Jan 3 2013
Sandstorm Metals & Energy Ltd. ("Sandstorm") together with Novadx Ventures Corp. ("Novadx") announce the completed acquisition (previously announced by Novadx on October 16, 2012) of Mine 12, the Turley Rail Load-Out, and the Smokey Junction Preparation Plant (the "Acquisition") located in Campbell and Scott Counties, Tennessee (the "Tennessee Properties"). The Tennessee Properties were acquired from Premium Coal Company, National Coal, LLC and Jacksboro Coal Company, LLC, for an aggregate purchase price of US$8.5 million (the "Purchase Price").
The Acquisition was completed through a newly incorporated company ("US Inc.") which will be initially owned by Sandstorm and by Novadx, based on their relative contribution to the Purchase Price. Novadx will have full control over management and operation of US Inc. and has a one-year option (the "Option Period") to acquire Sandstorm's interest in US Inc. at cost. Novadx will be responsible for the costs of any operations until the expiry of the Option Period. The Purchase Price was paid through a cash payment of US$3,000,000 contributed by Sandstorm, US$2,000,000 payable through the issuance of 4,377,675 common shares of Sandstorm and a short term promissory note issued by US Inc. in the amount of US$3,500,000 (the "Note"). The Note will be payable by US Inc. but may be paid through the issuance of Sandstorm common shares, at the option of Sandstorm.
Mine 12 is contiguous with Novadx's existing Rex coal reserves and will provide a second mine entry into the high quality coal seam and potentially add to the reserves and resources and extend the mine life. In addition, the Smokey Junction Preparation Plant should facilitate a more rapid start-up of mining operations at the Rex No. 1 mine and the Turley Rail Load-Out facility brings improved market access, both domestic and export. The Acquisition of the Tennessee Properties significantly improves Novadx's asset package and marketability and puts Novadx in a more favorable position to complete the special warrant financing previously announced on September 21, 2012 and October 12, 2012. The US$3,000,000 cash commitment from Sandstorm towards the Purchase Price forms part of Sandstorm's previously announced commitment to subscribe for up to $5,000,000 under the Novadx special warrant financing.