Under the terms of the agreement announced on 26 November 2010, Sandstorm is entitled to purchase 18% of the first six million tons of coal produced and 12% of the life of mine coal produced thereafter from the Big Branch Mine, the Big Branch Extension and the SID Mine for $55 per ton.
As part of the agreement, Royal Coal provided a guarantee that Sandstorm would receive minimum cash flows of $2m in 2011 and $2.5m in each of 2012, 2013, 2014 and 2015.
Sandstorm has amended the agreement whereby the requirement for Royal Coal to deliver the fixed percentage of coal will be deferred until 31 December 2012.
This amendment is contingent upon Royal Coal raising CAD5m ($4.89m) by means of an equity financing.
Under the amended coal purchase agreement, a total of $4.4m will be due to Sandstorm by 30 June 2013 and the $2.5m 2012 cash flow guarantee with interest.
