Sandstorm Metals Cleans Up the Books

Checking in on the annual report from one of our speculations

By Travis Johnson, Stock Gumshoe, March 27, 2013

Sandstorm Metals and Energy, with their latest quarterly report, is clarifying some of the restructuring they’ve been forced into over the last year — nothing that is shocking or new to share with you, but it is nice to see it all down in one document.

You can listen to their annual report conference call at 1130 EST here (or the archived webcast afterward) if you’re interested. The full annual report for 2012 is here, and the press release with highlights is here.

The short answer is that they’re really cleared a lot of the junk off the books now …

They’ve sold the Terrex oil streams in conjunction with Terrex’s merger with (or rescue by) Anterra energy and gotten consideration of a bit over $10 million, though only a bit more than half of that is cash or “soon to be cash” (equipment that they’re going to sell). The other possible outcome was probably trying to wring something out of Terrex in bankruptcy court, so this is a reasonable compromise and it at least brings some capital back to Sandstorm. This stream cost Sandstorm almost $15 million when they bought it back in 2011, so they’re not getting it all back — but they’re getting something.

And the much more expensive problems with the coal streams are also getting a bit of closure after Sandstorm threw a bit more cash at the problem in January to try to reinvigorate NovaDX with some additional coal assets. They’ve now written down about $33 million from those assets, which is most of what they invested in them, and they now essentially hold the first bondholder’s position on the Rex no. 1 and Rosa mines in case it turns out that they eventually restructure again or become a real company again — presumably that would depend on coal prices improving and investor interest returning to that sector.

The coal streams were the heart of Sandstorm Metals & Energy when they started up, and it obviously is not good news for the company that they’ve essentially had to eat almost $50 million worth of bad investments because they put up cash for streaming deals in companies that were too young and too financially dependent … but they have thankfully moved up the food chain, worked with some stronger companies, and added a couple of actual potential cash flowing streams since then. ...

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