions; the Chapada Mine, the Cerro Moro Project, the Ming Mine, the Gualcamayo Mine, the Karma Project,
the Emigrant Springs Mine, MWS, the Hugo North Extension and Heruga deposits, the mines underlying the Sandstorm portfolio of royalties,
the Bachelor Lake Mine, the Diavik Mine, the Mt. Hamilton mine, the Prairie Creek Project, the San Andres Mine, the Bomboré
Project, the Hot Maden Project, the Hackett River Project, the Lobo-Marte Project, Agi Dagi and Kirazli or the Bracemac-McLeod
Mine; the absence of control over mining operations from which Sandstorm will purchase gold and risks related to those mining operations,
including risks related to international operations, government and environmental regulation, actual results of current exploration
activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined; problems inherent
to the marketability of minerals; industry conditions, including fluctuations in the price of metals, fluctuations in foreign exchange
rates and fluctuations in interest rates; government entities interpreting existing tax legislation or enacting new tax legislation
in a way which adversely affects Sandstorm; stock market volatility; competition; as well as those factors discussed in the section
entitled “Risks to Sandstorm” herein and those risks described in the section entitled “Risk Factors” contained
in Sandstorm’s most recent Annual Information Form for the year ended December 31, 2015 available at www.sedar.com and www.sec.gov
and incorporated by reference herein.



Forward-looking information in this MD&A includes,
among other things, disclosure regarding: Sandstorm’s existing Gold Streams and royalties as well as its future outlook,
the mineral reserve and mineral resource estimates for each of the Chapada Mine, the Cerro Moro Project, the Diavik Mine, the Aurizona
Mine, the Gualcamayo Mine, the Emigrant Springs Mine, MWS, the Santa Elena Mine, the Ming Mine, the Black Fox Mine, the Hugo North
Extension and Heruga deposits, the Karma Project, the mines underlying the Sandstorm portfolio of royalties, the Bachelor Lake
Mine, the Mt. Hamilton Mine, the Prairie Creek Project, the San Andres Mine, the Bomboré Project, the Hot Maden Project,
the Hackett River Project, the Lobo-Marte Project, Agi Dagi and Kirazli and the Bracemac-McLeod Mine. Forward-looking information
is based on assumptions management believes to be reasonable, including but not limited to the continued operation of the mining
operations from which Sandstorm will purchase gold, no material adverse change in the market price of commodities, that the mining
operations will operate in accordance with their public statements and achieve their stated production outcomes, and such other
assumptions and factors as set out therein.



Although Sandstorm has attempted to identify important
factors that could cause actual actions, events or results to differ materially from those contained in forward-looking information,
there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be
no assurance that such information will prove to be accurate, as actual results and future events could differ materially from
those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.



36







MANAGEMENT'S
RESPONSIBILITY FOR FINANCIAL REPORTING



The accompanying consolidated financial statements
of Sandstorm Gold Ltd. and all the information in this annual report are the responsibility of management and have been approved
by the Board of Directors.



The consolidated financial statements have been
prepared by management on a going concern basis in accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”). When alternative accounting methods exist, management
has chosen those it deems most appropriate in the circumstances. Financial statements are not exact since they include certain
amounts based on estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that
the financial statements are presented fairly, in all material respects. Management has prepared the financial information presented
elsewhere in the annual report and has ensured that it is consistent with that in the financial statements.



Sandstorm Gold Ltd. maintains systems of internal
accounting and administrative controls in order to provide, on a reasonable basis, assurance that the financial information is
relevant, reliable and accurate and that the Company's assets are appropriately accounted for and adequately safeguarded.



The Board of Directors is responsible for ensuring
that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving
the financial statements. The Board carries out this responsibility principally through its Audit Committee.



The Audit Committee is appointed by the Board, and all of its members are independent directors. The Committee
meets at least four times a year with management, as well as the external auditors, to discuss internal controls over the financial
reporting process, auditing matters and financial reporting issues, to satisfy itself that each party is properly discharging its
responsibilities, and to review the quarterly and the annual reports, the financial statements and the external auditors' report.
The Committee reports its findings to the Board for consideration when approving the financial statements for issuance to the shareholders.
The Committee also considers, for review by the Board and approval by the shareholders, the engagement or reappointment of the
external auditors. The consolidated financial statements have been audited by Deloitte LLP, Chartered Professional Accountants,
in accordance with Canadian generally accepted auditing standards and standards of the Public Company Accounting Oversight Board
(United States) on behalf of the shareholders. Deloitte LLP have full and free access to the Audit Committee.





|“Nolan Watson”                      | “Erfan Kazemi”         
|----------------------------------- | -----------------------
|President & Chief Executive Officer | Chief Financial Officer
|                                    |                        
|March 30, 2016                      |                        









37







Report
of Independent Registered Public Accounting Firm



To the Board of Directors and Shareholders of Sandstorm
Gold Ltd.





We have audited the accompanying consolidated
financial statements of Sandstorm Gold Ltd. and subsidiaries (the “Company”), which comprise the consolidated statements
of financial position as at December, 31 2015 and December 31, 2014, and the consolidated statement of (loss) income,consolidated
statements of comprehensive (loss) income, consolidated statements of changes in equity, and consolidated statements of cash flows
for the years then ended, and a summary of significant accounting policies and other explanatory information.







Management's Responsibility for the Consolidated
Financial Statements





Management is responsible for the preparation and
fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.



Auditor's Responsibility



Our responsibility is to express an opinion on
these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.



An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the
auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation
and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we have obtained
in our audits is sufficient and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of Sandstorm Gold Ltd. and subsidiaries as at December 31, 2015
and December 31, 2014, and their financial performance and their cash flows for the years then ended in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.



Other Matter





We have also audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial
reporting as of December 31, 2015, based on the criteria established in Internal Control — Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 30, 2016 expressed
an adverse opinion on the Company’s internal control over financial reporting.







/S/ Deloitte LLP



Chartered Professional Accountants
March 30, 2016
Vancouver, Canada





38











Report of Independent
Registered Public Accounting Firm



To the Board of Directors and Shareholders
of Sandstorm Gold Ltd.





We have audited the internal control over financial
reporting of Sandstorm Gold Ltd.and subsidiaries (the “Company”)as of December 31, 2015, based on the
criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Managements Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal
control over financial reporting based on our audit.



We conducted our audit in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.



A company's internal control over financial
reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers,
or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with International Financial Reporting Standards as issued by the International Accounting Standards Board, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.



Because of the inherent limitations of internal
control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following
material weakness has been identified and included in management's assessment: management identified a material weakness relating
to the review control over the impairment of long-lived assets. The material weakness could have resulted in a material misstatement
related to the understatement of impairment expense and overstatement of mineral interests in the consolidated financial statements
as at and for the year ended December 31, 2015. This material weakness was considered in determining the nature, timing, and extent
of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2015, of
the Company and this report does not affect our report on such consolidated financial statements dated March 30, 2016, which expressed
an unmodified/unqualified opinion on those consolidated financial statements.



In our opinion, because of the effect of the
material weakness identified above on the achievement of the control criteria, the Company has not maintained effective internal
control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control — Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.



We have also audited, in accordance with Canadian
generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated
financial statements as of and for the year ended December 31, 2015 of the Company and our report dated March 30, 2016 expressed
an unmodified/unqualified opinion on those consolidated financial statements.







/S/ Deloitte LLP



Chartered Professional Accountants
March 30, 2016
Vancouver, Canada



39









SANDSTORM GOLD LTD.



CONSOLIDATED FINANCIAL STATEMENTS



Annual 2015



40







|CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | Expressed in U.S. dollars ($000s)
|--------------------------------------------- | ---------------------------------



|ASSETS                               | Note | December 31, 2015 | December 31, 2014
|------------------------------------ | ---- | ----------------- | -----------------
|Current                              |      |                   |                  
|Cash and cash equivalents            |      | $                 | 5,346            
|Trade receivables and other          |      |                   | 3,876            
|                                     |      | $                 | 9,222            
|Non-current                          |      |                   |                  
|Mineral interests and royalties      | 7    | $                 | 414,363          
|Investments                          | 8    |                   | 26,580           
|Deferred financing costs             | 9    |                   | 2,220            
|Loan receivable                      | 7    |                   | 23,821           
|Deferred income tax assets           | 11   |                   | 19,650           
|Receivables and other                |      |                   | 1,017            
|Total assets                         |      | $                 | 496,873          
|                                     |      |                   |                  
|LIABILITIES                          |      |                   |                  
|Current                              |      |                   |                  
|Trade and other payables             |      | $                 | 7,443            
|Non-current                          |      |                   |                  
|Bank debt                            | 9    |                   | 83,500           
|Deferred income tax liabilities      | 11   |                   | 3,279            
|                                     |      |                   | 86,779           
|                                     |      | $                 | 94,222           
|                                     |      |                   |                  
|EQUITY                               |      |                   |                  
|Share capital                        | 10   | $                 | 491,769          
|Reserves                             | 10   |                   | 23,368           
|Deficit                              |      |                   | (60,926)         
|Accumulated other comprehensive loss |      |                   | (51,560)         
|                                     |      | $                 | 402,651          
|Total liabilities and equity         |      | $                 | 496,873          



Contractual
obligations (Note 15)

Subsequent
events (Note 17)



ON BEHALF OF THE BOARD:



“Nolan Watson”, Director “David
DeWitt”, Director



- The accompanying notes
are an integral part of these consolidated financial statements –



41







|Consolidated Statements of (Loss) Income | Expressed in U.S. dollars ($000s)
|---------------------------------------- | ---------------------------------



|                                                                                                                         | Note         | Year Ended
December 31, 2015 | Year Ended
        December 31, 2014
        (note 2 b)
|------------------------------------------------------------------------------------------------------------------------ | ------------ | ---------------------------- | -------------------------------------------------------
|Sales                                                                                                                    | 16           | $                            | 38,585                                                 
|Royalty revenue                                                                                                          | 16           |                              | 14,078                                                 
|                                                                                                                         |              | $                            | 52,663                                                 
|                                                                                                                         |              |                              |                                                        
|Cost of sales, excluding depletion                                                                                       |              | $                            | 13,566                                                 
|Depletion                                                                                                                |              |                              | 35,312                                                 
|Total cost of sales                                                                                                      |              | $                            | 48,878                                                 
|                                                                                                                         |              |                              |                                                        
|Gross Profit                                                                                                             |              | $                            | 3,785                                                  
|                                                                                                                         |              |                              |                                                        
|Expenses and other (income)                                                                                              |              |                              |                                                        
|·  Administration expenses1                                                                                              | 12           | $                            | 5,690                                                  
|·  Project evaluation1                                                                                                   |              |                              | 4,346                                                  
|·  Foreign exchange gain                                                                                                 |              |                              | (1,532)                                                
|·  Loss on revaluation of investments                                                                                    | 8            |                              | 12,463                                                 
|·  Finance
    income                                                                                                    |              |                              | (1,610)                                                
|·  Finance
    expenses and other                                                                                        |              |                              | 1,693                                                  
|·  Gain on restructuring of mineral interest, bargain purchase and other                                                 | 6 (b), 7 (b) |                              | (4,966)                                                
|·  Mineral interest impairments                                                                                          | 7 (c)        |                              | 21,645                                                 
|(Loss) income before taxes                                                                                               |              | $                            | (33,944)                                               
|                                                                                                                         |              |                              |                                                        
|Current income tax expense                                                                                               | 11           | $                            | 871                                                    
|Deferred income tax expense (recovery)                                                                                   | 11           |                              | 8,241                                                  
|                                                                                                                         |              |                              | 9,112                                                  
|Net (loss) income for the year                                                                                           |              | $                            | (43,056)                                               
|                                                                                                                         |              |                              |                                                        
|Basic (loss) earnings per share                                                                                          |              | $                            | (0.36)                                                 
|Diluted (loss) earnings per share                                                                                        |              | $                            | (0.36)                                                 
|                                                                                                                         |              |                              |                                                        
|Weighted average number of common shares outstanding                                                                     |              |                              |                                                        
|·  Basic                                                                                                                 | 10 (e)       |                              | 119,622,450                                            
|·  Diluted                                                                                                               | 10 (e)       |                              | 119,622,450                                            
|1 Equity settled stock based compensation (a non-cash item)is included in administration expenses and project evaluation |              | $                            | 2,706                                                  



- The accompanying notes
are an integral part of these consolidated financial statements –



42







|Consolidated Statements of Comprehensive (Loss) Income | Expressed in U.S. dollars ($000s)
|------------------------------------------------------ | ---------------------------------



|                                                                        | Note | Year Ended
December 31, 2015 | Year Ended
December 31, 2014
|----------------------------------------------------------------------- | ---- | ---------------------------- | ----------------------------
|Net (loss) income for the year                                          |      | $                            | (43,056)                    
|                                                                        |      |                              |                             
|Other comprehensive loss for the year                                   |      |                              |                             
|Items that may subsequently be re-classified to net income (loss):      |      |                              |                             
|·  Currency translation differences                                     |      | $                            | (5,668)                     
|Items that will not subsequently be re-classified to net income (loss): |      |                              |                             
|·  Unrealized loss on investments                                       | 8    |                              | (7,507)                     
|Total other comprehensive loss for the year                             |      | $                            | (13,175)                    
|Total comprehensive loss for the year                                   |      | $                            | (56,231)                    



- The accompanying notes
are an integral part of these consolidated financial statements –



43







|Consolidated Statements of Cash Flows | Expressed in U.S. dollars ($000s)
|------------------------------------- | ---------------------------------



|Cash flow from (used in):                                                       | Note        | Year Ended
December 31, 2015 | Year Ended
December 31, 2014
|------------------------------------------------------------------------------- | ----------- | ---------------------------- | ----------------------------
|Operating activities                                                            |             |                              |                             
|·  Net (loss) income for the year                                               |             | $                            | (43,056)                    
|·  Items not affecting cash:                                                    |             |                              |                             
|·  Mineral interest impairments                                                 | 7 (c)       |                              | 21,645                      
|·  Depletion and depreciation and financing amortization                        |             |                              | 35,998                      
|·  Deferred income tax expense (recovery)                                       | 11          |                              | 8,116                       
|·  Share-based payment                                                          |             |                              | 2,706                       
|·  Loss on revaluation of investments                                           |             |                              | 12,463                      
|·  Unrealized foreign exchange gain                                             |             |                              | (1,687)                     
|·  Interest on loan receivable and other                                        |             |                              | (674)                       
|·  Gain on restructuring of mineral interest, bargain purchase and other        | 6 (b), 7(b) |                              | (4,966)                     
|·  Changes in non-cash working capital                                          | 13          |                              | 274                         
|                                                                                |             | $                            | 30,819                      
|Investing activities                                                            |             |                              |                             
|·  Acquisition of mineral interests and royalties                               | 7           | $                            | (217,345)                   
|·  Acquisition of investments and other assets                                  | 7,8         |                              | (14,398)                    
|·  Proceeds from disposition of investments and other assets                    |             |                              | 11,039                      
|·  Acquisition of Gold Royalties Corp., net of cash acquired of $1.3M           | 6 (a)       |                              | 1,288                       
|·  Acquisition of Sandstorm Metals & Energy Ltd., net of cash acquired of $4.1M | 6 (b)       |                              | -                           
|·  Loan issuance                                                                |             |                              | (1,993)                     
|                                                                                |             | $                            | (221,409)                   
|Financing activities                                                            |             |                              |                             
|·  Bank debt drawn                                                              | 9           | $                            | 110,000                     
|·  Bank debt repaid                                                             | 9           |                              | (26,500)                    
|·  Proceeds on equity financing and exercise of warrants and options            | 10          |                              | 28,789                      
|·  Redemption of common share purchase warrants – Premier Royalty               |             |                              | -                           
|·  Share issue and deferred financing costs                                     | 9, 10       |                              | (3,128)                     
|·  Redemption of common shares (normal course issuer bid)                       | 10          |                              | (1,708)                     
|                                                                                |             | $                            | 107,453                     
|                                                                                |             |                              |                             
|Effect of exchange rate changes on cash and cash equivalents                    |             | $                            | (1,741)                     
|Net decrease in cash and cash equivalents                                       |             |                              | (84,878)                    
|Cash and cash equivalents – beginning of the year                               |             |                              | 90,224                      
|Cash and cash equivalents – end of the year                                     |             | $                            | 5,346                       
|                                                                                |             |                              |                             
|Cash and cash equivalents, at the end of the year                               |             |                              |                             
|Cash at bank                                                                    |             | $                            | 5,346                       
|Short-term deposit                                                              |             | $                            | -                           



Supplemental
cash flow information (note 13)



- The accompanying notes
are an integral part of these consolidated financial statements –



44









|Consolidated Statements of CHANGES IN EQUITY | Expressed in U.S. dollars ($000s)
|-------------------------------------------- | ---------------------------------





|                                                                         |            | Share
    Capital | Reserves |              |                       |                               
|------------------------------------------------------------------------ | ---------- | ----------------- | -------- | ------------ | --------------------- | ------------------------------
|                                                                         | Note       | Number            | Amount   | ShareOptions | SharePurchaseWarrants | Retained
    Earnings(Deficit)
|At
    January 1, 2014                                                   |            | 100,028,138       | $        | 383,082      | $                     | 8,083                         
|Shares
    issued on exercise of warrants                                | 10
    (a) | 11,041,020        |          | 41,013       |                       | -                             
|Options
    exercised                                                    | 10
    (b) | 862,000           |          | 2,291        |                       | (570)                         
|Share
    issue costs                                                    |            | -                 |          | (27)         |                       | -                             
|Expiration
    of unexercised warrants                                   |            | -                 |          | 192          |                       | -                             
|Shares
    issued on acquisition of Sandstorm Metals & Energy Ltd.       | 6
    (b)  | 5,698,216         |          | 30,078       |                       | -                             
|Issuance
    of replacement equity awards                                | 6
    (b)  | -                 |          | -            |                       | 129                           
|Vesting
    of restricted stock rights                                   |            | 70,898            |          | 723          |                       | (723)                         
|Redemption
    of common shares (normal course issuer bid)               |            | (222,090)         |          | (682)        |                       | -                             
|Share
    based payment                                                  |            | -                 |          | -            |                       | 2,096                         
|Net
    income for the year                                              |            | -                 |          | -            |                       | -                             
|Other
    comprehensive loss                                             |            | -                 |          | -            |                       | -                             
|At
    December 31, 2014                                                 |            | 117,478,182       | $        | 456,670      | $                     | 9,015                         
|Shares
    issued                                                        |            | 10,087,800        |          | 27,136       |                       | -                             
|Options
    exercised                                                    | 10
    (b) | 155,000           |          | 684          |                       | (170)                         
|Vesting
    of restricted stock rights                                   |            | 77,138            |          | 725          |                       | (725)                         
|Expiration
    of unexercised warrants                                   |            | -                 |          | 4,388        |                       | -                             
|Redemption
    of common shares (normal course issuer bid) and other     | 10
    (a) | (518,123)         |          | (1,708)      |                       | (475)                         
|Issuance
    of warrants                                                 | 7
    (b)  | -                 |          | -            |                       | -                             
|Share
    issuance costs (net of tax of $1.0 million)                    |            | -                 |          | (1,561)      |                       | -                             
|Shares
    issued on acquisition of Gold Royalties Corporation and other | 6
    (a)  | 1,600,317         |          | 5,435        |                       | -                             
|Share
    based payment                                                  |            | -                 |          | -            |                       | 2,706                         
|Net
    loss for the year                                                |            | -                 |          | -            |                       | -                             
|Other
    comprehensive loss                                             |            | -                 |          | -            |                       | -                             
|At
    December 31, 2015                                                 |            | 128,880,314       | $        | 491,769      | $                     | 10,351                        



- The accompanying notes
are an integral part of these consolidated financial statements –



45







Notes
to the Consolidated

Financial
Statements

December
31, 2015



Expressed
in U.S. dollars



| | 1. | Nature
                                         Of Operations
| | -- | -------------------------------------------------------------



Sandstorm Gold Ltd. was incorporated under the Business Corporations Act of British Columbia on March
23, 2007. Sandstorm Gold Ltd. and its subsidiary entities ("Sandstorm", “Sandstorm Gold” or the "Company")
is a resource-based company that seeks to acquire gold and other precious metal purchase agreements (“Gold Streams”
or “Silver Streams”) and royalties from companies that have advanced stage development projects or operating mines.
In return for making an upfront payment to acquire a Gold Stream, Sandstorm receives the right to purchase, at a fixed price per
unit, a percentage of a mine’s production for the life of the mine.



The
head office, principal address and registered office of the Company are located at Suite 1400, 400 Burrard Street, Vancouver,
British Columbia, V6C 3A6.



These consolidated financial statements were authorized for issue by the Board of Directors of the Company
on March 30, 2016.





| | 2. | Summary
                                         of Significant Accounting Policies
| | -- | -----------------------------------------------------------------------------------



| | A. | Statement
                                         of Compliance
| | -- | ----------------------------------------------------------------



These
consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).



| | B. | Basis
                                         of Presentation
| | -- | --------------------------------------------------------------



These
consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which
are measured at fair value.



The
consolidated financial statements are presented in United States dollars, and all values are rounded to the nearest thousand except
as otherwise indicated.





46







The Company has allocated certain salary
and related costs and stock based compensation to project evaluation in the Consolidated Statement of (Loss) Income during the
year ended December 31, 2015. The comparative figures have been adjusted to reflect the reallocation of these costs from administration
expense to project evaluation. The adjustment resulted in a decrease of administration expenses and an increase in project evaluation
by $2.4 million, respectively.



| | C. | Principles of Consolidation
| | -- | ---------------------------



These consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries Sandstorm Gold Bank Limited, Sandstorm Gold (Canada) Holdings
Ltd., Bridgeport Gold Inc., Inversiones Mineras Australes Holdings (BVI) Inc., Inversiones Mineras Australes S.A., Premier Royalty
U.S.A. Inc., Sandstorm Metals & Energy Ltd., Sandstorm Metals & Energy (Canada) Holdings Ltd, Sandstorm Metals & Energy
(Canada) Ltd. and Sandstorm Metals & Energy (US) Inc. Subsidiaries are fully consolidated from the date the Company obtains
control, and continue to be consolidated until the date that control ceases. Control is achieved when the Company has the power
to govern the financial and operating policies of an entity so as to obtain benefits from its activities.



All intercompany balances, transactions,
revenues and expenses have been eliminated on consolidation.



| | D. | Business Combinations
| | -- | ---------------------



On the acquisition of a business, the
acquisition method of accounting is used, whereby the purchase consideration is allocated to the identifiable assets and liabilities
on the basis of fair value at the date of acquisition. Provisional fair values allocated at a reporting date are finalized as soon
as the relevant information is available, within a period not to exceed twelve months from the acquisition date with retrospective
restatement of the impact of adjustments to those provisional fair values effective as at the acquisition date. Incremental costs
related to acquisitions are expensed as incurred.



When the amount of purchase consideration
is contingent on future events, the initial cost of the acquisition recorded includes an estimate of the fair value of the contingent
amounts expected to be payable in the future. When the fair value of contingent consideration as at the date of acquisition is
finalized before the purchase price allocation is finalized, the adjustment is allocated to the identifiable assets and liabilities
acquired. Subsequent changes to the estimated fair value of contingent consideration are recorded in the consolidated statement
of (loss) income.



When the cost of the acquisition exceeds
the fair values of the identifiable net assets acquired, the difference is recorded as goodwill. If the fair value attributable
to the Company’s share of the identifiable net assets exceeds the cost of acquisition, the difference is recognized as a
gain in the consolidated statement of (loss) income.



Non-controlling interests represent
the fair value of net assets in subsidiaries, as at the date of acquisition, which are not held by the Company and are presented
in the equity section of the consolidated statement of financial position.



47







| | E. | Goodwill
| | -- | --------



The Company allocates goodwill arising
from business combinations to each cash-generating unit or group of cash-generating units that are expected to receive the benefits
from the business combination. Irrespective of any indication of impairment, the recoverable amount of the cash-generating unit
or group of cash-generating units to which goodwill has been allocated is tested annually for impairment and when there is an indication
that the goodwill may be impaired. Any impairment is recognized as an expense immediately. Any impairment of goodwill is not subsequently
reversed.



| | F. | Mineral Interest and Royalties
| | -- | ------------------------------



Agreements for which settlements are
called for in gold or other commodities the amount of which is based on production at the mines and capitalized on a property by
property basis, are recorded at cost less accumulated depletion and impairment loss, if any. Project evaluation costs that are
not related to a specific agreement are expensed in the period incurred.



Producing mineral interests are depleted
using the units-of-production method over the life of the property to which the interest relates, which is estimated using available
information of proven and probable reserves and the portion of resources expected to be classified as mineral reserves at the mine
corresponding to the specific agreement. For those mineral interests that have commenced production, all costs associated with
mineral interests are depleted and no amounts would remain classified as non-depletable.



The acquisition costs of acquired resources
and exploration potential is recorded as an asset (non-depletable interest) on the acquisition date. The value of the exploration
potential is classified as non-depletable and accounted for in accordance with IFRS 6, Exploration and Evaluation of Mineral Resources
until such time as the technical feasibility and commercial viability have been established at which point the value of the exploration
potential is classified as either depletable or non-depletable in accordance with IAS16, Property, Plant and Equipment.



| | G. | Impairment of Mineral Interests
| | -- | -------------------------------



Evaluation of the carrying values of
each mineral property is undertaken when events or changes in circumstances indicate that the carrying values may not be recoverable.
If any indication of impairment exists, the recoverable amount is estimated to determine the extent of any impairment loss. The
recoverable amount is the higher of the fair value less costs to sell and value in use. Estimated values in use are calculated
using estimated production, sales prices, and a discount rate. Estimated production is determined using current reserves and the
portion of resources expected to be classified as mineral reserves. Estimated sales prices are determined using an average of long-term
metal price forecasts by analysts and management’s expectations. The discount rate is estimated using the average discount
rate used by analysts to value precious metal royalty companies. If it is determined that the recoverable amount is less than the
carrying value then an impairment is recorded with a charge to net income (loss).



48







An assessment is made at each reporting
period if there is any indication that a previous impairment loss may no longer exist or has decreased. If indications are present,
the carrying amount of the mineral interest is increased to the revised estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount net of depletion that would have been determined had no impairment loss been
recognized for the mineral interest in previous periods.



| | H. | Revenue Recognition
| | -- | -------------------



Revenue from the sale of precious metals
is recognized when persuasive evidence of an arrangement exists, title and risk passes to the buyer, collection is reasonably assured
and the price is reasonably determinable. Selling prices are determined at the point revenue is recognized by reference to active
and freely traded commodity markets, for example the London Bullion Market for commodities, in an identical form to the product
sold. Revenue from the sale of gold may be subject to adjustment upon final settlement of estimated metal prices, weights,
and assays. Provisionally-priced revenues are initially recognized based on forward prices. Adjustments to revenue from metal prices
are recorded at each reporting period and other adjustments are recorded on final settlement and are offset against revenue
when incurred.



Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement
(provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably).
Royalty arrangements are based on production, sales and/or other measures and are recognised by reference to the underlying arrangement.



| | I. | Foreign Currency Translation
| | -- | ----------------------------



The functional currency of the Company
and its subsidiaries is the principal currency of the economic environment in which they operate. For the Company and its subsidiaries
Sandstorm Gold Bank Limited, Sandstorm Gold (Canada) Ltd., Bridgeport Gold Inc., Inversiones Mineras Australes Holdings (BVI) Inc.,
Premier Royalty U.S.A. Inc., Sandstorm Metals & Energy Ltd., Sandstorm Metals & Energy (Canada) Holdings Ltd, Sandstorm
Metals & Energy (Canada) Ltd. and Sandstorm Metals & Energy (US) Inc. the functional currency is the U.S. dollar.



For Inversiones Mineras Australes S.A.,
the functional currency of this subsidiary is the Argentine Peso. To translate Inversiones Mineras Australes S.A. to the presentation
currency of the U.S. dollar, all assets and liabilities are translated using the exchange rate as of the reporting date and all
income and expenses are translated using the exchange rate at the dates of transactions. All resulting exchange differences are
recognized in other comprehensive income (loss).



Transactions in foreign currencies are
initially recorded in the entity’s functional currency as the rate on the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated using the closing rate as at the reporting date.



49







| | J. | Financial Instruments
| | -- | ---------------------



The Company has adopted IFRS 9, Financial
Instruments, effective January 1, 2010. The Company’s financial instruments consist of cash and cash equivalents, trade receivables
and other, investments, loans receivable, trade and other payables, and bank debt. All financial instruments are initially recorded
at fair value and designated as follows:



Investments in common shares held are
classified as fair value through other comprehensive income (“FVTOCI”), as these are held for long-term strategic purposes
and provide a more meaningful presentation based on management’s intention, rather than reflecting changes in fair value
in net income. Cash and cash equivalents, trade receivables and other, and loans receivable are classified as financial assets
at amortized cost and trade and other payables and bank debt are classified as other financial liabilities and these are measured
at amortized cost using the effective interest method.



Investments in warrants and convertible
debt instruments are classified as fair value through profit or loss (“FVTPL”). These warrants and convertible debt
instruments are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement
recognized as a component of net income (loss) under the classification of loss on revaluation of investments.



Transaction costs on initial recognition
of financial instruments classified as FVTPL are expensed as incurred. Transaction costs incurred on initial recognition of financial
instruments classified as loans and receivables and other financial liabilities are recognized at their fair value amount and offset
against the related loans and receivables or capitalized when appropriate.



Financial assets are derecognized when
the contractual rights to the cash flows from the asset expire. Financial liabilities are derecognized only when the Company’s
obligations are discharged, cancelled or they expire. All gains and losses as a result of changes in fair value for FVTPL financial
instruments are included in net income (loss) in the period they occur.



Common share purchase warrants, which
provide the holder the right to settle in cash, are considered derivative instruments. As such, they are classified as financial
liabilities measured at FVTPL and are re-measured at fair value at the end of each reporting period with all changes being recognized
as a component net income (loss) under the classification of loss on revaluation of investments.



| | K. | Impairment of Financial Assets
| | -- | ------------------------------



The Company assesses at each reporting
date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Financial assets
are considered to be impaired if objective evidence indicates that a change in the market, economic or legal environment in which
the Company invested has had a negative effect on the estimated future cash flows of that asset. An impairment loss for a financial
asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated
future cash flows discounted at the original effective interest rates. Impairment losses are recognized in profit and loss. For
financial assets measured at amortized cost, any reversal of impairment is recognized in profit and loss.



50







| | L. | Inventory
| | -- | ---------



Inventory is valued at the lower of
specifically identifiable cost and net realizable value. Costs included are the agreed upon purchase price under the Gold Stream
and depletion of the applicable mineral interest.



| | M. | Cash and Cash Equivalents
| | -- | -------------------------



Cash and cash equivalents include cash
on account, demand deposits and money market investments with maturities from the date of acquisition of three months or less,
which are readily convertible to known amounts of cash and are subject to insignificant changes in value.



| | N. | Income Taxes
| | -- | ------------



Current income tax assets and liabilities
are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used are
those that are substantively enacted at the reporting date.



Deferred income taxes are provided using
the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying
amounts for accounting. The change in the net deferred income tax asset or liability is included in income except for deferred
income tax relating to equity items which is recognized directly in equity. The income tax effects of differences in the periods
when revenue and expenses are recognized in accordance with Company accounting practices, and the periods they are recognized for
income tax purposes are reflected as deferred income tax assets or liabilities. Deferred income tax assets and liabilities are
measured using the substantively enacted statutory income tax rates which are expected to apply to taxable income in the years
in which the assets are realized or the liabilities settled. A deferred tax asset is recognized for unused tax losses, tax credits
and deductible temporary differences to the extent that it is probable that future taxable profits will be available for utilization.



Deferred income tax assets and liabilities
are offset only if a legally enforceable right exists to offset current tax assets against liabilities and the deferred tax assets
and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity and are intended to be
settled on a net basis.



The determination of current and deferred
taxes requires interpretations of tax legislation, estimates of expected timing of reversal of deferred tax assets and liabilities,
and estimates of future earnings.



| | O. | Share Capital and Share Purchase Warrants
| | -- | -----------------------------------------



The proceeds from the issue of units
are allocated between common shares and share purchase warrants (with an exercise price denominated in U.S. dollars) on a pro-rata
basis based on relative fair values at the date of issuance. The fair value of common shares is based on the market closing price
on the date the units are issued and the fair value of share purchase warrants is determined using the quoted market price or if
the warrants are not traded, using the Black-Scholes Model (“BSM”) as of the date of issuance. Equity instruments issued
to agents as financing costs are measured at their fair value at the date the services were provided.



51







| | P. | Earnings Per Share
| | -- | ------------------



Basic earnings per share is computed
by dividing the net income available to common shareholders by the weighted average number of common shares issued and outstanding
during the period. Diluted earnings per share is calculated assuming that outstanding share options and share purchase warrants,
with an average market price that exceeds the average exercise prices of the options and warrants for the year, are exercised and
the proceeds are used to repurchase shares of the Company at the average market price of the common shares for the year.



| | Q. | Share Based Payments
| | -- | --------------------



The Company recognizes share based compensation
expense for all share purchase options and restricted share rights (“RSR’s”) awarded to employees, officers and
directors based on the fair values of the share purchase options and RSRs at the date of grant. The fair values of share purchase
options and RSRs at the date of grant are expensed over the vesting periods of the share purchase options and RSRs, respectively,
with a corresponding increase to equity. The fair value of share purchase options is determined using the BSM with market related
inputs as of the date of grant. Share purchase options with graded vesting schedules are accounted for as separate grants with
different vesting periods and fair values. The fair value of RSRs is the market value of the underlying shares at the date of grant.
At the end of each reporting period, the Company re-assesses its estimates of the number of awards that are expected to vest and
recognizes the impact of any revisions to this estimate in the consolidated statement of income (loss).



The BSM requires management to estimate
the expected volatility and term of the equity instrument, the risk-free rate of return over the term, expected dividends, and
the number of equity instruments expected to ultimately vest. Volatility is estimated using the historical stock price of the Company,
the expected term is estimated using historical exercise data, and the expected number of equity instruments expected to vest is
estimated using historical forfeiture data.



| | R. | Related Party Transactions
| | -- | --------------------------



Parties are considered related if one
party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party
in making financial and operating decisions. Parties are also considered related if they are subject to common control or significant
influence. A transaction is considered a related party transaction when there is a transfer of resources or obligations between
related parties.



| | S. | Segment Reporting
| | -- | -----------------



An operating segment is a component
of the Company that engages in business activities from which it may earn revenues and incur expenses. All operating segments’
results are reviewed regularly by the Company’s Chief Executive Officer to make decisions about resources to be allocated
to the segment and assess its performance, and for which discrete financial information is available.



52







| | 3. | FUTURE CHANGES IN ACCOUNTING POLICIES
| | -- | -------------------------------------



The IASB has issued the following new
standard but it is not yet effective. Pronouncements that are not applicable to the Company have been excluded from this note:



IFRS 15 Revenue from Contracts with Customers— The final standard on revenue from contracts
with customers was issued on May 28, 2014 and is effective for annual reporting periods beginning after January 1, 2018 for public
entities with early application permitted. Entities have the option of using either a full retrospective or a modified retrospective
approach to adopt the guidance. The Company is assessing the impact of this Standard.



| | 4. | Key Sources of Estimation Uncertainty and Critical Accounting Judgments
| | -- | -----------------------------------------------------------------------



The preparation of the Company’s
consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that
affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements
and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated
and are based on management’s experience and other factors, including expectations of future events that are believed to
be reasonable under the circumstances. However, actual outcomes can differ from these estimates.



Information about significant areas
of estimation uncertainty and judgments made by management in preparing the consolidated financial statements are described below.



| | A. | Accounting For Mineral Interests
| | -- | --------------------------------



The Company’s business is the
acquisition of Gold Streams and royalties. Management accounts for these agreements as mineral interests as they consider the associated
mining risks when evaluating the assets to be acquired and assessing the mineral interests over the life of the related mine.



| | B. | Investments
| | -- | -----------



In the normal course of operations,
the Company invests in equity interests of other entities. In such circumstances, management considers whether the facts and circumstances
pertaining to each such investment result in the Company obtaining control, joint control or significant influence over the investee
entity. In some cases, the determination of whether or not the Company controls, jointly controls or significantly influences the
investee entities requires the application of significant management judgment to consider individually and collectively such factors
as:



| | · | The purpose and design of the investee entity.
| | - | ----------------------------------------------

| | · | The ability to exercise power, through substantive rights, over the activities of the investee entity that significantly affect
its returns.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------

| | · | The size of the company’s equity ownership and voting rights, including potential voting rights.
| | - | ------------------------------------------------------------------------------------------------



| | · | The size and dispersion of other voting interests, including the existence of voting blocks.
| | - | --------------------------------------------------------------------------------------------

| | · | Other investments in or relationships with the investee entity including, but not limited to, current or possible board representation,
royalty and/or stream investments, loans and other types of financial support, material transactions with the investee entity,
interchange of managerial personnel or consulting positions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Other relevant and pertinent factors.
| | - | -------------------------------------





53







If the Company determines that it controls
an investee entity, it consolidates the investee entity’s financial statements as further described in note 2. If the Company
determines that it jointly controls (a joint venture) or has significant influence (an associate) over an investee entity, then
it uses the equity method of accounting to account for its investment in that investee entity.



Under the equity method of accounting,
the Company’s investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the Company’s
share of the investee entity’s net assets. The Company’s profit or loss and other comprehensive (loss) income includes
its share of the investee entity’s profit or loss and other comprehensive (loss) income. If the Company’s share of
the investee entity’s losses equals or exceeds its interest in the joint venture or associate, and the corresponding investment
balance is reduced to zero, the Company stops recognizing its share of further losses, unless the Company has incurred legal or
constructive obligations or made payments on behalf of the joint venture or associate, in which case a liability is recognized.



If, after careful consideration, it
is determined that the Company neither has control, joint control or significant influence over an investee entity, the Company
accounts for the corresponding investment in equity interest at fair value through other comprehensive income as further described
in note 2.



| | C. | Attributable Reserve and Resource Estimates
| | -- | -------------------------------------------



Mineral interests and royalties are
a significant asset of the Company, with a carrying value of $414.4 million at December 31, 2015 (2014: $261.9 million). This
amount represents the capitalized expenditures related to the acquisition of the gold interests net of accumulated depletion and
any impairments. The Company estimates the reserves and resources relating to each agreement. Reserves are estimates of the amount
of gold that can be economically and legally extracted from the mining properties at which the Company has precious metal purchase
agreements, adjusted where applicable to reflect the Company’s percentage entitlement to gold produced from such mines.
The Company estimates its reserves and resources based on information compiled by appropriately qualified persons relating to
the geological data on the size, depth and shape of the ore body, and requires complex geological judgments to interpret the data.
The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future
capital requirements, and production costs along with geological assumptions and judgments made in estimating the size and grade
of the ore body. Changes in the reserve or resource estimates may impact upon the carrying value of the Company’s gold interests
and depletion charges.



54







| | D. | Depletion
| | -- | ---------



The Company’s mineral and royalty interests are depleted on a units-of-production basis, with estimated
recoverable reserves and resources being used to determine the depletion rate for each of the Company’s mineral and royalty
interests. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves. Changes
in the estimated recoverable reserves, resources or exploration potential will directly impact the depletion rate used. Changes
to depletion rates are accounted for prospectively.



| | E. | Income Taxes
| | -- | ------------



The interpretation of existing tax laws
or regulations in Canada, Barbados, the United States of America, Australia, Argentina, Chile or any of the countries in which
the mining operations are located or to which shipments of gold are made requires the use of judgment. Differing interpretation
of these laws or regulations could result in an increase in the Company’s taxes, or other governmental charges, duties or
impositions. In addition, the recoverability of deferred income tax assets, including expected periods of reversal of temporary
differences and expectations of future taxable income, are assessed by management at the end of each reporting period and adjusted,
as necessary, on a prospective basis.



| | F. | Impairment of Assets
| | -- | --------------------



Management considers each mineral and
royalty interest to be a separate cash generating unit, which is the lowest level for which cash inflows are largely independent
of those of other assets. At the end of each reporting period, the Company reviews the carrying amounts of each mineral and royalty
interest to determine whether there is any indication that those mineral and royalty interests have suffered an impairment loss.
If such an indication exists, the recoverable amount of the mineral and royalty interest is estimated in order to determine the
extent of the impairment (if any). The recoverable amount of each mineral and royalty interest is the higher of fair value less
costs to sell (“Fair Value approach”) and value in use.



55







Under the Fair Value approach, the
net present value (“NPV”) methodology is used. NPV is estimated by using a discount rate to calculate the present
value of expected future cash flows. The discount rate is based on the Company’s weighted average cost of capital, adjusted
for various risks. The expected future cash flows are management’s best estimates of expected future revenues and costs.
Under each method, expected future revenues reflect the estimated future production for each mine at which the Company has a Gold
Stream or royalty based on detailed life of mine plans received from each of the partners. Included in these forecasts is the
production of mineral resources that do not currently qualify for inclusion in proven and probable ore reserves where there is
a high degree of confidence in its economic extraction. This is consistent with the methodology that is used to measure value
beyond proven and probable reserves when allocating the purchase price to acquired mineral and royalty interests. Expected future
revenues also reflect management’s estimated long term metal prices, which are determined based on current prices, forward
pricing curves and forecasts of expected long-term metal prices prepared by analysts. These estimates often differ from current
price levels, but are consistent with how a market participant would assess future long-term metal prices. Estimated future cash
costs are fixed based on the terms of each Gold Stream or royalty, as disclosed in note 15 to the financial statements.



If the
carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and an impairment charge is reflected
as a component of net income (loss) so as to reduce the carrying amount to its recoverable value. A previously recognized impairment
charge is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since
the last impairment charge was recognized. If this is the case, the carrying amount of the asset is increased to its recoverable
amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depletion, had no impairment
charge been recognized for the asset in prior years. Such reversal is reflected as a component of net income (loss).



At December 31, 2015, the Company recorded
an impairment charge of $21.6 million ($1.2 million- year ended December 31, 2014).



| | 5. | Financial Instruments
| | -- | ---------------------



| | A. | Capital Risk Management
| | -- | -----------------------



The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing
the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists
of $402.7 million ($421.6 million – December 31, 2014) of equity attributable to common shareholders, comprising of issued
capital (note 10), accumulated reserves (note 10) and deficit. The Company was not subject to any externally imposed capital requirements
with the exception of complying with certain covenants under the credit agreement governing bank debt (note 9). The Company is
in compliance with the debt covenants described in note 9 as at December 31, 2015.



56





| | B. | Fair Value Estimation
| | -- | ---------------------



The fair value hierarchy establishes
three levels to classify the inputs of valuation techniques used to measure fair value. The three levels of the fair value hierarchy
are described below:



Level 1 |Unadjusted
quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Investments in common shares and warrants held that have direct listings on an exchange are classified as Level 1.



Level 2 |Quoted prices
in markets that are not active, quoted prices for similar assets or liabilities in active markets, or inputs that are observable,
either directly or indirectly, for substantially the full term of the asset or liabilities. Investments in warrants and convertible
debt instruments held that are not listed on an exchange are classified as Level 2.



Level 3 |Prices or
valuation techniques that require inputs that are both significant to fair value measurement and unobservable (supported by little
or no market activity).



The following table sets forth the Company's
financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as at December
31, 2015. As required by IFRS 13, assets and liabilities are classified in their entirety based on the lowest level of input that
is significant to the fair value measurement.



|In $000s                                   |  | Total |        |  | Quoted prices in active markets for identical assets (Level1) |   |        | Significant other observable inputs (Level 2) |  |   | Unobservable inputs (Level 3) | 
|------------------------------------------ |  | ----- | ------ |  | ------------------------------------------------------------- | - | ------ | --------------------------------------------- |  | - | ----------------------------- | 
|Long-term investments – common shares held |  | $     | 14,990 |  |                                                               | $ | 14,990 |                                               |  | $ | -                             | 
|Long-term investments  – convertible debt  |  |       | 11,590 |  |                                                               |   | -      |                                               |  |   | 11,590                        | 
|                                           |  | $     | 26,580 |  |                                                               | $ | 14,990 |                                               |  | $ | 11,590                        | 



The fair value of the Company's
other financial instruments which include cash and cash equivalents, trade receivables and other, loans receivable,
receivables and other, trade and other payables and bank debt approximate their carrying values at December 31, 2015.



| | C. | Credit Risk
| | -- | -----------



The Company’s credit risk is limited
to cash and cash equivalents, trade receivables and other, loans receivable, and receivables and other in the ordinary course of
business. The Company sells gold exclusively to third parties with a history in commodities. The Company’s trade receivables
and other is subject to the credit risk of the counterparties who own and operate the mines underlying Sandstorm’s royalty
portfolio. The Company’s loan receivable and convertible debenture due from Luna are subject to Luna’s credit risk
and the Company’s ability to realize on its security.



57







| | D. | Currency Risk
| | -- | -------------



Financial instruments that impact the
Company’s net (loss) income or other comprehensive (loss) income due to currency fluctuations include: cash and cash equivalents,
trade receivables and other, investments and trade and other payables denominated in Canadian dollars. Based on the Company's Canadian
dollar denominated monetary assets and monetary liabilities at December 31, 2015, a 10% increase (decrease) of the value of the
Canadian dollar relative to the United States dollar would (decrease) increase net loss by $0.4 million and other comprehensive
loss by $1.5 million, respectively.



| | E. | Interest Rate Risk
| | -- | ------------------



The Company is exposed to interest rate
risk on its outstanding borrowings. Presently, all of the Company’s outstanding borrowings are at floating rates. The Company
monitors its exposure to interest rates and has not entered into any derivative contracts to manage risk. During the year ended
December 31, 2015, the weighted average effective interest rate paid by the Company on the amount drawn on its outstanding borrowings
was 3.4% (2014- revolving loan facility was undrawn). A fluctuation in interest rates of 100 basis points (1 percent) would have
affected finance expense by approximately $0.2 million.



| | F. | Liquidity Risk
| | -- | --------------



In managing liquidity risk, the Company
takes into account its loan facility, anticipated cash flows from operations and its holding of cash and cash equivalents. As at
December 31, 2015, the Company had cash and cash equivalents of $5.3 million (2014: $90.2 million) and working capital of $1.8
million (2014: $89.3 million). The Company has a revolving loan facility which matures in July 2019 (note 9). Additionally, Sandstorm
holds common shares, convertible debentures, and warrants of other companies with a combined market value as at December 31, 2015,
of $26.6 million (December 31, 2014 – $24.0 million). The daily exchange traded volume of these shares, including
the shares underlying the warrants, may not be sufficient for the Company to liquidate its position in a short period of time without
potentially affecting the market value of the shares.



| | 6. | Business Combination
| | -- | --------------------



| | A. | Acquisition of Gold Royalties Corporation
| | -- | -----------------------------------------



On April 28, 2015, the Company closed
its previously announced plan of arrangement pursuant to which Sandstorm Gold acquired all of the issued and outstanding shares
(the “Gold Royalties Shares”) of Gold Royalties Corporation (“Gold Royalties”). The transaction was implemented
by way of a statutory plan of arrangement (the “Arrangement”). Upon completion of the Arrangement, Sandstorm Gold issued
to each holder of a Gold Royalties Share 0.045 of a common share of Sandstorm Gold.



As a result of acquiring Gold Royalties,
Sandstorm has added a number of Canadian royalty assets to its portfolio along with over $1.0 million in cash.



58







In accordance with IFRS 3 – Business
Combinations, the total consideration of $4.8 million, consisting of (i) $4.3 million representing the value of the Sandstorm Gold
common shares issued (based on the April 28, 2015 closing price) and (ii) $0.5 million of Gold Royalties Shares previously owned
by Sandstorm Gold, was allocated to the identifiable assets acquired and liabilities assumed as follows:



|Consideration:                                    |  | In 000s |      
|------------------------------------------------- |  | ------- | -----
|Sandstorm Shares issued (1,161,720 common shares) |  | $       | 4,281
|Gold Royalties Shares owned by Sandstorm Gold     |  |         | 472  
|                                                  |  | $       | 4,753



|Allocation of acquisition costs: |  |   |      
|-------------------------------- |  | - | -----
|Cash and cash equivalents        |  | $ | 1,288
|Trade receivables and other      |  |   | 107  
|Mineral interests and royalties  |  |   | 1,852
|Deferred income tax assets       |  |   | 1,592
|Trade and other payables         |  |   | (86) 
|                                 |  | $ | 4,753



Sandstorm Gold has estimated the fair
value of the assets acquired to be equal to their carrying value except for the mineral interests and royalties which were estimated
to have a fair value of $1.9 million and deferred tax assets of $1.6 million, respectively. An income approach (being the net present
value of expected future cash flows) was used to determine the fair values of the mineral interests and royalties. Estimates of
future cash flows are based on estimated future revenues and expected conversions of resources to reserves at each of the mineral
properties.



Had the acquisition of Gold Royalties been effected on January 1, 2015, the consolidated revenue and net
loss for the year ended December 31, 2015 would have been $52.7 million and $43.0 million, respectively (these amounts are unaudited).
The Company considers these “pro-forma” numbers to represent an approximate measure of the performance of the combined
group up to the period end date and to provide a reference point for comparison to future periods.





| | B. | Acquisition of Sandstorm Metals & Energy Ltd.
| | -- | ---------------------------------------------



On May 29, 2014, the Company closed
its previously announced plan of arrangement (“Arrangement Agreement”) pursuant to which it acquired 100% of the outstanding
common shares of Sandstorm Metals & Energy Ltd. (“Sandstorm Metals & Energy”).



59







As contemplated in the Arrangement Agreement,
the shareholders of Sandstorm Metals & Energy, other than Sandstorm Gold, received common shares of Sandstorm Gold (the “Sandstorm
Gold Shares”) on the basis of 0.178 of a Sandstorm Gold Share plus C$0.35 of cash for each Sandstorm Metals & Energy
common share held.



In accordance with IFRS 3 – Business
Combinations, the total consideration of $43.8 million, consisting of: (i) $10.3 million cash; (ii) $30.1 million representing
the value of the Sandstorm Gold common shares issued (based on the May 29, 2014 closing price); and (iii) $3.4 million of Sandstorm
Metals & Energy common shares previously owned by the Company and other consideration was allocated to the identifiable assets
acquired and liabilities assumed as follows:



|Acquisition  price:                                             |  |   |       
|--------------------------------------------------------------- |  | - | ------
|Sandstorm Gold common shares issued                             |  | $ | 30,078
|Sandstorm Metals & Energy common shares owned by Sandstorm Gold |  |   | 3,310 
|Cash paid                                                       |  |   | 10,310
|Conversion of previously issued Sandstorm Metals & Energy RSUs  |  |   | 129   
|                                                                |  | $ | 43,827



|Allocation of acquisition costs: |  |   |       
|-------------------------------- |  | - | ------
|Cash and cash equivalents        |  | $ | 4,068 
|Trade receivables and other      |  |   | 909   
|Mineral interests and royalties  |  |   | 29,817
|Investments                      |  |   | 5,259 
|Deferred income tax assets       |  |   | 9,616 
|Other                            |  |   | 108   
|Trade and other payables         |  |   | (1,185
|Promissory note                  |  |   | (2,200
|Gain on bargain purchase         |  |   | (2,565
|                                 |  | $ | 43,827



Sandstorm Gold has estimated the fair
value of the assets acquired to be equal to their carrying value except for certain trade receivables and other balances and the
mineral interest and royalties which were estimated to have a fair value of $0.9 million and $29.8 million respectively. An income
approach (being the net present value of expected future cash flows) was used to determine the fair values of the royalty interests
in mineral properties. Estimates of future cash flows are based on estimated future revenues and expected conversions of resources
to reserves at each of the mineral properties. The excess of the total fair value of the identifiable assets acquired and the liabilities
assumed over the total consideration has been recorded as a gain on bargain purchase of $2.6 million.



Included in total revenue and net income
for the year ended December 31, 2014 is $2.5 million and $1.9 million, respectively, attributable to the results of Sandstorm Metals
& Energy from the date of acquisition. Had the acquisition of Sandstorm Metals & Energy been effected on January 1, 2014,
the consolidated revenue and net income for the year ended December 31, 2014 would have been $58.0 million and $7.9 million, respectively.
The Company considers these “pro-forma” numbers to represent an approximate measure of the performance of the combined
group on an annualized basis and to provide a reference point for comparison to future periods.



60







The acquisition allows management to
focus all of its future time and attention on acquiring Gold Streams and royalties. The acquisition of Sandstorm Metals & Energy
also provides Sandstorm Gold shareholders with annual royalty revenue from operating mines as well as royalties on advanced exploration
and development assets including Canadian Zinc’s Prairie Creek Project and Entrée’s Hugo North Extension and
Heruga deposits. The acquisition resulted in a gain on bargain purchase as the Company has recognized the benefit of Sandstorm
Metals & Energy’s non-capital loss carry forwards available for tax purposes.



| | 7. | Mineral Interests and Royalties
| | -- | -------------------------------



| | A. | Carrying Amount
| | -- | ---------------



As of and for the year ended December
31, 2015:



|                                              | Cost    | Accumulated Depletion |                           
|--------------------------------------------- | ------- | --------------------- | --------------------------
|In $000s                                      | Opening | Additions(disposals)  | Foreignexchangetranslation
|Aurizona, BrazilB                             | 27,358  | (16,358)              | -                         
|Bachelor Lake, Canada                         | 22,671  | -                     | -                         
|Black Fox, Canada                             | 37,758  | -                     | -                         
|Chapada, Brazil                               | -       | 69,520                |                           
|Diavik Mine, Canada                           | -       | 53,111                | -                         
|Hugo North
    Extension and Heruga, Mongolia | 42,493  | -                     | -                         
|Karma Gold Project, Burkina Faso              | 14,456  | 6,718                 | -                         
|Ming, Canada                                  | 20,068  | -                     | -                         
|Santa Elena, Mexico                           | 23,342  | -                     | -                         
|Yamana Silver Stream, Argentina               | -       | 74,229                |                           
|Royalties 1                                   | 189,970 | 19,348                | (2,594)                   
|Other 2                                       | 12,393  | (1,054)               | -                         
|Total 3                                       | 390,509 | 205,514               | (2,594)                   



| | 1) | Includes Bracemac-McLeod, Coringa, Mt. Hamilton, Paul Isnard, Prairie Creek, Ann Mason, Serra Pelada,
Gualcamayo, Emigrant Springs, Mine Waste Solutions, San Andres, Sao Francisco, Thunder Creek, Bomboré, the Gold Royalties
royalty portfolio and the Early Gold Deposit.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | Includes Summit and other.
| | -- | --------------------------



| | 3) | Total mineral interest and royalties includes $111.3 million of assets located in Canada, $88.1
million in Brazil, $98.1 million in Argentina, $42.5 million in Mongolia, $21.8 million in the United States, $24.3 million in
Burkina Faso, $6.1 million in Mexico, $6.9 million in South Africa, $5.1 million in French Guiana, $3.1 million in Honduras, $1.0
million in Ghana, and $6.1 million in other South American countries.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



61







As of and for the year ended December
31, 2014:



|                                          | Cost    | Accumulated Depletion |                           
|----------------------------------------- | ------- | --------------------- | --------------------------
|In $000s                                  | Opening | Additions             | Foreignexchangetranslation
|Aurizona, Brazil                          | 25,820  | 1,538                 | -                         
|Bachelor Lake, Canada                     | 22,671  | -                     | -                         
|Black Fox, Canada                         | 37,758  | -                     | -                         
|Hugo North Extension and Heruga, Mongolia | 37,580  | 4,913                 | -                         
|Karma Gold Project, Burkina Faso          | -       | 14,456                | -                         
|Ming, Canada                              | 20,068  | -                     | -                         
|Santa Elena, Mexico                       | 13,342  | 10,000                | -                         
|Royalties 1                               | 169,855 | 23,505                | (3,390)                   
|Other 2                                   | 10,345  | 2,048                 | -                         
|Total 3                                   | 337,439 | 56,460                | (3,390)                   



| | 1) | Includes Bracemac-McLeod, Coringa, Mt. Hamilton, Paul Isnard, Prairie Creek, Ann Mason, Serra Pelada,
Gualcamayo, Emigrant Springs, Mine Waste Solutions, San Andres, San Francisco, Sao Vicente, Thunder Creek, and Bomboré.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | Includes Deflector, Summit and other.
| | -- | -------------------------------------



| | 3) | Total mineral interest and royalties includes $77.4 million of assets located in Canada, $42.5
million in Mongolia, $39.6 million in Brazil, $33.3 million in the United States, $14.5 million in Burkina Faso, $12.3 million
in Mexico, $10.4 million in South Africa, $6.3 million in Australia, $5.1 million in French Guiana, $4.3 million in Honduras, $0.4
million in Ghana, and $15.8 million in other South American countries.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | B. | Acquisitions and Updates
| | -- | ------------------------



ACQUISITION | Yamana
Streams



Silver Stream



On October 27, 2015, the Company acquired
a Silver Stream on Yamana Gold Inc.’s (“Yamana”) gold-silver Cerro Moro project, located in Santa Cruz, Argentina
(the “Cerro Morro Project” or “Cerro Moro”) and interim silver deliveries during years 2016 to 2018 from
a number of Yamana’s currently operating mines.



In acquiring the Yamana Silver Stream,
the Chapada copper stream (refer to Chapada copper stream section) and a potential gold stream on the Agua Rica project, the Company
agreed to upfront consideration consisting of a cash payment of $152 million, of which $4 million is payable in April 2016, and
15 million Sandstorm warrants. The warrants have a 5 year term, a strike price of $3.50 per Sandstorm common share and are exercisable
upon achievement of specific milestones with respect to the construction of the Cerro Moro mine.



Under the terms of the Yamana Silver
Stream, Sandstorm has agreed to purchase, for on-going per ounce cash payments equal to 30% of the spot price of silver, an amount
of silver from Cerro Moro equal to 20% of the silver produced (up to an annual maximum of 1.2 million ounces of silver), until
Yamana has delivered to Sandstorm 7.0 million ounces of silver; then 9.0% of the silver produced thereafter.



As part of the Yamana Silver Stream,
during the year 2016 through 2018, Sandstorm has also agreed to purchase, for on-going per ounce cash payment equal to 30% of the
spot price of silver, an amount of silver from:



| | (i)  | the Minera Florida mine in Chile equal to 38% of the silver produced (up to an annual maximum of 200,000 ounces of silver);
and
| | ---- | -------------------------------------------------------------------------------------------------------------------------------
| | (ii) | the Chapada mine in Brazil equal to 52% of the silver produced (up to an annual maximum of 100,000 ounces of silver).          



62







If by January 1, 2019, the Cerro Moro
processing facility has not averaged 80% of its daily nameplate production capacity over a 30-day period (the "Commencement
of Production"), then Yamana ́s producing El Peñon mine in Chile will provide a 24 month backstop until the Commencement
of Production has begun. During the 24 month backstop, if applicable, Sandstorm will purchase, for on-going per ounce cash payments
equal to 30% of the spot price of silver, an amount of silver equal to 16% of El Peñon ́s silver production up to a
maximum of 1.2 million ounces per annum.



Copper Stream



On October 27, 2015, the Company acquired
a copper stream on Yamana’s open pit gold-copper Chapada mine located 270 kilometres northwest of Brasília in Goiás
state, Brazil (“Chapada” or the “Chapada Mine”). Under the terms of the Yamana copper stream, Sandstorm
has agreed to purchase, for on-going per pound cash payments equal to 30% of the spot price of copper, an amount of copper from
the Chapada Mine equal to:



| | i) | 4.2% of the copper produced (up to an annual maximum of 3.9 million pounds of copper) until Yamana has delivered 39 million
pounds of copper to Sandstorm (the “First Chapada Delivery Threshold”); then
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | 3.0% of the copper produced until, on a cumulative basis, Yamana has delivered 50 million pounds of copper to Sandstorm (the
“Second Chapada Delivery Threshold”); then
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii) | 1.5% of the copper produced thereafter, for the life of the mine.
| | ---- | -----------------------------------------------------------------



If Cerro Moro has not achieved the Commencement
of Production and Sandstorm has not received cumulative pre-tax cash flow equal to $70 million from the Yamana Silver Stream, then
the First Chapada Delivery Threshold and the Second Chapada Delivery Threshold will cease to be in effect and Sandstorm will continue
to purchase 4.2% of Chapada’s payable copper production (up to an annual maximum of 3.9 million pounds of copper), until
the earlier of Sandstorm having received cumulative pre-tax cash flow equal to $70 million, or Cerro Moro having achieved the Commencement
of Production.



In assessing the fair value of the Yamana
Silver, Copper and Early Gold Deposit, the Company utilized a discounted cash flow analysis using discount rates from 3.5% to 5.0%
and analyst price projections. The excess of the fair value of the Yamana Silver, Copper and Early Gold Deposit of $155.1 million
and the total cash consideration of $152.0 million of $3.1 million was ascribed to the 15 million warrants issued to Yamana as
consideration for the transaction.



ACQUISITION | Diavik
Royalty



In March 2015, the Company acquired
a 1% gross proceeds royalty based on the production from the Diavik mine located in Lac de Gras, Northwest Territories, Canada
(“Diavik” or the “Diavik Mine”) which is operated by Rio Tinto PLC (“Rio Tinto”).



For consideration, the Company paid
$52.5 million in cash and 3 million warrants of Sandstorm to IAMGOLD Corporation (the owner of the 1% royalty). The warrants have
a strike price of $4.50 per Sandstorm common share, an expiration date of March 23, 2020 and will only be exercisable following
initial production from the Diavik Mine’s A21 pipe.



63







In assessing the fair value of the Diavik
royalty, the Company utilized a discounted cash flow analysis using a 7% discount rate and analyst price projections. The excess
of the fair value of the Diavik royalty of $53.1 million and the total cash consideration of $52.5 million being $0.6 million was
ascribed to the 3 million warrants issued to IAMGOLD Corporation as consideration for the transaction.



ACQUISITION | Bomboré
Royalty



On January 27, 2015, the Company acquired
a 0.45% NSR on the Bomboré gold project (“Bomboré” or “Bomboré Project”) located in
Burkina Faso, West Africa and owned by Orezone Gold Corp. (“Orezone”) for consideration of $3.0 million (“Upfront
Royalty”). In addition, Sandstorm has committed to providing up to an additional $5.0 million in royalty financing (remittable
in cash and/or shares, subject to certain conditions) to Orezone on a drawdown basis until January 27, 2017 (the “Standby
Royalty”). The Standby Royalty, if fully exercised, would result in the granting of an additional 0.75% NSR. Orezone has
granted Sandstorm a right of first refusal on any future stream or royalty financings related to the Bomboré Project until
36 months following the achievement of commercial production at the mine. Orezone has the option to repurchase the Upfront Royalty
from Sandstorm for a period of 36 months, at a premium of 10% per year. The Standby Royalty can also be repurchased at a premium
of 10% per year if Orezone completes a gold stream financing and Sandstorm participates for no less than $30 million.



UPDATE | Aurizona
Mine



The Company has a 3% – 5%
sliding scale NSR on the production from Luna Gold Corp.’s (“Luna”) open-pit Aurizona mine, located in Brazil
(the “Aurizona Mine”). 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 190,073 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.



On June 30, 2015, the Company restructured
its previously existing Gold Stream and loan agreement with Luna (the “Restructuring”). Under the terms of the Restructuring,
the Gold Stream was terminated and replaced by two net smelter return royalties (“NSR”) and a convertible debenture.



The convertible debenture is a $30 million instrument bearing interest at a rate of 5% per annum (the
“Debenture”). The Debenture is payable in three equal annual tranches of $10 million plus accrued interest beginning
June 30, 2018. Luna will have the right to convert principal and interest owing under the Debenture into common shares of Luna,
so long as Sandstorm does not own more than 20% of the outstanding common shares of Luna. The quantum of shares upon conversion
will be dependent on a 20 day volume weighted average price (“VWAP”) and if the VWAP is less than C$0.10 per share,
the shares will be deemed to have been issued at C$0.10 per share. The Debenture is included in investments (note 8).



Under the loan amendment, the maturity
date of the existing $20 million Luna loan was extended from June 30, 2017 to June 30, 2021 and the interest rate was revised to
5% per annum, payable in cash on the maturity date. In the event that Luna is in default, the applicable rate of interest will
increase to 10% per annum. The fair value of the loan was determined by utilizing a cash flow model incorporating the contractual
cash flows and a 7% discount rate.



64







Under the terms of the Restructuring,
Sandstorm continued to purchase 17% of the gold that resulted from the processing of the remaining stockpile from the Aurizona
Mine for a per ounce cash payment equal to the lesser of $408 and the then prevailing market price of gold.



The fair value of the two NSRs was determined
using a discounted cash flow model to estimate the fair value less costs to sell. Key assumptions incorporated into the cash flow
model included the estimated long-term price of gold of $1,150, annual production volumes at the Aurizona Mine of up to 80,000
ounces of gold for an estimated 7 to 10 year mine life and a 7% discount rate. The fair value of the Debenture was determined using
a discounted cash flow model incorporating the contractual cash flows of the Debenture, a 9% discount rate and an option pricing
model to value the prepayment and convertibility feature embedded in the Debenture. Key assumptions in the option pricing model
included an exercise price of $0.10 per share, a volatility rate of 45%, a term of 5 years and an interest free rate of 1.3%. The
resulting fair value of the Debenture and two NSRs was $13 million and $11 million, respectively.



The Company recognized a gain of $4.3
million arising from the difference between the fair value of the Debenture and the two NSRs and the carrying value of the Aurizona
mineral interest.



UPDATE | Deflector Mine



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 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.



| | C. | Impairments
| | -- | -----------



As a result of a decline in the Company’s
market capitalization during the year ended December 31, 2015, the Company performed an impairment analysis of the Company’s
mineral interests. As part of this and other assessments, the Company recognized the following impairments:



Serra Pelada



As a result of the lack of progress
at the Serra Pelada project, the Company recorded an impairment charge of $13.1 million in its interest in the mineral interest
and convertible debenture resulting in a $nil balance as at December 31, 2015. The recoverable amount of the asset was determined
for impairment purposes using management’s best estimate in value of the underlying assets and Sandstorm’s ability
to realize on those assets during an insolvency proceeding.



Emigrant Springs



As a result of the impairment assessment,
the Company recognized an impairment charge of $5.8 million with respect to its mineral interest in the Emigrant Springs mine.
The recoverable amount of $5.3 million was determined using a discounted cash flow calculation to estimate the fair value less
costs to sell. Key assumptions used in the cash flow forecast to determine the fair value included a long term gold price of $1,200
and an estimated 4 year mine life and a 5% discount rate.



Mine Waste Solutions



As a result of the impairment assessment,
the Company recognized an impairment charge of $2.4 million with respect to its mineral interest in the Mine Waste Solutions project.
The recoverable amount of $6.9 million was determined using a discounted cash flow calculation to estimate the fair value less
costs to sell. Key assumptions used in the cash flow forecast to determine the fair value included a long term gold price of $1,200
and an estimated 8 year mine life and a 5% discount rate.



Summit



The lack of progress with respect to Santa Fe
Gold Corp. 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 mine Gold Stream. The recoverable amount of the asset,
for impairment assessment purposes, was determined using a liquidation scenario to estimate the fair value less costs to sell.
Key assumptions used in the analysis to determine fair value included management’s best estimates of the value of the underlying
assets and Sandstorm’s ability to realize on these assets during an insolvency proceeding. As a result of its review, the
Company, during the year ended December 31, 2015, recorded an impairment charge of $3.3 million for the full balance of the mineral
interest.



| | 8. | Investments
| | -- | -----------



As of and for the year ended December
31, 2015:



|In $000s                     | Fair Value
January 1, 2015 | Net Additions
(Disposals)
December 31, 2015 | Fair Value
Adjustment
December 31, 2015 | Fair Value
December 31, 2015
|---------------------------- | -------------------------- | ------------------------------------------- | --------------------------------------- | ----------------------------
|Common shares                | $                          | 14,254                                      | $                                       | 8,243                       
|Convertible debt instruments |                            | 9,735                                       |                                         | 14,318                      
|Total                        | $                          | 23,989                                      | $                                       | 22,561                      



65







During the year ended December 31, 2015,
the Company acquired common shares of AuRico Metals Inc. for total consideration of $8.6 million and recognized a loss in other
comprehensive income of $0.3 million on these shares during the year ended December 31, 2015.



The lack of progress with respect
to advancing the Serra Pelada project (note 7 (c)) resulted in the Company recognizing a loss on revaluation of its investments
on its convertible debentures in the amount of $3.0 million.



As of and for the year ended December
31, 2014:



|In $000s                     | Fair Value
January 1, 2014 | Net Additions
(Disposals)
December 31, 2014 | Fair Value
Adjustment
December 31, 2014 | Fair Value
December 31, 2014
|---------------------------- | -------------------------- | ------------------------------------------- | --------------------------------------- | ----------------------------
|Common shares                | $                          | 8,804                                       | $                                       | 25,359                      
|Convertible debt instruments |                            | 4,185                                       |                                         | 6,501                       
|Total                        | $                          | 12,989                                      | $                                       | 31,860                      



| | 9. | REvolving loan and deferred financing costs
| | -- | -------------------------------------------



On October 26, 2015,
the Company amended its revolving credit agreement, allowing the Company to borrow up to $110 million (“Revolving Loan”)
for acquisition purposes from a syndicate of banks including the Bank of Nova Scotia, Bank of Montreal, National Bank of Canada
and Canadian Imperial Bank of Commerce. The amounts drawn on the Revolving Loan remain subject to interest at LIBOR plus 3.00% – 4.25%
per annum, and the undrawn portion of the Revolving Loan remains subject to a standby fee of 0.75% – 1.05%
per annum, dependent on the Company’s leverage ratio. The Revolving Loan matures in July 2019.



Under the credit agreement,
the Company is required to maintain an interest coverage ratio greater than or equal to 4.00:1, a leverage ratio (defined as net
debt divided by EBITDA) less than or equal to 4.00:1, 3.50:1, and 2.75 for calendar 2016, calendar 2017 and the remainder of the
life of the Revolving Loan, respectively. The Company is further required to maintain a tangible net worth greater than the aggregate
of $109.7 million and 50% of positive net income for each fiscal quarter after September 30, 2012. The Revolving Loan is secured
against the Company’s assets, including the Company’s mineral interests and royalties and investments.



As of December 31,
2015, the Company was in compliance with the covenants and had drawn $83.5 million under the facility.



Deferred financing
costs are capitalized and amortized on a straight-line basis over the term of the debt instrument as presented below:



As of December 31,
2015:



|In $000s            | Cost | Additions | Accumulated Amortization | Carrying Amount
|------------------- | ---- | --------- | ------------------------ | ---------------
|Debt issuance costs | $    | 3,377     | $                        | 556            



66







As of December
31, 2014:



|In
    $000s            | Cost | Additions | Accumulated
    Amortization | Carrying
    Amount
|----------------------- | ---- | --------- | ---------------------------- | -------------------
|Debt
    issuance costs | $    | 2,392     | $                            | 985                



| | 10. | Share Capital and Reserves
| | --- | --------------------------



| | A. | Shares Issued
| | -- | -------------



The Company is authorized to issue
an unlimited number of common shares without par value.



During the year ended December
31, 2015, the Company completed a public offering of 10,087,800 units at a price of $2.85 per unit, for gross proceeds of $28,750,230.
Each unit was comprised of one common share of the Company and one-half of one common share purchase warrant. Each warrant is
exercisable into a common share at an exercise price of $4.00 per share until November 3, 2020. In connection with the offering,
the Company paid agent fees of $1.4 million, representing 5% of the gross proceeds. The amount attributable to common shares was
$27.1 million, with the remainder allocated to warrants.



On December 15, 2014, the Company
announced that it intended to proceed with a normal course issuer bid (“NCIB”). Under the NCIB, the Company was able,
until December 16, 2015, to purchase up to 5,882,879 common shares, representing 5% of the Company’s issued and outstanding
common shares of 117,657,587 as of December 11, 2014. The NCIB provided the Company with the option to purchase its common shares
from time to time when the Company’s management believed that the Common Shares were undervalued by the market. Subsequent
to December 31, 2015, the Company reinitiated its NCIB, allowing it to purchase up to 6,896,539 common shares until April 2017.



During the year ended December
31, 2015 and pursuant to the NCIB, the Company purchased and cancelled an aggregate of 518,123 common shares.



| | B. | Stock Options of the Company
| | -- | ----------------------------



The Company has an incentive stock
option plan (the “Option Plan”) whereby the Company may grant share options to eligible employees, officers, directors
and consultants at an exercise price, expiry date, and vesting conditions to be determined by the Board of Directors. The maximum
expiry date is five years from the grant date. All options are equity settled. The Option Plan permits the issuance of options
which, together with the Company's other share compensation arrangements, may not exceed 10% of the Company’s issued common
shares as at the date of the grant.



67







A summary of the Company’s
options and the changes for the period are as follows:



|                                                             | Number
    of Options | Weighted
    Average
    Exercise Price (C$)
|------------------------------------------------------------ | --------------------- | --------------------------------------------
|Options outstanding at December
    31, 2013                 | 3,987,133             | 5.70                                        
|Granted                                                      | 3,762,474             | 2.95                                        
|Exercised                                                    | (862,000)             | 2.25                                        
|Forfeited                                                    | (35,000)              | (6.31)                                      
|Options outstanding at December
    31, 2014                 | 6,852,607             | 4.69                                        
|Granted                                                      | 1,284,000             | 3.61                                        
|Addition of outstanding Gold Royalties’ Options (note 6 (a)) | 47,475                | 15.71                                       
|Exercised                                                    | (155,000)             | (3.39)                                      
|Forfeited                                                    | (1,173,500)           | (3.40)                                      
|Options outstanding at December
    31, 2015                 | 6,855,582             | 5.45                                        



The weighted-average share price
at the date of exercise for the year ended December 31, 2015 was C$3.78 (C$7.06 – year ended December 31, 2014). The weighted
average remaining contractual life of the options for the year ended December 31, 2015 was 3.38 years (3.43 years – year
ended December 31, 2014).



During the year ended December
31, 2015, the Company issued 1,284,000 options with a weighted average exercise price of C$3.61 and a fair value of $2.4 million
or $0.85 per option. The fair value of the options granted was determined using a Black-Scholes model using the following weighted
average assumptions: grant date share price and exercise price of C$3.60, expected volatility of 48%, risk-free interest rate
of 0.48% and expected life of 3 years. Expected volatility is determined by considering the trailing 3 year historic average share
price volatility of the Company and similar companies in the same industry.



A summary of the Company’s
share purchase options as of December 31, 2015 is as follows:



|Number
    outstanding | Exercisable | Exercise
    Price per Share (C$) | Expiry
    Date  
|---------------------- | ----------- | --------------------------------- | -----------------
|66,000                 | 66,000      | $6.30                             | August 25, 2016  
|1,129,000              | 1,129,000   | 6.35                              | November 25, 2016
|27,000                 | 27,000      | 18.33                             | August 22, 2017  
|5,850                  | 5,850       | 18.33                             | October 4, 2017  
|402,133                | 402,133     | 16.35                             | December 11, 2017
|150,000                | 150,000     | 11.78                             | December 21, 2017
|10,875                 | 10,875      | 11.31                             | February 19, 2018
|3,625                  | 3,625       | 10.62                             | March 1, 2018    
|12,375                 | 12,375      | 8.89                              | December 13, 2018
|25,000                 | 8,334       | 6.03                              | May 16, 2019     
|3,737,474              | 1,245,834   | 2.93                              | November 13, 2019
|1,084,000              | -           | 3.60                              | December 9, 2020 
|200,000                | -           | 3.64                              | December 22, 2020
|2,250                  | 2,250       | 15.00                             | March 30, 2022   
|6,855,582              | 3,063,276   | $6.70                             |                  



68







| | C. | Share Purchase Warrants
| | -- | -----------------------



A summary of the Company’s
warrants and the changes
for the period are as follows:



|                                                      | Number
    of Warrants | Shares
    to be Issued Upon Exercise of the Warrants
|----------------------------------------------------- | ---------------------- | -----------------------------------------------------
|Warrants outstanding at December
    31, 2013         | 83,305,390             | 22,490,095                                           
|Exercised                                             | (55,205,100)           | (11,041,020)                                         
|Expired unexercised                                   | (2,331,018)            | (1,223,522)                                          
|Warrants outstanding at December
    31, 2014         | 25,769,272             | 10,225,553                                           
|Addition of Gold Royalties’
    Warrants (note 6 (a)) | 368,038                | 368,038                                              
|Issued (note 7 (b) and 10(a))                         | 23,043,900             | 23,043,900                                           
|Expired unexercised                                   | (19,874,037)           | (4,330,318)                                          
|Warrants outstanding at December
    31, 2015         | 29,307,173             | 29,307,173                                           



A summary of the Company’s
warrants as of
December 31, 2015 are as follows:



|Number
    outstanding | Exercise
    Priceper Share | Expiry
    Date
|---------------------- | --------------------------- | ---------------
|72,500                 | C$17.24                     | Feb. 28, 2016  
|32,400                 | C$11.11                     | May 1, 2016    
|1,155,873              | C$13.79                     | Dec. 4, 2016   
|5,002,500              | $14.00                      | Sep. 7, 2017   
|3,000,000              | $4.50                       | Mar. 23, 2020  
|15,000,000             | $3.50                       | Oct. 26, 2020  
|5,043,900              | $4.00                       | Nov. 3, 2020   
|29,307,173             |                             |                



| | D. | Restricted Share Rights
| | -- | -----------------------



The Company has a restricted share
plan (the “Restricted Share Plan”) whereby the Company may grant restricted share rights to eligible employees, officers,
directors and consultants at an expiry date to be determined by the Board of Directors. Each restricted share right entitles the
holder to receive a common share of the Company without any further consideration. The Restricted Share Plan permits the issuance
of up to a maximum of 2,800,000 RSRs.



During the year ended December
31, 2015, the Company granted 895,480 RSRs with a fair value of $2.4 million, a three year vesting term, and a weighted average
grant date fair value of C$3.63 per unit. As at December 31, 2015, the Company had 1,396,676 RSRs outstanding.



69







| | E. | Diluted Earnings Per Share
| | -- | --------------------------



Diluted earnings per share is calculated
based on the following:



|In
    $000s                                         | Year
    Ended
    December 31, 2015 | Year
    Ended
    December 31, 2014
|---------------------------------------------------- | ------------------------------------ | ------------------------------------
|Net (loss) income                                    | $                                    | (43,056)                            
|                                                     |                                      |                                     
|Basic weighted average number of
    shares          |                                      | 119,622,450                         
|Effect of
    dilutive securities                    |                                      |                                     
|·  Stock
    options                                 |                                      | -                                   
|·  Warrants                                          |                                      | -                                   
|·  Restricted
    share rights                       |                                      | -                                   
|Diluted weighted average number
    of common shares |                                      | 119,622,450                         



The Company has a net loss for
the year ended December 31, 2015; however, the following lists the stock options and share purchase warrants that would have been
included in the computation of diluted weighted average number of common shares if the Company had net earnings as they would
have been dilutive. For the comparative year ending December 31, 2014, the following table lists the number of stock options,
warrants and RSRs excluded from the computation of diluted earnings per share because the exercise prices exceeded the average
market value of the common shares of C$5.61.



|              | Year
    Ended
    December 31, 2015 | Year
    Ended
    December 31, 2014
|------------- | ------------------------------------ | ------------------------------------
|Stock Options | -                                    | 1,796,633                           
|Warrants      | -                                    | 7,286,270                           
|RSRs          | 64,973                               | 434,853                             



| | 11. | Income Taxes
| | --- | ------------



The income tax expense (recovery)
differs from the amount that would result from applying the federal and provincial income tax rate to the net income before income
taxes.



These differences result from the
following items:



|In
    $000s                                                                                                     | Year
    Ended
    December 31, 2015 | Year
    Ended
    December 31, 2014
|---------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------
|(Loss) income before income
    taxes                                                                            | $                                    | (33,944)                            
|Canadian federal and provincial income tax
    rates                                                             |                                      | 26.0%                               
|Income tax (recovery) expense based on the
    above rates                                                       | $                                    | (8,825)                             
|Increase (decrease)
    due to:                                                                                  |                                      |                                     
|·  Non-deductible
    expenses                                                                                   |                                      | 621                                 
|·  Permanent
    difference for gain on bargain purchase                                                         |                                      | -                                   
|·  Change
    in deductible temporary differences                                                                |                                      | 6,073                               
|·  Change
    in unrecognized temporary differences                                                              |                                      | 3,632                               
|·  Change
    in deferred taxes related to attributing taxable income from Barbadian subsidiary                  |                                      | 8,060                               
|·  Difference
    between statutory and foreign tax rates                                                        |                                      | (2,172)                             
|·  Recognition
    of previously unrecognized and unused tax losses now recognized as deferred income tax assets |                                      | -                                   
|·  Other                                                                                                         |                                      | 1,723                               
|Income tax  expense (recovery)                                                                                   | $                                    | 9,112                               



70







As a result of an ongoing assessment
of the Company’s assets held in foreign subsidiaries, during the year ended December 31, 2015, the Company recognized a
reduction of its deferred income tax assets relating to taxable income previously attributed to its Barbadian subsidiary. A corresponding
non-cash income tax expense of $8.1 million was accordingly recognized. The assessment is complex in nature, and the reduction
and corresponding expense represent management estimates. The Company’s international transactions have not been reviewed
by the Canada Revenue Agency, and should such transactions be reviewed no assurances can be given that the tax authority will
concur with management’s estimates.



The deferred tax assets and liabilities
are shown below:



|In
    $000s                              | As
    at December 31, 2015 | As
    at December 31, 2014
|----------------------------------------- | --------------------------- | ---------------------------
|Deferred Income Tax Assets                |                             |                            
|»  Non-capital
    losses                 |                             | 31,701                     
|»
     Share issue costs                  |                             | 1,253                      
|»  Mineral
    interests and royalties    |                             | (13,304)                   
|Total deferred income
    tax assets      |                             | 19,650                     
|Deferred Income Tax Liabilities           |                             |                            
|»
     Mineral interest and royalties     |                             | 3,279                      
|Total deferred income
    tax liabilities |                             | 3,279                      
|Total deferred income
    tax asset, net  | $                           | 16,371                     



Deferred tax assets and liabilities
have been offset where they relate to income taxes levied by the same taxation authority and the Company has the legal right and
intent to offset. Non-capital losses have been recognized as a deferred income tax asset to the extent there will be future taxable
income against which the Company can utilize the benefit prior to their expiration. The Company recognized deferred tax assets
in respect of tax losses as at December 31, 2015 of $122.4 million (2014: $144.1 million) as it is probable that there will be
future taxable profits to recover the deferred tax assets.



71







Movement in net deferred income
taxes:



|In
    $000s                                                       | Year
    Ended
    December 31, 2014 | Year
    Ended
    December 31, 2013
|------------------------------------------------------------------ | ------------------------------------ | ------------------------------------
|Balance, beginning
    of the year                                 | $                                    | 21,708                              
|Recognized in net (loss) income for the year                       |                                      | (8,240)                             
|Recognized in equity                                               |                                      | 1,010                               
|Recognition and movement of purchase price allocation (note
    6) |                                      | 1,592                               
|Currency translation differences                                   |                                      | 301                                 
|Balance, end of year                                               |                                      | 16,371                              



The Company has deductible unused
tax losses expiring as follows:



|In
    $000s                    | Location |   | Amount  | Expiration
|------------------------------- | -------- | - | ------- | ----------
|Non-capital loss carry-forwards | Canada   | $ | 122,436 | 2028-2036 
|                                |          |   |         |           



The aggregate amount of deductible temporary
differences associated with capital losses and other items, for which deferred income tax assets have not been recognized as at
December 31, 2015 are $48.7 million (2014: $39.5 million). No deferred tax asset is recognized in respect of these items because
it is not probable that future taxable capital gains or taxable income will be available against which the Company can utilize
the benefit.



| | 12. | Administration Expenses
| | --- | -----------------------



The administration expenses for
the Company are as follows:



|In
    $000s                                                     | Year
    Ended
    December 31, 2015 | Year
    Ended
    December 31, 2014
|---------------------------------------------------------------- | ------------------------------------ | ------------------------------------
|Corporate administration                                         | $                                    | 1,471                               
|Employee benefits and salaries                                   |                                      | 1,695                               
|Professional fees                                                |                                      | 798                                 
|Depreciation                                                     |                                      | 212                                 
|Administration expenses before share
    based compensation      | $                                    | 4,176                               
|                                                                 |                                      |                                     
|Equity settled share based compensation
    (a non-cash expense) |                                      | 1,514                               
|Total administration expenses                                    | $                                    | 5,690                               



72







| | 13. | Supplemental Cash Flow Information
| | --- | ----------------------------------



|In
    $000s                                                                       | Year
    Ended
    December 31, 2015 | Year
    Ended
    December 31, 2014
|---------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------
|Change
    in non-cash working capital:                                            |                                      |                                     
|·  Trade
    receivables and other                                                 | $                                    | (540)                               
|·  Trade
    and other payables                                                    |                                      | 814                                 
|Net increase (decrease) in cash                                                    | $                                    | 274                                 
|Significant non-cash
    transactions:                                             |                                      |                                     
|·  Restructuring
    of mineral interest and loan receivable                       | $                                    | 24,000                              
|·  Exchange
    of mineral interest and corresponding reduction of promissory note |                                      | -                                   
|·  Issuance
    of common shares for Gold Royalties acquisition and other (note 4) |                                      | 5,435                               
|·  Issuance
    of warrants for mineral interest acquisitions (note 7 (b))         | $                                    | 3,674                               



| | 14. | Key Management Compensation
| | --- | ---------------------------



The remuneration of directors and
those persons having authority and responsibility for planning, directing and controlling activities of the Company are as follows:



|In
    $000s                                  | Year
    Ended
    December 31, 2015 | Year
    Ended
    December 31, 2014
|--------------------------------------------- | ------------------------------------ | ------------------------------------
|Short-term employee salaries
    and benefits | $                                    | 2,345                               
|Share-based payments                          |                                      | 1,837                               
|Total key management compensation
    expense | $                                    | 4,182                               



73







| | 15. | Contractual Obligations
| | --- | -----------------------



| | A. | Gold Streams
| | -- | ------------



In connection with its Gold Streams,
the Company has committed to purchase the following:



|Gold
    Stream      | %
    of Life of Mine Gold 5,6,7,8,9                                     | Per
    Ounce Cash Payment:
    lesser of amount below and the then
 prevailing market price of gold 1,
    2, 3, 4
|-------------------- | ------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------
|Bachelor Lake        | 20%                                                                      | $500                                                                                                               
|Black Fox            | 8%                                                                       | $518                                                                                                               
|Chapada              | 4.2%                                                                     | 30% of copper spot price                                                                                           
|Entrée Gold          | 6.76% on Hugo North
    Extension
    and 5.14% on Heruga                | $220                                                                                                               
|Karma                | 25,000 ounces over 5
    years
    and 1.625% thereafter                 | 20% of gold spot price                                                                                             
|Ming                 | 25% of the first 175,000
    ounces of gold produced, and 12% thereafter | $nil                                                                                                               
|Santa Elena          | 20%                                                                      | $357                                                                                                               
|Yamana Silver Stream | Varies                                                                   | 30% of silver spot
    price                                                                                       



| | 1) | Subject
                                         to an annual inflationary adjustment except for Ming.
| | -- | ------------------------------------------------------------------------------------------------------

| | 2) | For
                                         the Entrée Gold Stream, after approximately 8.6 million ounces of gold have been
                                         produced from the joint venture property, the price increases to $500 per gold ounce.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3) | For
                                         the Entrée Silver Stream, percentage of life of mine is 6.76% on Hugo North Extension
                                         and 5.14% on Heruga which the Company can purchase for the lesser of the prevailing market
                                         price and $5 per ounce of silver until 40.3 million ounces of silver have been produced
                                         from the entire joint venture property. Thereafter, the purchase price will increase
                                         to the lesser of the prevailing market price and $10 per ounce of silver.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4) | For
                                         the Santa Elena Gold Stream, the Company can purchase for a per ounce cash payment equal
                                         to (i) the lesser of $357 and the then prevailing market price of gold for the open-pit
                                         mine and (ii) the lesser of $357 and the then prevailing market price of gold until 50,000
                                         ounces of gold have been delivered to Sandstorm (inclusive of ounces already received
                                         from open-pit production), at which time the on-going per ounce payments will increase
                                         to the lesser of $450 and the then prevailing market price of gold for the underground
                                         mine.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5) | For
                                         the Entrée Gold and Silver Stream, percentage of life of mine is 6.76% on Hugo
                                         North Extension and 5.14% on Heruga if the minerals produced are contained below 560
                                         metres in depth.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6) | For
                                         the Entrée Gold and Silver Stream, percentage of life of mine is 10.15% on Hugo
                                         North Extension and 7.7% on Heruga if the minerals produced are contained above 560 metres
                                         in depth.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7) | For
                                         the Entrée copper stream, the Company has committed to purchase an amount equal
                                         to 0.5% of the copper produced from the Hugo North Extension and Heruga deposits. If
                                         the minerals produced are contained above 560 metres in depth, then the commitment increases
                                         to 0.75% for both the Hugo North Extension and Heruga deposits. Sandstorm will make ongoing
                                         per pound cash payments equal to the lesser of $0.50 and the then prevailing market price
                                         of copper, until 9.1 billion pounds of copper have been produced from the entire joint
                                         venture property. Thereafter, the on-going per pound payments will increase to the lesser
                                         of $1.10 and the then prevailing market price of copper.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8) | For
                                         the Chapada copper stream, the Company has committed to purchase an amount equal to 4.2%
                                         of the copper produced (up to an annual maximum of 3.9 million pounds of copper) until
                                         Yamana has delivered 39 million pounds of copper to Sandstorm; then 3.0% of the copper
                                         produced until, on a cumulative basis, Yamana has delivered 50 million pounds of copper
                                         to Sandstorm; then 1.5% of the copper produced thereafter, for the life of the mine.
                                         If Cerro Moro has not achieved the Commencement of Production and Sandstorm has not received
                                         cumulative pre-tax cash flow equal to $70 million from the Yamana Silver Stream, then
                                         the First Chapada Delivery Threshold and the Second Chapada Delivery Threshold will cease
                                         to be in effect and Sandstorm will continue to purchase 4.2% of Chapada’s payable
                                         copper production (up to an annual maximum of 3.9 million pounds of copper), until such
                                         time as Sandstorm has received cumulative pre-tax cash flow equal to $70 million, or
                                         Cerro Moro has achieved the Commencement of Production.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 9) | Under
                                         the terms of the Yamana Silver Stream, Sandstorm has agreed to purchase an amount of
                                         silver from Cerro Moro equal to 20% of the silver produced (up to an annual maximum of
                                         1.2 million ounces of silver), until Yamana has delivered to Sandstorm 7.0 million ounces
                                         of silver; then 9.0% of the silver produced thereafter. As part of the Yamana Silver
                                         Stream, during the year 2016 through 2018, Sandstorm has also agreed to purchase an amount
                                         of silver from: (i) the Minera Florida mine in Chile equal to 38% of the silver produced
                                         (up to an annual maximum of 200,000 ounces of silver); and (ii) the Chapada mine in Brazil
                                         equal to 52% of the silver produced (up to an annual maximum of 100,000 ounces of silver).
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In connection with the Karma Gold
Stream, the Company has agreed, subject to certain financing conditions, to provide remaining upfront payments totaling $3.9 million
(which were remitted subsequent to the year ended December 31, 2015). In addition, the Stream Syndicate has provided True Gold
with an 18 month option to increase funding by up to $20.0 million whereby Sandstorm’s commitment would be up to $5 million
of the increase. In 2016, the Company remitted $1.25 million of that commitment.



74







In connection with the Bomboré
royalty, Sandstorm has committed to providing up to an additional $5.0 million in royalty financing (remittable in cash and/or
shares, subject to certain conditions) to Orezone on a draw down basis until January 27, 2017.



As part of the Yamana transaction, the Company drew on its Revolving Loan. The Company will, from time
to time, repay balances outstanding on its Revolving Loan with operating cash flow and cash flow from other sources. The amounts
drawn on the Revolving Loan remain subject to interest at LIBOR plus 3.00% – 4.25% per annum, and the undrawn
portion of the Revolving Loan remains subject to a standby fee of 0.75% – 1.05% per annum, dependent on the
Company’s leverage ratio. The Revolving Loan matures in July 2019.



| | 16. | Segmented Information
| | --- | ---------------------



The Company’s reportable
operating segments, which are components of the Company’s business where separate financial information is available and
which are evaluated on a regular basis by the Company’s Chief Executive Officer, who is the Company’s chief operating
decision maker, for the purpose of assessing performance, are summarized in the tables below:



For the year ended December 31,
2015



|In
    $000s              | Sales | Royalty

    revenue | Cost
    of sales(excluding depletion) | Depletion | Impairment
    of mineral
 interests | Income (loss)
 before taxes | Cash
    from
    operations
|------------------------- | ----- | -------------------- | -------------------------------------- | --------- | ------------------------------------ | --------------------------- | ----------------------------
|Aurizona,
    Brazil      | $     | 10,773               | $                                      | -         | $                                    | 3,690                       | $                           
|Bachelor
    Lake, Canada |       | 8,285                |                                        | -         |                                      | 3,550                       |                             
|Black
    Fox, Canada     |       | 6,856                |                                        | -         |                                      | 3,041                       |                             
|Diavik
    Mine, Canada   |       |                      |                                        | 5,656     |                                      | -                           |                             
|Ming,
    Canada          |       | 1,855                |                                        | -         |                                      | -                           |                             
|Santa
    Elena, Mexico   |       | 10,640               |                                        | -         |                                      | 3,266                       |                             
|Royalties1                |       | -                    |                                        | 8,422     |                                      | -                           |                             
|Other                     |       | 176                  |                                        | -         |                                      | 19                          |                             
|Corporate                 |       | -                    |                                        | -         |                                      | -                           |                             
|Consolidated              | $     | 38,585               | $                                      | 14,078    | $                                    | 13,566                      | $                           



| | 1) | Includes
                                         royalty revenue from Bracemac-McLeod, Gualcamayo, Emigrant Springs, Mine Waste Solutions,
                                         San Andres, and Thunder Creek. Includes royalty revenue from royalty interests located
                                         in Canada of $3.5 million, in the United States of $1.9 million, and other of $3.0 million.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For the year ended December 31,
2014



|In
    $000s              | Sales | Royalty

    revenue | Cost
    of sales(excluding depletion) | Depletion | Impairment
    of mineral
 interests | Income (loss) 
before taxes | Cash
    from
    operations
|------------------------- | ----- | -------------------- | -------------------------------------- | --------- | ------------------------------------ | --------------------------- | ----------------------------
|Aurizona,
    Brazil      | $     | 15,527               | $                                      | -         | $                                    | 4,986                       | $                           
|Bachelor
    Lake, Canada |       | 11,899               |                                        | -         |                                      | 4,662                       |                             
|Black
    Fox, Canada     |       | 6,889                |                                        | -         |                                      | 2,790                       |                             
|Ming,
    Canada          |       | 2,459                |                                        | -         |                                      | -                           |                             
|Santa
    Elena, Mexico   |       | 6,916                |                                        | -         |                                      | 1,945                       |                             
|Royalties1                |       | -                    |                                        | 12,804    |                                      | -                           |                             
|Corporate                 |       | -                    |                                        | -         |                                      | -                           |                             
|Consolidated              | $     | 43,690               | $                                      | 12,804    | $                                    | 14,383                      | $                           





| | 1) | Includes
                                         Bracemac-McLeod, Gualcamayo, Emigrant Springs, Mine Waste Solutions, San Andres, Sao
                                         Francisco, Sao Vicente, and Thunder Creek. Includes royalty revenue from royalty interests
                                         located in Canada of $1.8 million, in the United States of $0.6 million, and other of
                                         $1.6 million.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





75







Total assets as of:



|In
    $000s         | December
    31, 20151 | December
    31, 20141
|-------------------- | ---------------------- | ----------------------
|Aurizona             | $                      | 10,690                
|Bachelor Lake        |                        | 7,993                 
|Black Fox            |                        | 15,641                
|Chapada              |                        | 69,520                
|Diavik Mine          |                        | 48,013                
|Entrée               |                        | 42,493                
|Karma                |                        | 21,174                
|Ming                 |                        | 12,446                
|Santa Elena          |                        | 6,140                 
|Yamana Silver Stream |                        | 74,229                
|Royalties 2          |                        | 103,634               
|Other 3              |                        | 6,868                 
|Corporate            |                        | 78,032                
|Consolidated         | $                      | 496,873               



| | 1) | Includes
                                         related accounts receivables and payables in relation to the respective properties.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------

| | 2) | Includes
                                         Bracemac-McLeod, Coringa, Mt. Hamilton, Paul Isnard, Prairie Creek, Ann Mason, Serra
                                         Pelada, Gualcamayo, Emigrant Springs, Mine Waste Solutions, San Andres, Sao Francisco,
                                         Sao Vicente, Thunder Creek, Bomboré, and the Gold Royalties royalty portfolio.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3) | Includes
                                         Summit and other.
| | -- | -------------------------------------------------------------------



| | 17. | Subsequent events
| | --- | -----------------



Teck Royalty Package



On January 19, 2016, the Company announced that
it had agreed to acquire 55 royalties from Teck Resources Limited (“Teck”) and its affiliates for total consideration
of up to $22 million, payable in $1.4 million cash and $20.6 million in common shares of the Company.



76







Entrée Stream



Subsequent to the year ended December 31,
2015, Sandstorm amended its Gold Stream with Entrée Gold Inc. (“Entrée”) such that the Company will
now purchase an amount equal to 5.62% and 4.26% of the gold and silver by-products produced from the Hugo North Extension and
Heruga deposits located in Mongolia, (the “Hugo North Extension” and “Heruga”, respectively) for per ounce
cash payments equal to the lesser of $220 per ounce of gold and $5 per ounce of silver and the then prevailing market price of
gold and silver, respectively. Additionally, Sandstorm amended its copper stream such that the Company will now purchase an amount
equal to 0.42% share of the copper produced from Hugo North Extension and Heruga for per pound cash payments equal to the lesser
of $0.50 per pound of copper and the then prevailing market price of copper. In consideration for the amendment and subsequent
to the year ended December 31, 2015, Sandstorm received consideration of $6.8 million (of which $5.5 million was paid in cash
and $1.3 million was received by way of Entrée common shares).



77