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Bullboard - Stock Discussion Forum Sandstorm Metals & Energy Ltd STTYF

GREY:STTYF - Post Discussion

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Post by elmothefearless on Aug 23, 2012 2:11am

Lah dee dah

Lets do some math:

 

SND entitled to 17.5% of Bracemec McLeod copper:

350 days / yr (assume 15 days downtime for repairs, etc.) x 2,950 tpd x 2,205 lb/tonne x 17.5% (SND's portion)  x 1.3% (% copper) x ~$2.25 profit / lb (assume $2.75 Cu / $3.05 copper price) = ~$11 million cash flow pre-tax to SND / annum for at least 6 years (assuming inferred gets converted)

 

SND entitled to 35% production at Gordons Creek (or whatever it is called):

370 mcf/day x 350 days (assume 15 days downtime) x 35% (SND's portion) x 15 wells x $2.00/mcf (assume $3.00 gas) = ~$1.4 million cash flow for 2012... at 50 wells we'd be looking ~$4.2 million (there will be declines, of course).  On the upside, if we get $4.00 gas prices, we'd be looking at 50% more cash flow... so somewhere between $2.1 million and ~$6.3 million cash flow from this asset.  These guys are not in good financial health with low gas prices, but it looks as though they will survive (lowest quartile cash costs helps).

 

RDA, write-off at this point, but we invested I think $15 million (please correct me if I am wrong)... NDX we invested $30 million, although I wouldn't call this an RDA as I think there is a pretty good chance these guys get a deal worked out and back into production... TER we put in $15 million, this seems like a write-off. 

 

We have $40 million cash on the books less $10 million going to TBD, so $30 million net.  Market cap. of $100 million less $30 million gives us a $70 million EV.  Assume we recover 50% of our investment in RDA, NDX, TER as a result of our guarantees (we're better off if these assets are just sold and we keep the streaming deals in place, but we're going to be conservative and assume a worst case scenario)... so we recover $60 mm x 50% = $30 million, and we are now sitting at a $40 million enterprise value.  

 

Between Donner and TBD we are trading at about 4x 2013 cash flows.... pretty cheap.  

 

Anyway, you can see a lot of "bad news" has been built into the stock.  TER or NDX working themselves out = immediate upside.  Recovering our entire, or most of our, investment in RDA would be a blessing.

Comment by elmothefearless on Aug 23, 2012 2:30am
Sorry about the double post, Stockhouse lagged out.   Some rough numbers on the NDX stream too...   ~500,000 tpa x 25% (SND) x $75 (assume $150 met coal, may be aggressive) = ~$9.4 million / annum for first 7-8 years   ~500,000 tpa x 16% x ~$75 = ~$6.0M for final ~15 years of production   This is only from the Rex No. 1 mine I believe... Rosa  I'm too lazy to look up ...more  
Comment by unlimited_aw on Aug 23, 2012 7:35am
Great effort Elmo for which I gave you 3 times 5***, but you are a little optimistic. Not concerning the streams that seem not to gonna make it, but with respect of the Bracemac (Donner) and Gordon Creek (Thunderbird) projects which will not bring in the cash you mentioned, at least not in 2013. Donner expects to be online medio 2013, while Thunderbird projections go into 2014. You can check out ...more  
Comment by elmothefearless on Aug 23, 2012 11:58am
Right on all counts.  I would suggest that SND like most companies be valued on cash flows going forward.  So in the context of cash flows derived from TBD and DON, us trading between 4x and 3.5x cash flows would an appropriate statement as of around June 30, 2013, assuming no hiccups in the Donner mine development (sounds reasonable, Xstrata should know what they're doing).   ...more  
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