Silver Wheaton Inks Pact with Vale - Analyst Blog
March 04 2013 - 12:53PM
Zacks
Silver Wheaton Corp. (SLW) has entered into an
agreement with a subsidiary of mining giant Vale
S.A. (VALE) to acquire gold production from mines in
Brazil and Sudbury, Canada.
As per the agreement, Silver Wheaton will receive 25% of the life
of mine gold produced from Vale’s Brazilian Salobo mine as well as
70% of the production from its Sudbury Mines for a period of 20
years.
Within 10 business days from the agreement date, Silver Wheaton
will pay Vale $1.9 billion in cash. It has also issued 10 million
Silver Wheaton warrants with a strike price of $65 and a term of 10
years. It will also pay up to $400 for each ounce of gold
delivered, subject to inflation adjustments and the current market
price.
Silver Wheaton will gain immensely through this deal. The
partnership will significantly increase the company’s access to
percentage of revenues generated from gold production by an average
of 12% and a peak of 25% over the next 5 years.
It will also immediately increase Silver Wheaton’s production
and cash flow profile by adding expected average gold production of
110,000 ounces per year over the next 20 years. Silver Wheaton
expects to increase its organic growth profile with this
acquisition.
Silver Wheaton has also entered into two new unsecured credit
facilities, comprising a $1 billion revolving credit facility
having a 5-year term (the "Revolving Facility"); and a $1.5 billion
bridge financing facility having a 1-year term (the "Bridge
Facility"). The Revolving Facility and Bridge Facility replaced the
$400 million Revolver Loan and the Term Loan, with the latter being
repaid in full on Feb 22, 2013.
Silver Wheaton is the largest precious metals streaming company in
the world. The company’s industry-leading growth profile is driven
by its portfolio of low-cost and long-life assets.
Silver Wheaton currently retains a Zacks Rank #3 (Hold).
Other mining companies having favorable Zacks Rank are
Sandstorm Gold Ltd. (SAND) and Banro
Corporation (BAA) with both having a Zacks Rank #2
(Buy).
BANRO CORP (BAA): Free Stock Analysis Report
SANDSTORM GOLD (SAND): Get Free Report
SILVER WHEATON (SLW): Free Stock Analysis Report
VALE SA (VALE): Free Stock Analysis Report
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