UPDATE: Sandstorm Goes Lower In Last Couple of Minutes on Heavy Trade
Sandstorm Metals & Energy Ltd. (SND.V) has in the last couple of minutes fallen in to negative territory, well off the day high 36.5 cents hit before midday. Around 2.6 million shares have changed hands, making it the most active on the TSXV, but there is no apparent fresh news around.
Sandstorm announced on December 22, that it has amended the coal purchase agreement with Royal Coal Corp. (RDA.V). Under the terms of the agreement announced on November 26, 2010, Sandstorm is entitled to purchase 18% of the first six million tons of coal produced and 12% of the life of mine coal produced thereafter from the Big Branch Mine, the Big Branch Extension and the SID Mine for US$55 per ton. As part of the agreement, Royal Coal provided a guarantee that Sandstorm would receive minimum cash flows of US$2 million in 2011 and US$2.5 million in each of 2012, 2013, 2014 and 2015.
Sandstorm has amended the agreement whereby the requirement for Royal Coal to deliver the fixed percentage of coal will be deferred until December 31, 2012. This amendment is contingent upon Royal Coal raising C$5 million by means of an equity financing. Under the amended coal purchase agreement a total of US$4.4 million will be due to Sandstorm by June 30, 2013, which represents the unpaid portion of the 2011 cash flow guarantee and the US$2.5 million 2012 cash flow guarantee, with interest. In addition, the cash flow guarantees to Sandstorm of US$2.5 million in each of 2013, 2014 and 2015 remain. The coal purchase agreement is senior secured against all of the assets of Royal Coal.
In August 2011, Sandstorm provided US$3 million in a bridge loan to Royal Coal for the purposes of purchasing the Charlene load-out facility. Royal Coal has agreed to settle the bridge loan by making monthly payments to Sandstorm in the amount of US$375,000 beginning in January 2012. The bridge loan is subject to interest at a rate of 15% per annum.
The 2.7% gross revenue royalty that Sandstorm acquired on the Big Branch Mine, the Big Branch Extension and the SID Mine is still required to be paid on a monthly basis.
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