Hugo North Extension and Heruga - Copper Stream
Sandstorm has a copper stream with Entree Gold Inc. ("Entree") to purchase 2.5% of Entree'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 Entree - 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."
Sandstorm's fourth quarter and annual results for the year ended December 31, 2012 are available on SEDAR at www.sedar.com and on the Company website at www.sandstormmetalsandenergy.com.
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.
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