VANCOUVER, BRITISH COLUMBIA--(Marketwire - Mar 26, 2013) - In connection with the release of its fourth quarter and annual results, Sandstorm Metals & Energy Ltd. ("Sandstorm" or the "Company") (TSX VENTURE:SND) is pleased to provide a corporate update on the activities of the Company (all figures U.S.).
Sandstorm has a portfolio of 4 commodity streams in 3 diversified commodities including the following:
Bracemac-McLeod Mine - Copper Stream
Sandstorm has a copper stream with Donner Metals Ltd. to purchase 24.5% of the copper produced from the Bracemac-McLeod Mine ("Bracemac-McLeod") at $0.80 per pound (subject to adjustment if the spot price of copper falls below $2.75 per pound, in which case the payments will decrease to $0.55 per pound). Bracemac-McLeod is operated by Xstrata Canada Corp. and the mine is expected to initiate production during the second quarter of 2013.
An ongoing 35,000 metre drill program on the McLeod Deep Zone has discovered high-grade sulphide mineralization between the proven and probable mineral reserves in the McLeod Zone (2.10 million tonnes grading 9.25% zinc, 1.18% copper, 24.98 g/t silver, 0.49 g/t gold) and inferred mineral resources in the McLeod Deep Zone (2.47 million tonnes grading 9.21% zinc, 1.22% copper, 39.81 g/t silver and 1.12 g/t gold). These new results increase the hypothesis that the two zones, separated by a 200-metre un-drilled gap, are connected by continuous high-grade sulphide mineralization, which has potential implications for additional mineral resources and extended mine life at Bracemac-McLeod.
Serra Pelada Mine - Palladium Stream
Sandstorm has a palladium stream with Colossus Minerals Inc. ("Colossus") to purchase 35% of the palladium produced from the Serra Pelada Mine ("Serra Pelada") at $100 per ounce. Serra Pelada is a high-grade gold-platinum-palladium mine that is expected to initiate gold production in the second half of 2013, with platinum and palladium production beginning at the end of 2014. Colossus is in the process of collecting a bulk sample and the material is being assayed and sorted on surface, the results of which are expected in the coming weeks. Underground drilling is ongoing and the data is being used to complete the first mineral resource/reserve estimate at Serra Pelada.
In connection with the palladium stream, the Company has made a $15 million cash payment to Sandstorm Gold Ltd.
Gordon Creek Property - Natural Gas Stream
Sandstorm has a natural gas stream with Thunderbird Energy Corp. ("Thunderbird") to purchase 35% of the natural gas produced from the Gordon Creek Property ("Gordon Creek") at $1.00 per mcf (plus 20% of the price received that is above $4.00 per mcf and less certain production taxes that have recently averaged less than 2% of revenue). In addition to continuing production from four historical wells, Thunderbird commenced production from eight new wells at Gordon Creek in late 2012. The Gordon Creek wells produce from stacked sands and coals within the Ferron zone, and it is common for these wells to require a period of dewatering. Thunderbird is in the process of optimizing pump performance to maximize water removal, and results to date, although preliminary, have been encouraging.
Hugo North Extension and Heruga - Copper Stream
Sandstorm has a copper stream with Entrée Gold Inc. ("Entrée") to purchase 2.5% of Entrée's 20% share of the copper produced from the Heruga and Hugo North Extension deposits at $0.50 per pound. The deposits are on the Entrée - Oyu Tolgoi LLC joint venture property which forms part of the world-class Oyu Tolgoi copper mining complex.
Sale of Streams
Two Creek and Strathmore - Oil Streams
Sandstorm recently announced a settlement agreement with Terrex Energy Inc. ("Terrex") whereby the oil stream agreement between Sandstorm and Terrex was sold as part of a business combination between Terrex and Anterra Energy Inc. ("Anterra"). In consideration for the settlement, Sandstorm received approximately $10.6 million including $3.26 million in cash, approximately $3 million worth of equipment (to be sold in the near-term), a $4 million convertible debenture and 9.39 million common shares of Anterra.
Rex No. 1 and Rosa - Coal Streams
In the fall of 2012, Sandstorm announced a proposed restructuring of Novadx Ventures Corp. ("Novadx") which was contingent upon Novadx raising $15 million in equity capital. Due to the progress of the equity financing and other operational delays, Sandstorm recorded an impairment charge to the Novadx coal stream and other related assets in the amounts of $27.8 million and $5.2 million, respectively. Sandstorm holds senior security on the Rex No. 1 and Rosa Mines and any future restructuring associated with Novadx will provide Sandstorm with an opportunity to extract value from the initial investment.
Sandstorm President and CEO Nolan Watson commented, "When Sandstorm was launched two years ago, we completed commodity stream agreements with small junior resource companies and although the companies were developing quality assets, the challenging times that we have seen in the capital markets have made it extremely difficult for small junior companies to access development financing." Watson continued, "As a result, Sandstorm has shifted its focus to larger transactions with intermediate-sized resource companies that have sufficient access to capital through the market cycle. By paying off the $15 million liability due to Sandstorm Gold for the Serra Pelada palladium stream, we have cleaned up our balance sheet and we have a strong foundation of four commodity streams, two of which are expected to generate cash flow in the near-term. We strongly believe in our prospects for future growth and our management team is committed to building fundamental value for our shareholders for years to come."
Proposed Share Consolidation
Sandstorm is proposing a consolidation of its issued and outstanding common shares (the "Common Shares") on the basis of one (1) post-consolidation Common Share for up to every ten (10) pre-consolidation Common Shares (the "Consolidation"), with the final consolidation ratio to be set by the Company's Board of Directors within the range approved by the shareholders. The purpose of the Consolidation is to attract additional institutional investors and for potential future stock market listings.
If approved, the Consolidation would reduce the Company's 333,360,280 issued and outstanding Common Shares to approximately 33,336,028 Common Shares. The exercise price of outstanding stock options would be proportionately adjusted based upon the final consolidation ratio. The proposed Consolidation is subject to the approval of the TSX Venture Exchange and Sandstorm's shareholders.
Full details regarding the proposed Consolidation will be included in the information circular to be mailed on April 4, 2013 to all Sandstorm shareholders of record on March 26, 2013, and posted on SEDAR at www.sedar.com in connection with the Annual and Special Meeting of Shareholders, which is scheduled to be held on Friday, May 10, 2013.
Webcast and Conference Call Details
A conference call will be held on Wednesday, March 27, 2013 starting at 8:30am PDT to further discuss the corporate update. To participate in the conference call use the following dial-in numbers:
Local / International: 647-788-4916
North American Toll-Free: 877-214-4966
It is recommended that participants dial in five minutes prior to the commencement of the conference call. To access an audio webcast of the conference call, use the following link: www.snwebcastcenter.com/custom_events/sandstorm-20130327/site/.
Robin Adair (VP of Exploration) is a Qualified Person for Donner Metals Ltd. and is responsible for the technical information reported in this news release.
ABOUT SANDSTORM METALS & ENERGY
Sandstorm Metals & Energy Ltd. is the world's first diversified streaming company. Sandstorm provides upfront financing to resource companies that are looking for capital and in return, receives a commodity streaming agreement. This agreement gives Sandstorm the right to purchase a percentage of the commodity produced, for the life of the asset, at a fixed price. Sandstorm has acquired a portfolio of four commodity streams in copper, palladium and natural gas. Sandstorm plans to grow its production base through the acquisition of additional commodity streams.
Sandstorm Metals & Energy is focused on low cost operations with excellent exploration potential and strong management teams. Sandstorm has completed commodity purchase agreements with Colossus Minerals Inc., Donner Metals Ltd., Entrée Gold Inc. and Thunderbird Energy Corp.
For more information visit: www.sandstormmetalsandenergy.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
Except for the statements of historical fact contained herein, the information presented constitutes "forward-looking information" or "forward-looking statements" within the meaning of applicable Canadian securities legislation. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "continue", "plans", or similar terminology. 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 the forward-looking information, including but not limited to: the impact of general business and economic conditions; the absence of control over operations from which Sandstorm will purchase commodities and risks related to those 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 commodities; industry conditions, including fluctuations in the price of commodities, fluctuations in foreign exchange rates and fluctuations in interest rates; stock market volatility; competition; as well as those factors discussed in the section entitled "Risks to Sandstorm" in Sandstorm's annual report for the financial year ended December 31, 2012. Although Sandstorm has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause 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. Sandstorm does not undertake to update any forward-looking information that is contained or incorporated by reference herein, except in accordance with applicable securities laws. Sandstorm does not provide any representation as to its comparability with other companies in its industry including, but not limited to, Franco-Nevada Corporation, BHP Billiton and Rio Tinto.