Sandstorm Metals & Energy Ltd STTYF

No minimum payment guarantee?

[aagold]

This agreement surprises me because, unless I'm missing something, I don't see any minimum payment guarantees.  Also, I thought SND was supposed to restrict itself to projects in North America, wasn't it?  As far as I know, all of the other past agreements required a set of minimum payments to SND that equaled the original investment.  So this agreement seems to be quite a bit different - if there's no production, SND gets nothing and can do nothing about it, right?

[HVAN1]

The minimum payment guarantees have proven nearly worthless, see Royal Coal etc. If a company can't produce economically the guarantees mean nothing. Colossus is near production, with an experienced team and some cash on hand, and looks a lot like Donner Metals in those respects. No more investments in undercapitalized juniors years away from production.

[Metalschic]

The way the deals are structured, SND has senior rights to all assets in case of default. 

[aagold]

I disagree that the minimum payment guarantees have proven to be worthless.  I'm not so sure about Royal Coal, but for Thunderbird, NovaDx, and Terrex I think those guarantees provide a very important point of leverage for SND.  If those minimum payments can't be met then the company is in breach of a contract, much like a debtor who can't make the scheduled principal or

[aagold]

Exactly.  So my point is that there's no possibility of "default" in this case because there's no minimum payment guarantee.

[elmothefearless]

You nailed it aagold.  The minimum payment guarantees are necessary as it provides leverage for SND management.  Case in point, the recent extension of the TBD agreement because of low gas prices.  Without the minimum drilling / payment commitments provided by TBD, we would have been hooped and left sitting around with our hands in our pocket for TBD to drill.     If SND