VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 15, 2012) - Sandstorm Metals & Energy Ltd. ("Sandstorm" or "the Company") (TSX VENTURE:SND.V - News) announces the release of its results for the fourth quarter and the year ended December 31, 2011 (all figures in U.S. dollars).
Fourth Quarter Summary (3 Months)
Sandstorm recorded a $13.1 million net loss for the three months ended December 31, 2011, attributable to a number of factors including:
-- A non-cash impairment charge of $14.6 million relating to the assets of Royal Coal Inc. ("Royal Coal"). -- An increase of
.5 million in administration expenses primarily driven by an increase in the Company's professional fees and corporate expenses. -- The loss was partially offset by $2.7 million of income, representing the amount owing on the 2011 Novadx Ventures Corp. ("Novadx") commodity stream cash flow guarantee.
"Royal Coal represents approximately 10% of our capital base, but has been a disproportionately large portion of our recent news flow," stated Nolan Watson, President & CEO. "Sandstorm management made the decision to write-down Royal Coal's assets and take a loss for 2011, thus allowing our shareholders to focus on the many positives ahead for our young company. We intend to complete additional commodity streaming deals in 2012 that will strengthen and further diversify our asset base and with $40 million in cash on hand and $80 million in minimum cash flow guarantees, we are well positioned in the current market."
2011 Summary (12 Months)
-- Entered into an energy streaming agreement with Terrex Energy Inc. ("Terrex") to purchase 25% of all oil and natural gas for the life of the Two Creek Jurassic A property and for five years of the Two Creek Jurassic B property and 15% of all oil and natural gas for the life of the Strathmore property. -- Entered into a copper streaming agreement with Donner Metals Ltd. ("Donner") to purchase 17.5% of all copper for the life of mine at the Bracemac-McLeod property. -- Entered into an energy streaming agreement with Thunderbird Energy Corp. ("Thunderbird") to purchase 35% of all natural gas for the life of the Gordon Creek property. -- Sandstorm has minimum cash flow guarantees from its partners totaling $80 million. -- Completed an equity financing for gross proceeds of $51.4 million. -- The Rosa Mine achieved commercial production and commenced shipments of cleaned coal to customers in the coking coal and activated carbon markets.
Operational Highlights
Producing Assets
Novadx's Rosa Mine is an auger and strip coal mining operation located in Alabama, USA. Novadx has reached commercial production at Rosa and is shipping cleaned coal to customers in the coking coal and activated carbon markets.
Terrex has two oil and gas projects in Alberta, Canada. The Two Creek property has 16 producing wells in two separate oil pools and the Strathmore property has 10 producing wells in one main oil pool. Production volumes are expected to increase materially with the implementation of polymer floods at the Strathmore and Two Creek properties in 2013.
Development Assets
Donner is the owner of a 35% joint venture interest in the Bracemac-McLeod mine which is operated by Xstrata Canada Corporation ("Xstrata"). Xstrata plans to utilize the existing Matagami mill to produce concentrates of zinc and copper. The Bracemac-McLeod mine will be an underground mine, accessed via a ramp, and is expected to begin ore production in early 2013. Underground drilling is scheduled to begin in the middle of 2012 to expand resources and to bring additional deposits into the mine plan.
Thunderbird's Gordon Creek property is located in Utah, USA. Gordon Creek is comprised of roughly 7900 acres, four producing wells, seven shut in wells and a 100% owned gas gathering and water disposal system. Gordon Creek is located adjacent to and shares geology with Utah's largest coal bed methane natural gas field known as Drunkard's Wash. Thunderbird is contractually obligated to workover 5 wells and drill an additional 50 wells by the end of 2013.
Novadx's Rex No. 1 Mine ("Rex") is a coal project located in Tennessee, USA. Novadx recently assembled a continuous miner with a beltline to transport mined coal to the surface. An on-site wash plant is currently being permitted and is expected to be constructed by the end of 2013.
Further details of the individual commodity streams can be found within Management's Discussion and Analysis contained in the Company's 2011 annual report and on the Company website.
Outlook
Sandstorm expects that revenue from coal and oil sales will increase slightly during 2012. In 2013, copper production from the Bracemac-McLeod mine, coal production from the Rex No. 1 Mine and natural gas production from Gordon Creek is expected to lead to material increases in cash flow and revenue.
Webcast and Conference Call Details
A conference call will be held on Friday, March 16, 2012 starting at 1:00 pm EST to further discuss the fourth quarter results. 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. Click here to access an audio webcast of the conference call which will also be available on the Sandstorm website.