TIDMWPM
RNS Number : 3796I
Wheaton Precious Metals Corp.
11 December 2020
December 11, 2020 TSX: WPM
Vancouver, British Columbia NYSE: WPM
LSE: WPM
WHEATON PRECIOUS METALS announces acquisition of A NEW silver
stream from capstone's cozamin mine
Wheaton Precious Metals(TM) 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
"Precious Metal Stream") with Capstone Mining Corp. ("Capstone")
(TSX: CS) in respect to the Cozamin Mine located in Zacatecas,
Mexico. Wheaton International will pay Capstone upfront cash
consideration of US$150 million upon closing for 50% of the silver
production until 10 million ounces ("Moz") have been delivered,
thereafter dropping to 33% of silver production for the life of the
mine. In addition, Wheaton will make ongoing payments for silver
ounces delivered equal to 10% of the spot silver price. The
Precious Metal Stream is effective December 1, 2020.
"Wheaton has a long history with Capstone and Cozamin and
welcomes the opportunity to bring back this first quartile mine
into our portfolio of low-cost, long-life assets. Over the past few
years, Capstone has conducted an extensive and successful
exploration and drill program, which has significantly increased
Cozamin's mine life. We believe, as does Capstone, that the best is
yet to come for Cozamin," said Randy Smallwood, Wheaton's President
and Chief Executive Officer. "In addition, Wheaton is in advanced
discussions with Capstone regarding a potential gold stream on
their Santo Domingo project, which would provide additional
near-term growth for the Company."
TRANSACTION HIGHLIGHTS
-- Adds to Wheaton's existing high-quality portfolio
-- Cozamin is a first quartile copper mine[1] that has been operated by Capstone since 2006.
-- Subsequent to the closing of this acquisition, the addition
of Cozamin will increase Wheaton's estimated Proven and Probable
silver reserves by 6.8 Moz, Measured and Indicated silver resources
by 10.5 Moz and Inferred silver resources by 9.5 Moz.[2]
-- Adds near-term production
-- For the five years starting in 2021, attributable silver
production is forecast to average approximately 820 thousand ounces
per year.[3]
-- Significant exploration upside potential
As previously announced during 2020 by Capstone:
-- Proven and Probable silver reserves for Cozamin as of April
30, 2020, increased by over 100% from the prior year, and Measured
and Indicated silver resources increased by over 70%.
-- Current drill program targeting down dip extension of key
producing veins and Capstone is currently considering a one
kilometer exploration drift to target continuation of
mineralization along strike.
-- Capstone is in the process of completing a pre-feasibility
study of an underground paste backfill system for Cozamin that
could potentially increase the extraction ratio as mining pillars
are currently excluded in the existing mine plan.
-- Significant exploration potential exists regionally.
TRANSACTION TERMS
-- The Precious Metal Stream is effective December 1, 2020.
-- Wheaton International will be entitled to receive 50% of the
silver production until 10 Moz have been delivered, thereafter
dropping to 33% of silver production for the life of the mine.
-- Wheaton International will pay Capstone cash consideration of
US$150 million upon closing of the Precious Metal Stream.
-- Wheaton International will make ongoing payments for silver
ounces delivered equal to 10% of the spot silver price.
-- Silver deliveries are guaranteed by Capstone.
-- 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 initial upfront cash payment of US$150 million will be paid
by using amounts drawn from the Company's US$2 billion revolving
credit facility. At September 30, 2020, the Company had
approximately US$210 million of cash on hand and approximately
US$1.5 billion of remaining capacity under the revolving credit
facility. With trailing four-quarter operating cash flow of
approximately $690 million[4], the Company has ample capacity to
service the additional debt resulting from this transaction,
especially given the low interest rate and flexible nature of the
covenants under the revolving credit facility.
ABOUT CAPSTONE AND THE COZAMIN MINE
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 70% of Santo Domingo, 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.
The underground Cozamin copper-silver-lead-zinc mine was
commissioned in 2006 and has undergone two successful expansions
since that time. The mill produces copper, zinc, and lead
concentrates that are shipped to the port of Manzanillo for export
to world markets. Exploration success has led to significant
resource increases and excellent potential exists to continue this
expansion. As part of the Silverstone Resources acquisition in
2009, Wheaton acquired a precious metals stream on Cozamin, which
subsequently expired in 2017.
Attributable Mineral Reserves and Mineral Resources - Cozamin,
effective as of April 30, 2020
Category Tonnage Grade Contained
-----------
Mt Ag g/t Ag Moz
----------- -------- ------- ----------
Proven
Probable 5.1 41.3 6.8
----------- -------- ------- ----------
P&P 5.1 41.3 6.8
----------- -------- ------- ----------
Measured 0.2 53.2 0.3
Indicated 8.2 40.1 10.5
----------- -------- ------- ----------
M&I 8.3 40.4 10.8
----------- -------- ------- ----------
Inferred 5.5 35.7 6.3
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. Cozamin mine 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. Cozamin mine Mineral Reserves and Mineral Resources are reported as of April 30, 2020.
7. Cozamin mine Mineral Reserves are reported above a NSR
cut-off of $52.29 per tonne assuming $2.75 per pound copper and
$17.00 per ounce silver.
8. Cozamin mine Mineral Resources are reported above a NSR
cut-off of $50 per tonne assuming $3.25 per pound copper and $20.00
per ounce silver.
9. The Cozamin silver purchase agreement provides that Capstone
will deliver 50% of the silver production until 10 million ounces
are delivered and 33% thereafter for the life of the mine.
Attributable reserves and resources have been calculated on the 50%
/ 33% basis.
Mr. Neil Burns, Vice President of Technical Services for
Wheaton, is a "qualified person" as such term is defined under
National Instrument 43-101 and has reviewed and approved the
technical disclosure in this news release including information on
Mineral Reserves and Mineral Resources.
FINANCIAL ADVISOR
Fort Capital Partners acted as financial advisor to Wheaton
International.
For further information, please contact:
Patrick Drouin
Senior Vice President, Investor Relations
Wheaton Precious Metals Corp.
Tel: 1-844-288-9878
Email: info@wheatonpm.com
Website: www.wheatonpm.com
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$150
million to Capstone and the satisfaction of each party's
obligations in accordance with the Precious Metal Stream agreement,
the receipt by Wheaton International of silver production in
respect of the Cozamin Mine, 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 Precious Metals Stream 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 periods ended March 31, 2020 and September 30,
2020 both 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$150 million to Capstone and the
satisfaction of each party's obligations in accordance with the
terms of the Precious Metal Stream 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.
Cautionary Language Regarding Reserves And Resources
For further information on Mineral Reserves and Mineral
Resources and on Wheaton more generally, readers should refer to
Wheaton's Disclosure. Wheaton's Mineral Reserves and Mineral
Resources are subject to the qualifications and notes set forth
therein. Mineral Resources which are not Mineral Reserves do not
have demonstrated economic viability.
Cautionary Note to United States Investors Concerning Estimates
of Measured, Indicated and Inferred Resources: The information
contained herein has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which
differ from the requirements of United States securities laws. The
terms "mineral reserve", "proven mineral reserve" and "probable
mineral reserve" are Canadian mining terms defined in accordance
with Canadian National Instrument 43-101 - Standards of Disclosure
for Mineral Projects ("NI 43-101") and the Canadian Institute of
Mining, Metallurgy and Petroleum (the "CIM") - CIM Definition
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as amended (the "CIM Standards"). These definitions
differ from the definitions in Industry Guide 7 ("SEC Industry
Guide 7") under the U.S. Securities Act of 1933, as amended (the
"U.S. Securities Act"). Under U.S. standards, mineralization may
not be classified as a "reserve" unless the determination has been
made that the mineralization could be economically and legally
produced or extracted at the time the reserve determination is
made. Also, under SEC Industry Guide 7 standards, a "final" or
"bankable" feasibility study is required to report reserves, the
three-year historical average price is used in any reserve or cash
flow analysis to designate reserves and the primary environmental
analysis or report must be filed with the appropriate governmental
authority. In addition, the terms "mineral resource", "measured
mineral resource", "indicated mineral resource" and "inferred
mineral resource" are defined in and required to be disclosed by NI
43-101; however, these terms are not defined terms under SEC
Industry Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC. Investors
are cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into reserves.
"Inferred mineral resources" have a great amount of uncertainty as
to their existence and as to their economic and legal feasibility.
It cannot be assumed that all or any part of an inferred mineral
resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the
basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that all or any part
of an inferred mineral resource exists or is economically or
legally mineable. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. Disclosure of
"contained ounces" in a resource is permitted disclosure under
Canadian regulations; however, the SEC normally only permits
issuers to report mineralization that does not constitute
"reserves" by SEC standards as in place tonnage and grade without
reference to unit measures. Accordingly, information contained
herein that describes Wheaton's mineral deposits may not be
comparable to similar information made public by U.S. companies
subject to reporting and disclosure requirements under the United
States federal securities laws and the rules and regulations
thereunder. United States investors are urged to consider closely
the disclosure in Wheaton's Form 40-F, a copy of which may be
obtained from Wheaton or from EDGAR at www.sec.gov.
[1] ) Wood Mackenzie Ltd. Data set 2020 Q3.
[2] ) Please refer to the Mineral Reserves & Mineral
Resources table in this news release for full disclosure of
reserves and resources associated with Cozamin including
accompanying footnotes.
[3] ) Production estimates based upon the report titled "NI
43-101 Technical Report on the Cozamin Mine, Zacatecas, Mexico"
prepared for Capstone Mining and dated October 23, 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] ) Operating cash flow based on Q1 2019, and Q1, Q2 and Q3 of
2020.
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