Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) recently announced that its subsidiary, Wheaton Precious Metals International Ltd., has agreed to acquire an amount of gold and palladium equal to a fixed percentage of production from the Stillwater and East Boulder mines, from Sibanye Gold Ltd.
"What mainly attracted us to this opportunity was the quality and size of the J-M Reef deposit, coupled with the ongoing expansion at the Blitz Project. There are over 12 kilometres of undeveloped mineralization associated with the J-M Reef between the two currently producing mines. With a mine life extending well into the foreseeable future, we believe Stillwater will be one of Wheaton's foundational assets for many years to come,” said Randy Smallwood, the president and CEO of Wheaton.
Upfront cash consideration of US$500 million will be paid upon closing of the precious metals stream by Wheaton International to Sibanye-Stillwater. Additionally, "Wheaton will make ongoing payments equal to 18% of the spot gold price and spot palladium price until the reduction of the advanced payment to nil, and 22% of the spot gold price and spot palladium price thereafter."
For the life of the mine, Wheaton International will receive an amount of gold equal to 100% of the Stillwater gold production. In addition, "Wheaton International will initially receive an amount of palladium equal to 4.5% of Stillwater palladium production, decreasing to 2.25% and then 1% based on defined delivery thresholds, for the life of mine."
Wheaton's estimated Proven and Probable gold reserves increase by 410,000 ounces (410 Koz) and Inferred gold resources increase by 920 Koz following the acquisition completion. Production is forecast to average approximately 14.5 Koz of gold and 29 Koz of palladium per year, or approximately 37 Koz of gold equivalent per year, for the 10 years beginning in 2019.
The largest primary producer of platinum group metals outside of South Africa and the Russian Federation, Stillwater is located in Montana.
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