Sandstorm Metals & Energy Ltd has announced it has amended the coal purchase agreement with Royal Coal Corp.

Under the terms of the agreement announced on November 26 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 USD 55 per ton. As part of the agreement, Royal Coal provided a guarantee that Sandstorm would receive minimum cash flows of USD 2 million in 2011 and USD 2.5 million 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 December 31, 2012. This amendment is contingent upon Royal Coal raising CAD 5 million by means of an equity financing. Under the amended coal purchase agreement a total of USD 4.4 million will be due to Sandstorm by June 30, 2013 which represents the unpaid portion of the 2011 cash flow guarantee and the USD 2.5 million 2012 cash flow guarantee with interest. In addition, the cash flow guarantees to Sandstorm of USD 2.5 million in each of 2013, 2014 and 2015 remain. The coal purchase agreement is senior secured against all of the assets of Royal Coal.

In August 2011, Sandstorm provided US$3 million in a bridge loan to Royal Coal for the purposes of purchasing the Charlene load-out facility. Royal Coal has agreed to settle the bridge loan by making monthly payments to Sandstorm in the amount of USD 375,000 beginning in January 2012. The bridge loan is subject to interest at a rate of 15% per annum.

The 2.7% gross revenue royalty that Sandstorm acquired on the Big Branch Mine, the Big Branch Extension and the SID Mine is still required to be paid on a monthly basis.

Sandstorm President and CEO Mr Nolan Watson said "The flexibility that we have extended to Royal Coal in repaying their obligations allows them to focus on increasing their production and cash flow in the short to medium term."