sandstorm, page-10

Here is more detail from the updated Seeking Alpha article, with a mention on Mutiny towards the end.

Sandstorm's Impressive Portfolio And Growing Revenues Suggest Large Upside As Gold Rises
Jul 25 2013, 10:54 by: Christopher F. Davis | about: SAND (Sandstorm Gold Ltd.)
While there has been back and forth between many of my readers about whether a "real bottom" is in or not for GLD and the gold miners, at $1,300 gold, one stock will remain highly profitable in coming quarters due to its unique business model. As gold and silver continue to rebound of the 2013 lows, Sandstorm Gold (SAND) stands to benefit in the long term. Since the highs of 2012 the stock has suffered a 68% decline from its 52-week high to touch as low as $4.75 per share in recent trading sessions. In my opinion, this stock has pull backed enough for investors to add to their long-term positions comfortably, given its focus on growth and future profit potential and that gold prices seem to have stabilized and are on the mend.
How does SAND operate?
SAND operates a unique and solvent business model in the precious metal sector known as streaming. I highly suggest potential investors in traditional precious metal mining stocks to consider streaming companies as a viable alternative. I believe the approach these companies take to seeking profits offers a stronger opportunity for share growth along with lower long-term overhead and will likely outperform miners in 2013 and beyond. In general, a streaming company generates its profits by providing up front financing for mining companies looking to expand and drill for precious metals. In exchange for the up-front financing of these companies, the streaming company acquires the right to purchase a portion of production generated from the mines at a fixed cost (figure 1). More specifically, SAND provides upfront financing for gold mining companies that are looking for capital for exploration and development. In return for upfront financing, SAND receives a gold streaming agreement giving SAND the right to purchase a percentage of the gold produced by the company. Further, SAND has the right to a percentage of a mine's gold production for the life of the mine.
Figure 1. Basic Visual Describing the Business Model of Streaming Companies.

SAND currently has a portfolio producing gold streams and royalties all over the globe, most of which are in politically stable areas limiting geopolitical risk to its assets (figure 2). SAND plans to grow and diversify its low-cost production profile through the acquisition of additional gold streams. SAND is a growth-focused company that is seeking to acquire more of these gold streams from companies that have advanced stage development projects or operating mines.
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Sandstorm's Portfolio, Growing Rapidly And Leading to Record Revenues.
A basic description of each major agreement in SAND's portfolio is given below. Understanding which companies SAND does business with and understanding how SAND will profit from them is absolutely critical before committing investment dollars. After investigating their approach, it should become evident that this way of doing business, that is, financing companies to receive future royalty payments and/or being able to buy gold at a fixed cost (for example $500/oz) and subsequently selling it at current market prices (or future prices) is advantageous over a traditional miner in many respects.
Aurizona Gold Mine Operated by Luna Gold Corp. (LGCUF.PK)
SAND has a gold stream agreement to "purchase 17% of the life of mine gold produced from Aurizona, located in Maranhao State in northern Brazil at a price of $400/oz. SAND made an upfront payment of $17.8 million in cash and 1.1 million common shares of SAND (5.5 million pre-consolidation) to acquire the stream in May 2009. If LGCUF.PK develops an underground mine on Aurizona, SAND has the right, but not the explicit obligation to purchase 17% of the payable gold from the underground mine, at $500/oz. For consideration, SAND would pay 17% of the capital expenditures incurred to determine the economic viability and to construct the underground mine."
SAND and LGCUF.PK recently provided an update to the proven and probable reserves at Aurizona in the Piaba deposit (Table 1).
Table 1. Proven and Probable Reserves at the Piaba Deposit, Aurizona Gold Mine, April 2013.
Deposit Classification Tons Gold g/t Gold Ounces
Piaba Proven 19,810,270 1.26 807,389
Probable 35,643,165 1.35 1,547,887
Proven & Probable 55,453,435 1.32 2,355,276
One key takeaway from this new estimate is that with the anticipated completion of Phase I Expansion nameplate processing capacity of 10,000 tons per day, Piaba's expected mine life has been extended to 2027. The new reserve estimate represents an incredible 222% increase in proven and probable reserves compared to the last estimate.
Serra Pelada Mine Operated by Colossus Minerals (COLUF.PK)
SAND has a precious metals stream agreement to "purchase 1.5% of the gold and 35% of the platinum produced from Serra Pelada, located in northern Brazil at $400/oz of gold and $200/oz of platinum. Sandstorm made an upfront payment of $60 million to acquire the stream in September 2012. Until April 1, 2015, COLUF has the option to repurchase up to 50% of the agreement by making a $48.75 million payment to SAND, upon receipt of which, the percentage of gold and platinum that SAND is entitled to purchase shall be decreased to 0.75% and 17.5% respectively."
A recent development with COLUF.PK will result in delayed production. Apparently COLUF.PK has encountered some challenges with dewatering wells and pumps in the central zone of its Serra Pelada mine which requires additional dewatering capacity and has delayed gold production. Despite the setback, COLUF.PK continues its development to have multiple horizons ready for mining in 2014 and has made progress in the construction of its process plant.
The key thing is that although there is a delay in production, it WILL NOT impact Sandstorm's 2013 production guidance of 33,000 to 40,000 attributable gold equivalent ounces. In addition, the delay at Serra Pelada is not currently anticipated to affect the development timeline for the platinum/palladium flotation circuit, which is expected to be processing material in late 2014.
Black Fox Mine Operated by Brigus Gold (BRD)
SAND has a gold stream agreement to "purchase 12% of the life of mine gold produced from Black Fox Mine located in Ontario, Canada, and 10% of the life of mine gold produced from the Black Fox extension (which includes a portion of the Pike River concessions) at $500/oz of gold. SAND made an upfront payment of $56.3 million to acquire the stream in November 2010. BRD has the option, until the end of 2012, to repurchase 50% of the gold purchase agreement by making a $36.6 million payment to SAND, upon receipt of which, the percentage of gold SAND is entitled to purchase shall be decreased to 6% for the Black Fox mine and 4.5% for the Black Fox extension".
Santa Elena Mine Operated by Silvercrest Mines (SVLC)
SAND has a gold stream agreement to "purchase 20% of the life of mine gold production from Santa Elena in Northern Mexico at a price of $350/oz. Sandstorm made an upfront payment of $12 million in cash and 700,000 common shares (3.5 million pre-consolidation) to acquire the stream in May 2009. If SVLC decides to develop an underground mine, SAND will have the right, but not the explicit obligation to purchase 20% of the payable gold from underground for an upfront payment that is equal to 20% of the upfront capital expenditures made by SVLC plus ongoing payments of $450/oz.

Deflector Mine Operated by Mutiny Gold
SAND has a gold stream agreement to purchase 15% of the life of mine gold produced from Deflector Mine in Western Australia at a price of $500/oz of gold. SAND made an upfront payment of $38 million to acquire the stream. For a period of 36 months, MTYGF has the option to repurchase up to 50% of the agreement by making a payment equal to the greater of $24.7 million or the value of 14,472 gold oz to SAND, upon receipt of which, the percentage of gold that SAND is entitled to purchase shall be decreased from 15% to 7.5%."