Nov 2 2012
Sandstorm Metals & Energy Ltd. ("Sandstorm" or the "Company") is pleased to announce that it has increased its copper stream agreement with Donner Metals Ltd. ("Donner") to purchase an amount of copper equal to 24.5% of the copper produced (the "Copper Stream") from the Bracemac-McLeod Mine, operated by Xstrata Canada Corp. ("Xstrata"). Previously, Sandstorm had completed a copper stream agreement with Donner, announced July 13, 2011 (the "Initial Stream"), to purchase 17.5% (now amended to 24.5%) of the copper produced from the Bracemac-McLeod Mine.
Sandstorm will make an upfront cash payment to Donner of US$7 million to increase the Copper Stream and will make ongoing per pound payments equal to the lesser of US$0.80 per pound of copper (the "Per Pound Payments") and the then prevailing market price of copper. If the spot price of copper falls below US$2.75 per pound, the Per Pound Payments will decrease and be equal to the lesser of US$0.55 per pound of copper and the then prevailing market price of copper. In consideration for the increased Copper Stream, Donner has agreed to waive its option to repurchase up to 50% of the Initial Stream. Additionally, Sandstorm has agreed to provide Donner with a US$2 million loan via a drawdown facility ("Drawdown Facility"), bearing 7% interest and expiring on February 1, 2014. The provision of the Drawdown Facility is contingent upon certain funding conditions by Donner.
"The increased copper stream with Donner will materially increase the near-term cash flow for Sandstorm Metals & Energy," said President & CEO Nolan Watson. "Xstrata has been operating base metal mines in the region for decades and we expect production to ramp up quickly in 2013."
As part of the transaction, Sandstorm Gold Ltd. ("Sandstorm Gold") has agreed to increase its gold stream to purchase 24.5% of the gold and gold equivalent of silver from the Bracemac-McLeod Mine, in exchange for making a payment to Donner (via a back-to-back agreement between Sandstorm Gold and Sandstorm Metals & Energy) of US$3 million. Sandstorm Gold will make ongoing per ounce payments equal to the lesser of US$350 per ounce of gold or gold equivalent and the then prevailing market price of gold. In addition, Sandstorm Gold has agreed to provide Donner with a US$2 million loan via a drawdown facility, bearing 7% interest and expiring on February 1, 2014.