TSX | NYSE | LSE: WPM
VANCOUVER, BC, March 25, 2021 /CNW/ - Wheaton Precious Metals™
Corp. ("Wheaton" or the "Company") is pleased to announce that its
wholly-owned subsidiary, Wheaton Precious Metals International Ltd.
("Wheaton International"), has entered into a definitive Precious
Metal Purchase Agreement (the "Agreement") with Capstone Mining
Corp. ("Capstone") (TSX: CS) in respect to the Santo Domingo project located in the Atacama
Region, Chile. Upon closing,
Wheaton International will purchase 100% of the payable gold
production until 285 thousand ounces ("koz") have been delivered,
thereafter dropping to 67% of payable gold production for the life
of the mine. Wheaton International will pay Capstone a total
upfront cash consideration of US$290
million (the "Upfront Payment"), $30
million of which is payable upon closing and the remainder
of which is payable during construction of the Santo Domingo project, subject to customary
conditions being satisfied, including Capstone attaining sufficient
financing to cover total expected capital expenditures. In
addition, Wheaton will make ongoing payments for gold ounces
delivered (the "Production Payment") equal to 18% of the spot gold
price1.
"Santo Domingo is an
exceptional project that provides Wheaton with an additional
near-term growth opportunity. The project is forecast to be a
first-quartile copper producer with a long mine life, making it an
ideal fit for Wheaton's existing high-quality portfolio," said
Randy Smallwood, Wheaton's President
and Chief Executive Officer. "We are very excited to further build
our partnership with Capstone and look forward to seeing
Santo Domingo developed into a
top-tier copper mine."
TRANSACTION HIGHLIGHTS
- The Santo Domingo project is
forecast to be a first quartile copper mine2
with an 18 year mine life3.
- Attributable gold production is forecast to average 35 to 40
koz per year for the first five full years of production and 25 to
30 koz for the first ten full years3.
- Capstone expects major construction to commence in late 2021
with the first full year of production forecast for 2024.
- Subsequent to the closing of this acquisition, the addition of
the Santo Domingo project will
increase Wheaton's estimated Proven and Probable gold reserves by
0.51 Moz, Measured and Indicated gold resources by 0.12 Moz and
Inferred gold resources by 0.03
Moz.4
- Exploration upside potential exists as no exploration drilling
has been completed since Capstone acquired the Santo Domingo project in 2011.
- Provides Capstone with an early deposit of $30 million, which will be used to repay the
funds paid by Capstone to acquire the remaining 30% of the
Santo Domingo project.
TRANSACTION TERMS
- Wheaton International will be entitled to receive 100% of the
payable gold production until 285 koz have been delivered,
thereafter dropping to 67% of payable gold production for the life
of the mine.
- Wheaton International will pay Capstone the Upfront Payment of
US$290 million as follows:
-
- once certain conditions have been met, Wheaton International
will advance US$30 million to
Capstone; and
- the remainder of the Upfront Payment will be paid on a pro rata
basis during construction (estimated to be approximately two to
three years), subject to customary conditions being satisfied,
including Capstone attaining sufficient financing to complete
construction.
- Wheaton International will make ongoing payments for gold
ounces delivered equal to 18% of the spot gold price until the
value of gold delivered less the cumulative Production Payments is
equal to the upfront consideration of US$290
million, at which point the Production Payment will increase
to 22% of the spot gold price.
- Gold deliveries are guaranteed by Capstone and by the
Santo Domingo project
owner. Security over the assets of the Santo Domingo project has also been provided
by the Santo Domingo project
owner.
- Closing of the transaction is expected to occur shortly
following announcement and is subject to the completion of certain
corporate matters and customary conditions.
FINANCING THE TRANSACTION
The early deposit portion of the Upfront Payment will be made on
closing, with the balance of the Upfront Payment to be paid over
the construction of the Santo
Domingo project. At December 31,
2020, the Company had approximately US$193 million of cash on hand and approximately
US$1.8 billion of remaining capacity
under the Company's US$2 billion
revolving credit facility. With operating cash flow in 2020 of
approximately US$765 million, the
Company has ample capacity to service any additional debt resulting
from this transaction, especially given the low interest rate and
flexible nature of the covenants under the Company's revolving
credit facility.
ABOUT CAPSTONE AND THE SANTO
DOMINGO PROJECT
Capstone is a Canadian base metals mining company, focused on
copper with two producing mines, the Cozamin copper-silver mine in
Zacatecas State, Mexico and the
Pinto Valley copper mine located in Arizona, US. In addition, Capstone owns the
Santo Domingo project, a large
scale, fully-permitted, copper-iron-gold project in Region III,
Chile, as well as a portfolio of
exploration properties. Capstone's strategy is to focus on the
optimization of operations and assets in politically stable, mining
friendly regions, centered in the Americas.
Santo Domingo is a first
quartile copper-iron-gold project2 and Chile's only fully-permitted greenfield
project. The proposed open-pit mine is located 50 kilometres
southwest of Codelco's El Salvador
copper mine and 130 kilometres north-northeast of Copiapó, near the
town of Diego de Almagro in Region
III, Chile. Elevation at the site
ranges from 1,000 to 1,280 metres above sea level, with relatively
gentle topographic relief.
Attributable Mineral Reserves and Mineral Resources –
Santo Domingo, effective as of
April 30, 2020
Category
|
Tonnage
|
Grade
|
Contained
|
Mt
|
Au
g/t
|
Au
Moz
|
Proven
|
65.4
|
0.08
|
0.17
|
Probable
|
326.9
|
0.03
|
0.34
|
P&P
|
392.3
|
0.04
|
0.51
|
Measured
|
1.4
|
0.05
|
0.002
|
Indicated
|
120.1
|
0.03
|
0.11
|
M&I
|
121.5
|
0.03
|
0.12
|
Inferred
|
31.8
|
0.02
|
0.03
|
Notes on Mineral Reserves &
Mineral Resources:
|
1.
|
All Mineral Reserves
and Mineral Resources have been estimated in accordance with the
2014 Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
Standards for Mineral Resources and Mineral Reserves and National
Instrument 43-101 – Standards for Disclosure for Mineral Projects
("NI 43-101").
|
2.
|
Mineral Reserves and
Mineral Resources are reported above in millions of metric tonnes
("Mt"), grams per metric tonne ("g/t") and millions of ounces
("Moz").
|
3.
|
Qualified persons
("QPs"), as defined by the NI 43-101, for the technical information
contained in this document (including the Mineral Reserve and
Mineral Resource estimates) are:
|
|
a.
|
Neil Burns, M.Sc.,
P.Geo. (Vice President, Technical Services); and
|
|
b.
|
Ryan Ulansky,
M.A.Sc., P.Eng. (Senior Director, Engineering),
|
|
both employees of the
Company (the "Company's QPs").
|
4.
|
The Mineral Resources
reported in the above tables are exclusive of Mineral
Reserves. Capstone report Mineral Resources inclusive of
Mineral Reserves. The Company's QPs have made the exclusive
Mineral Resource estimates for the mine based on average mine
recoveries and dilution.
|
5.
|
Mineral Resources,
which are not Mineral Reserves, do not have demonstrated economic
viability.
|
6.
|
Santo Domingo project
Mineral Reserves are reported as of November 14, 2018 and Mineral
Resources as of February 13, 2020.
|
7.
|
Santo Domingo project
Mineral Reserves are reported above variable throughput rates and
cut-offs assuming $3.00 per pound copper,$1,290 per ounce
gold and $100 per tonne iron.
|
8.
|
Santo Domingo project
Mineral Resources are reported above a copper equivalent cut-off of
0.125% assuming $3.50 per pound copper, $1,300 per ounce gold and
$99 per tonne iron.
|
9.
|
The Santo Domingo
gold purchase agreement provides that Capstone will deliver 100% of
the gold production until 285,000 ounces are delivered and 67%
thereafter for the life of the mine. Attributable reserves
and resources have been calculated on the 100% / 67%
basis.
|
Neil Burns, P.Geo., Vice
President, Technical Services for Wheaton Precious Metals and
Ryan Ulansky, P.Eng., Vice
President, Engineering, are a "qualified person" as such term is
defined under National Instrument 43-101, and have reviewed and
approved the technical information disclosed in this news release
(specifically Mr. Burns has reviewed mineral resource estimates and
Mr. Ulansky has reviewed the mineral reserve estimates).
CAUTIONARY NOTE REGARDING FORWARD
LOOKING-STATEMENTS
This press release contains "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and "forward-looking information" within the
meaning of applicable Canadian securities legislation concerning
the business, operations and financial performance of Wheaton and,
in some instances, the business, mining operations and performance
of Wheaton's precious metals purchase
agreement ("PMPA") counterparties. Forward-looking
statements, which are all statements other than statements of
historical fact, include, but are not limited to, payment by
Wheaton International of US$290
million to Capstone and the satisfaction of each party's
obligations in accordance with the Agreement, the receipt by
Wheaton International of gold production in respect of the
Santo Domingo project, the future
price of commodities, the estimation of future production from
mineral stream interests owned by Wheaton (the "Mining Operations")
(including in the estimation of production, mill throughput,
grades, recoveries and exploration potential), the estimation of
mineral reserves and mineral resources (including the estimation of
reserve conversion rates) and the realization of such estimations
and the commencement, timing and achievement of construction,
expansion or improvement projects by Wheaton's PMPA counterparties
at Mining Operations. Generally, these forward-looking statements
can be identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "projects", "intends",
"anticipates" or "does not anticipate", or "believes", "potential",
or variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved". Forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of Wheaton to be materially
different from those expressed or implied by such forward-looking
statements, including but not limited to risks associated with any
specific risks relating to the satisfaction of each party's
obligations in accordance with the terms of the Agreement,
fluctuations in the price of commodities (including Wheaton's
ability to sell its precious metals or cobalt production at
acceptable prices or at all), the Mining Operations (including
fluctuations in the price of the primary or other commodities mined
at such operations, regulatory, political and other risks of the
jurisdictions in which the Mining Operations are located, actual
results of mining, risks associated with the exploration,
development, operating, expansion and improvement of the Mining
Operations, environmental and economic risks of the Mining
Operations, and changes in project parameters as plans continue to
be refined), and other risks discussed in the section entitled
"Description of the Business – Risk Factors" in Wheaton's Annual
Information Form available on SEDAR at www.sedar.com, and in
Wheaton's Form 40-F for the year ended December 31, 2019 and Form 6-K filed March 11, 2020 both available on EDGAR at
www.sec.gov, as well as the risks set out in Wheaton's management's
discussions and analysis for the period ended December 31, 2020 available on SEDAR and EDGAR
(together, the "Disclosure"). Forward-looking statements are based
on assumptions management currently believes to be reasonable,
including (without limitation): the payment of US$290 million to Capstone and the satisfaction
of each party's obligations in accordance with the terms of the
Agreement, that there will be no material adverse change in the
market price of commodities, that the Mining Operations will
continue to operate and the mining projects will be completed in
accordance with public statements and achieve their stated
production estimates, that the mineral reserve and mineral resource
estimates from Mining Operations (including reserve conversion
rates) are accurate, and such other assumptions and factors as set
out in the Disclosure. There can be no assurance that
forward-looking statements will prove to be accurate and even if
events or results described in the forward-looking statements are
realized or substantially realized, there can be no assurance that
they will have the expected consequences to, or effects on,
Wheaton. Readers should not place undue reliance on forward-looking
statements and are cautioned that actual outcomes may vary. The
forward-looking statements included herein are for the purpose of
providing readers with information to assist them in understanding
Wheaton's expected financial and operational performance and may
not be appropriate for other purposes. Any forward looking
statement speaks only as of the date on which it is made, reflects
Wheaton's management's current beliefs based on current information
and will not be updated except in accordance with applicable
securities laws. Although Wheaton has attempted to identify
important factors that could cause actual results, level of
activity, performance or achievements to differ materially from
those contained in forward–looking statements, there may be other
factors that cause results, level of activity, performance or
achievements not to be as anticipated, estimated or intended.
___________________________
|
1) Wheaton will make
ongoing payments for gold ounces delivered equal to 18% of the spot
gold price until the value of gold delivered less the Production
Payment is equal to the upfront consideration of $290 million, at
which point the Production Payment will increase to 22% of the spot
gold price.
|
2) Wood Mackenzie
Ltd. Data set 2020 Q3.
|
3) Production
estimates based upon the report titled "Santo Domingo Project,
Region III, Chile, NI 43-101 Technical Report" prepared for
Capstone Mining and dated February 19, 2020. Production forecasts
contain forward looking information and readers are cautioned that
actual outcomes may vary. Please see "Cautionary Note
Regarding Forward Looking-Statements" at the end of this news
release for material risks, assumptions, and important disclosure
associated with this information.
|
4) Please refer to
the Attributable Mineral Reserves & Mineral Resources table in
this news release for full disclosure of reserves and resources
associated with the Santo Domingo project including accompanying
footnotes.
|
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SOURCE Wheaton Precious Metals Corp.