Sandspring Resources: A Deepening Value Investment Opportunity

Flagship Property: Toroparu Gold Deposit = 100% Ownership … 1 Point

Resource Base = 7,100,000 ozs. … 1 Point

F/D Share Structure = 236,479,684 … -1 Point

Recent Price = US $0.19

F/D Market Cap = US $44,931,139

Valuation Case Gold Price = $1,400/oz Au

All valuations incorporate the Wheaton Precious Metals Gold Stream Framework.

After-tax IRR = 28.7% … 1 Point

NPV/CapEx = 203% … 1 Point

F/D Market Cap per Resource Ounce = $6.33 … 1 Point

In other words, each ounce in the ground is valued at $6.33 by market cap.

Share Price Valuation by Resources in the Ground

Each share is worth 0.03 ounces in the ground. In other words, each share is worth $42 @ US $1,400/oz Au. This is pretty good.

Cost Structure = 56% … -1 Point

Cost Structure is not exorbitant, but it exceeds FCM’s ideal < 50% level. Opportunities to reduce costs wherever they emerge must be seized. With average grades > .5%, opportunities WILL present themselves.

Resource Valuation as a Percentage of Market Cap

Value of Resources @ $1,285/oz Au = US $9,123,500,000

= .5%

In other words, the market cap is valued at .5% of the value of the resources in the ground. This is mindbogglingly low, and leaves room for substantial market cap growth.

Near-Term Cash Flow = US $138,470,000 … Unrated

Near-Term Cash Flow Multiple = .3x … -1 Point

Sandspring Resources is trading with a market cap that is ~30% of future cash flow. Shares are cheap.

Future Cash Flow @ $2,000/oz Au = US$274,670,000 … Unrated

Debt Coverage = 0 Debt … 1 Point

Projected Future Market Cap = US $2,130,000,000 … Unrated

Projected Future Market Cap Growth Percentage = 4,641% … 1 Point

Location: Upper Puruni River Region … 1 Point

Conclusion

First things first: we own Sandspring Resources and we have a target of $9 a share. It’s a company poised for growth in an excellent jurisdiction with a phenomenal resource base at a decent grade. Sandspring anticipates recovery at ~91%. The Toroparu Gold Deposit also has a unique value-add feature: The Kurupung Hydro River Project, which would enable Sandspring to not only self-generate, but to interconnect with the Guyana National Grid… One might even assume the eventual creation of a small, lightly-regulated frontier utility — Sandspring Power & Light.

Score

5/11


Key

Flagship Project: 100% Ownership … 1 Point

After-tax IRR = > 20% … 1 Point

NPV/CapEx = > 1 … 1 Point

EV/Resources = < 1 … 1 Point

Cost Structure = < 50% … 1 Point

Resource Base = > 80 Mlbs. U308 … 1 Point

Future Cash Flow = Unrated

Future Cash Flow Multiple = > 5x … 1 Point

Share Structure = < 200 M … 1 Point

Debt Coverage = > 50% (or No Debt) … 1 Point

Projected Future Market Cap = Unrated

Projected Future Market Cap Growth Percentage = > 500% … 1 Point

Location: Friendly = 1 Point

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