Silver Wheaton Corp. SLW is pleased to announce that it has entered
into a binding term sheet to acquire from a subsidiary of Vale S.A. ("Vale")
VALE an amount of gold equal to 25% of the life of mine gold production
from its Salobo Mine, located in Brazil, as well as 70% of the gold
production, for a 20-year term, from certain of its Sudbury Mines located in
Canada.
The Company will pay Vale total cash consideration of US$1.90 billion, plus 10
million Silver Wheaton warrants with a strike price of US$65 and a term of 10
years^1. US$1.33 billion will be paid for 25% of the gold production from
Salobo, while US$570 million will be paid for 70% of the Sudbury gold
production. In addition, Silver Wheaton will make ongoing payments of the
lesser of US$400 (subject to a 1% annual inflation adjustment from 2016 for
Salobo) and the prevailing market price, for each ounce of gold delivered
under the agreement.
TRANSACTION HIGHLIGHTS
* Provides immediate cash flow and enhances Silver Wheaton's growth profile
* Silver Wheaton will receive 25% of the gold production from Vale's
newly constructed and currently expanding Salobo mine, and 70% of the
gold production from certain of its Sudbury mines;
* This immediately increases Silver Wheaton's production and cash flow
profile by adding expected average gold production of 110 thousand
ounces per year over the next 20 years (5.9 million silver equivalent
ounces^2), which includes approximately 60 thousand ounces per year
from Salobo and approximately 50 thousand ounces per year from
Sudbury.
* Excellent expansion and exploration potential exist for both Salobo,
which currently has an extensive reserve base and good depth and
strike potential, and Sudbury, which currently has the Totten mine in
start-up and the Victor development project.
* Significantly increases Silver Wheaton's exposure to gold
* The addition of the Vale streams will increase Silver Wheaton's
percentage of revenue generated from gold production over the next
five years from an average of 12% to a peak of around 25%.
* Adds another world-class partner and further endorses the competitiveness
of Silver Wheaton's streaming model
* Vale is the world's largest producer of iron ore and one of the
largest mining companies in the world, having a market capitalization
of over $100 billion.
* The use of precious metal streaming by Vale further validates the
benefits of streaming in unlocking the value of by-product precious
metals production.
* Increases Silver Wheaton's organic growth profile
* With the addition of these streams, Silver Wheaton is also pleased to
announce its updated production guidance. In 2013, Silver Wheaton
forecasts 33.5 million ounces of silver equivalent production^2
(including 145 thousand ounces of gold). In 2017, the Company
forecasts 53 million ounces of silver equivalent production^2
(including 180 thousand ounces of gold), which represents an increase
of over 80% from 2012.
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