Sandstorm Metals & Energy Ltd STTYF

RE: UPDATE ... NOVADX

[staolin]

"Sandstorm has agreed to purchase 25% of the first 3,800,000 tons of metallurgical equivalent coal (where three tons of thermal coal equals one ton of metallurgical equivalent coal) produced and 16% of the life of mine metallurgical equivalent coal produced thereafter from the Rosa Mine and the Rex No. 1 Mine for an upfront payment of US$30 million plus ongoing per ton payments of US$75 for metallurgical coal and US$55 for thermal coal. NovaDX has provided a guarantee that Sandstorm will receive minimum cash flows of (i) US$3 million in 2011, (ii) US$5 million in 2012, (iii) US$6 million in 2013, and (iv) US$8 million in each of 2014 and 2015, thus providing a 100% return of capital within 5 years.  "

Basically Novadx sells the coal and renumerates Sandstorm about 100$ for each ton of 25% of the coal. This happens until the 25 mil$ loan is paid off. Just a quick glance shows that sandstorm is going to make about 6% interest on the loan over the 5 years assuming minimum repayment. If met coal prices rise then more.

Once the Rex No.1 mine washplant is permitted the total output from Rex/Rosa mines should be around 30t/month sold at about 175$/t. That's about 750k$/month payment from Novadx by mid 2012.