Silver Wheaton Acquires Additional Gold Stream From Vale's Salobo Mine
- All $ are US
TSX: SLW
NYSE: SLW
Silver Wheaton Corp. ("Silver Wheaton" or the "Company") (TSX:SLW) (NYSE:SLW) is pleased to announce that its wholly-owned subsidiary, Silver Wheaton (Caymans) Ltd. ("Silver Wheaton Caymans"), has agreed to acquire from a subsidiary of Vale S.A. ("Vale") (NYSE:VALE) an amount of gold equal to 25% of the life of mine gold production from its Salobo mine, located in Brazil. This acquisition is in addition to the 25% of the Salobo gold production that Silver Wheaton acquired in 2013. The Company will pay Vale cash consideration of US$900 million for the increased gold stream. In addition, Silver Wheaton will make ongoing payments of the lesser of US$400 (subject to a 1% annual inflation adjustment commencing in 2017) and the prevailing market price for each ounce of gold delivered under the agreement. The original gold purchase agreement, dated February 28, 2013, has been amended to provide for the additional 25% stream.
TRANSACTION HIGHLIGHTS
-- Provides immediate production and cash flow -- Silver Wheaton will receive an additional 25% of the gold production from Vale's Salobo mine, entitling the Company to a total of 50% of the life-of-mine gold production from the mine. -- This immediately increases Silver Wheaton's production and cash flow profile by adding expected average gold production of 70,000 ounces per year for the first 10 years and 60,000 ounces per year over the first 30 years (5.0 million and 4.3 million silver equivalent ounces1, respectively). -- Significant expansion and exploration potential exists at Salobo, which currently has an extensive reserve base and good depth potential. -- Subsequent to the closing of this acquisition, Silver Wheaton's estimated Proven and Probable gold reserves increase by 3.3 million ounces, Measured and Indicated gold resources increase by 0.8 million ounces, and Inferred gold resources increase by 0.4 million ounces. -- Over the next five years, gold as a percentage of Silver Wheaton's forecasted production is estimated to grow to over 40%.
_____________________________
([1]) Silver equivalent production forecast assumes a gold/silver ratio of 72:1
-- Increases Silver Wheaton's growth profile -- Silver Wheaton is also pleased to announce its updated production guidance, which includes the additional stream from Salobo. In 2015, Silver Wheaton forecasts 43.5 million ounces of silver equivalent production[1] (including 230,000 ounces of gold) growing to 51 million ounces of silver equivalent production[1] (including 325,000 ounces of gold) in 2019.
"The Salobo mine is one of Silver Wheaton's cornerstone assets and we are fortunate to have the opportunity to double our gold production from this high-quality mine," said Randy Smallwood, Silver Wheaton's President and Chief Executive Officer. "Since we founded our company ten years ago, we have had a clear vision of the characteristics of our ideal asset. To start, the asset is managed by a strong operating partner and is located in a low political-risk jurisdiction. Furthermore, it is primarily a base metal producer where precious metals represent only a relatively small portion of the mine's overall economics. Vale's Salobo mine possesses all of these characteristics, while also offering over 40 years of defined mine life as well as the potential for significant exploration and expansion upside. Salobo is certainly one of the best assets we have ever seen and one that readily lends itself to streaming."
"With over 70% of global silver production sourced as by-product, we continue to believe that the silver market represents the largest market for streaming opportunities. However, Silver Wheaton has never been averse to strategically layering additional gold into the streaming mix when the right opportunity presents itself."
TRANSACTION TERMS
Silver Wheaton Caymans has agreed to acquire from a subsidiary of Vale an additional 25% of the life of mine gold production from Vale's Salobo mine. Production will accrue retroactively to Silver Wheaton Caymans as of January 1, 2015.
Silver Wheaton Caymans will pay Vale cash consideration of US$900 million for the increased gold stream. In addition, Silver Wheaton Caymans will make ongoing payments of the lesser of US$400 (subject to a 1% annual inflation adjustment commencing in 2017 for the Salobo stream) and the prevailing market price, for each ounce of gold delivered under the agreement. The terms of the existing gold stream on Salobo were modified so that the annual inflation adjustment that was scheduled to start in 2016 will now start coincident with this stream in 2017.
Vale is in the process of ramping up mill throughput at the Salobo mine to 24 million tonnes per annum ("Mtpa"). If throughput capacity is expanded within a predetermined period, Silver Wheaton Caymans will be required to make an additional payment to Vale, relative to the 50% stream, based on a set fee schedule that now ranges from US$88 million if throughput is expanded beyond 28 Mtpa by January 1, 2036, up to US$720 million if throughput is expanded beyond 40 Mtpa by January 1, 2018.
_____________________________
([1]) Silver equivalent production forecast assumes a gold/silver ratio of 72:1
FINANCING THE ACQUISITION
To pay the initial upfront cash payment of US$900 million, Silver Wheaton intends to use cash on hand together with the net proceeds of an equity offering announced concurrently as of today's date (the "Offering"). Silver Wheaton may also use amounts borrowed under its existing revolving credit facility.
ABOUT THE SALOBO MINE
According to Vale's public filings, the Salobo mine, located in the Par? state of Brazil, is the largest copper deposit in Brazil. This low-cost copper-gold mine was commissioned in November 2012 with a design throughput capacity of 12 Mtpa and subsequently expanded to 24 Mtpa of mill capacity in mid-2014. The mine is well-positioned relative to infrastructure and is connected to the national power grid.
The Salobo mine has total estimated Mineral Reserves of 1.179 billion tonnes grading 0.35 g/t gold([) (1]) , and, along with additional Mineral Resources, also has substantial exploration and expansion potential. The acquisition of an additional 25% life of mine gold stream adds an estimated 3.3 million ounces of Proven and Probable Mineral Reserves, 0.8 million ounces of Measured and Indicated Mineral Resources, and 0.4 million ounces of Inferred Mineral Resources attributable to Silver Wheaton. Total estimated attributable Mineral Reserves and Mineral Resources for the now 50% life of mine gold stream are detailed in the table below.
SILVER WHEATON ANNOUNCES NEW PRODUCTION GUIDANCE
Silver Wheaton is pleased to provide its updated one and five-year production guidance, which incorporates the additional 25% life of mine gold stream on the Salobo mine. In 2015, Silver Wheaton's estimated attributable silver equivalent production is forecast to be 43.5 million silver equivalent ounces([) (2]) , including 230,000 ounces of gold. In 2019, estimated annual attributable production is anticipated to increase over 40% compared to 2014 levels, growing to approximately 51 million silver equivalent ounces([) (2]) , including 325,000 ounces of gold.
The additional ounces from Salobo to our production profile as well as the ramp-up of Hudbay Minerals Inc.'s ("Hudbay") Constancia mine in 2015 more than offset the anticipated reduction in attributable production from other assets in Silver Wheaton's current streaming portfolio. Hudbay's Constancia mine is expected to meet the completion test well before 2016, resulting in gold production from the 777 mine attributable to Silver Wheaton dropping from 100% to 50% in 2017. In addition, the 10-year term contract on Capstone Mining's Cozamin mine, acquired with Silver Wheaton's 2009 acquisition of Silverstone, expires in April 2017. Finally, as Hudbay provides no formal production guidance for its Rosemont project, Silver Wheaton no longer includes any production from the Rosemont project in its production forecast for 2019. As a reminder, Silver Wheaton also does not include any production from Barrick Gold Corp.'s Pascua-Lama project in its guidance.
_____________________________
([1]) Silver Wheaton has previously filed a technical report for the Salobo mine dated March 19, 2013, which is available on SEDAR at sedar.com. Silver Wheaton has updated certain technical disclosure on Salobo in this news release and in a preliminary short form prospectus filed today. For further details of the Salobo mineral reserves, see the tables appended to this news release.
([2]) Silver equivalent production forecast assumes a gold/silver ratio of 72:1
SILVER WHEATON ANNOUNCES 2014 PRODUCTION AND SALES VOLUME([) (1])
Silver Wheaton reports that attributable silver equivalent production for the year ended December 31, 2014, was 35.3 million ounces, compared to 35.8 million ounces in 2013, representing a decrease of 1.5%.
The Company reports silver equivalent sales volume for the year ended December 31, 2014, was 32.9 million ounces, compared to 30.0 million ounces in 2013, representing an increase of 9.8%.
SILVER WHEATON ANNOUNCES UPDATED RESERVES AND RESOURCES
As of December 31, 2014, and detailed in the tables at the end of this news release, Proven and Probable Mineral Reserves attributable to Silver Wheaton were 757.7 million ounces of silver compared to 781.3 million ounces reported by the Company in its management's discussion and analysis for the quarter ended September 30, 2014, a decrease of 3%, and 9.27 million ounces of gold compared to 6.09 million ounces, an increase of 52%. On an attributable Measured and Indicated basis, silver resources were 549.5 million ounces compared to 569.4 million ounces reported by the Company in its management's discussion and analysis for the quarter ended September 30, 2014, a decrease of 3%, and gold resources were 2.76 million ounces compared to 1.92 million ounces, an increase of 43%. On an attributable Inferred Resource basis, silver resources were 275.2 million ounces compared to 298.7 million reported by the Company in its management's discussion and analysis for the quarter ended September 30, 2014, a decrease of 8%, and gold resources were 1.46 million ounces compared to 1.03 million ounces, an increase of 41%.
The tables at the end of this news release set forth the estimated mineral reserves and mineral resources (silver and/or gold only) for the 27 mining assets which are subject to the Company's precious metal purchase agreements, adjusted where applicable to reflect the Company's percentage entitlement to silver and/or gold produced from such assets, as of December 31, 2014, unless otherwise noted. The tables are based on information available to the Company as of the date of this news release, and therefore will not reflect updates, if any, after such date.
Mr. Neil Burns, Vice President of Technical Services, 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.
(__________________________)
([1]) Silver equivalent basis assumes a 61:1 Ag:Au ratio for 2013 and 67:1 Ag:Au ratio for 2014
CONFERENCE CALL
A conference call will be held on Monday, March 2, 2015, starting at 5:00pm (Eastern Time) to discuss this transaction. To participate in the live call please use one of the following methods:
Dial toll free from Canada or the US: 1-888-231-8191 Dial from outside Canada or the US: 1-647-427-7450 Pass code: 94973271 Live audio webcast: silverwheaton.com
Participants should dial in ten to fifteen minutes before the call.
The presentation may be obtained by contacting Scotia Capital Inc. collect in Canada, Attention: Equity Capital Markets (Tel: 416-862-5837), Scotia Plaza, 66th Floor, 40 King Street West, M5W 2X6, Toronto, Ontario. The presentation will also be available in PDF format for download from the Silver Wheaton website silverwheaton.com and will be filed on SEDAR at sedar.com.
The common shares will be offered by way of a short form prospectus relating to the Offering announced concurrently with today's date in all of the provinces of Canada. A copy of the Canadian preliminary prospectus once available may be obtained by contacting Scotia Capital Inc. collect in Canada, Attention: Equity Capital Markets (Tel: 416-862-5837), Scotia Plaza, 66th Floor, 40 King Street West, M5W 2X6, Toronto, Ontario.
The issuer has filed a registration statement (including a U.S. prospectus) with the U.S. Securities and Exchange Commission ("SEC") for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by contacting Scotia Capital Inc. collect in the U.S., Attention: Equity Capital Markets (Tel: 212-225-6853), 250 Vesey Street, 24th Floor, New York, New York, 10281.
ABOUT SILVER WHEATON
Silver Wheaton is the largest pure precious metals streaming company in the world. Based upon its current agreements, forecast 2015 estimated annual attributable production is approximately 43.5 million silver equivalent ounces([) (1]) , including 230,000 ounces of gold. By 2019, estimated annual attributable production is anticipated to increase significantly to approximately 51 million silver equivalent ounces([) (1]) , including 325,000 ounces of gold. This anticipated growth is expected to be driven by the Company's portfolio of low-cost and long-life assets, including precious metal and gold streams on Hudbay's Constancia project and Vale's Salobo mine.
______________________________
([1]) Silver equivalent production forecast assumes a gold/silver ratio of 72:1
Silver Wheaton's Estimated Attributable Reserves and Resources are as follows:
Proven & Probable Reserves Attributable to Silver Wheaton (1,2,3,8,18) As of December 31, 2014 unless otherwise noted [(6)] Proven Probable Tonnage Grade Contained Tonnage Grade Contained Mt g/t Moz Mt g/t Moz SILVER Pe?asquito (25%) [(14)] Mill 84.1 33.3 90.0 52.7 25.0 42.4 Heap Leach 10.9 31.7 11.1 11.5 25.0 9.2 San Dimas [(10],[ 14)] 0.9 345.2 10.3 4.0 307.3 39.2 Pascua-Lama (25%) [(14)] 8.0 69.8 17.9 73.2 64.1 150.8 Lagunas Norte [(11)] 12.4 4.5 1.8 52.9 4.5 7.7 Veladero [(11)] 5.5 14.8 2.6 90.5 14.8 43.2 Yauliyacu [(11],[ 12)] 0.8 123.5 3.1 3.4 109.8 11.9 777 [(13)] 4.9 24.7 3.9 5.7 24.7 4.5 Neves-Corvo Copper 4.9 38.8 6.1 20.5 36.1 23.8 Zinc 10.4 73.1 24.4 10.2 66.9 22.0 Rosemont [(15)] 279.5 4.1 37.0 325.8 4.1 43.1 Constancia 506.0 3.1 50.3 114.0 2.9 10.8 Zinkgruvan Zinc 7.4 87.0 20.6 4.2 51.0 6.9 Copper 3.3 35.0 3.7 0.1 35.0 0.1 Stratoni 0.5 174.0 2.9 0.3 182.0 1.5 Minto 3.8 5.9 0.7 5.7 5.7 1.0 Cozamin [(11)] Copper - - - 2.8 43.8 4.0 Los Filos 48.8 5.7 8.9 198.4 5.0 32.2 Metates Royalty [(20)] 4.1 18.0 2.3 13.2 13.1 5.5 TOTAL SILVER 297.8 459.9 GOLD Salobo (50%) [(16)] 331.7 0.39 4.13 257.9 0.31 2.57 Sudbury (70%) [(11)] - - - 54.3 0.39 0.68 777 [(13)] 3.5 1.81 0.21 4.1 1.81 0.24 Constancia (50%) 253.0 0.05 0.42 57.0 0.07 0.14 Minto 3.8 0.80 0.10 5.7 0.60 0.11 Toroparu (10%) [(17)] 3.0 1.10 0.10 9.7 0.98 0.31 Metates Royalty [(20)] 4.1 0.68 0.09 13.2 0.44 0.19 TOTAL GOLD 5.04 4.23 (TABLE CONTINUED) As of December 31, 2014 unless otherwise noted [(6)] Proven & Probable Process Recovery Tonnage Grade Contained [(7)] Mt g/t Moz SILVER Pe?asquito (25%) [(14)] Mill 136.7 30.1 132.4 53-65% Heap Leach 22.4 28.3 20.4 22-28% San Dimas [(10],[ 14)] 4.9 314.5 49.5 94% Pascua-Lama (25%) [(14)] 81.2 64.7 168.7 82% Lagunas Norte [(11)] 65.3 4.5 9.5 19% Veladero [(11)] 96.0 14.8 45.8 6% Yauliyacu [(11],[ 12)] 4.1 112.4 15.0 85% 777 [(13)] 10.6 24.7 8.4 64% Neves-Corvo Copper 25.4 36.6 29.9 35% Zinc 20.6 70.0 46.4 20% Rosemont [(15)] 605.3 4.1 80.1 76% Constancia 620.0 3.1 61.1 71% Zinkgruvan Zinc 11.6 73.9 27.5 87% Copper 3.4 35.0 3.8 78% Stratoni 0.8 176.7 4.5 84% Minto 9.5 5.7 1.8 78% Cozamin [(11)] Copper 2.8 43.8 4.0 72% Los Filos 247.2 5.2 41.1 5% Metates Royalty [(20)] 17.2 14.2 7.9 76% TOTAL SILVER 757.7 GOLD Salobo (50%) [(16)] 589.6 0.35 6.70 66% Sudbury (70%) [(11)] 54.3 0.39 0.68 81%
777 [(13)] 7.7 1.81 0.45 73% Constancia (50%) 310.0 0.06 0.56 61% Minto 9.5 0.68 0.21 74% Toroparu (10%) [(17)] 12.7 1.01 0.41 89% Metates Royalty [(20)] 17.2 0.50 0.28 89% TOTAL GOLD 9.27 Measured & Indicated Resources Attributable to Silver Wheaton [(1],[2],[3],[4],[5],[9],[18)] As of December 31, 2014 unless otherwise noted [(6)] Measured Indicated Tonnage Grade Contained Tonnage Grade Contained Mt g/t Moz Mt g/t Moz SILVER Pe?asquito (25%) [(14)] Mill 34.4 26.1 28.9 91.7 21.5 63.5 Heap Leach 5.1 19.3 3.1 24.1 16.7 13.0 Pascua-Lama (25%) [(14)] 3.7 26.4 3.1 35.7 22.3 25.5 Yauliyacu [(11],[ 12)] 1.0 127.3 4.0 6.0 216.6 41.5 Neves-Corvo Copper 5.8 48.5 9.0 25.7 50.8 42.0 Zinc 14.1 59.6 27.0 60.2 55.7 107.8 Rosemont [(15)] 38.5 3.0 3.7 197.7 2.7 17.1 Constancia 73.0 2.4 5.6 299.0 2.0 19.4 Zinkgruvan Zinc 2.2 66.8 4.6 4.7 107.1 16.3 Copper 1.6 20.0 1.0 0.4 39.1 0.5 Aljustrel [(19)] Zinc 1.3 65.6 2.7 20.5 60.3 39.7 Stratoni 0.2 200.4 1.5 0.2 213.3 1.4 Minto 7.5 3.6 0.9 32.3 3.4 3.5 Keno Hill (25%) Underground - - - 0.7 473.1 10.2 Elsa Tailings - - - 0.6 119.0 2.4 Los Filos 11.4 11.0 4.0 112.3 7.4 26.9 Loma de La Plata (12.5%) - - - 3.6 169.0 19.8 TOTAL SILVER 99.2 450.2 GOLD Salobo (50%) [(16)] 24.6 0.47 0.37 97.7 0.37 1.16 Sudbury (70%) [(11)] - - - 28.9 0.34 0.32 Constancia (50%) 36.5 0.05 0.06 149.5 0.04 0.18 Minto 7.5 0.42 0.10 32.3 0.32 0.33 Toroparu (10%) [(17)] 0.9 0.87 0.03 7.9 0.83 0.21 TOTAL GOLD 0.56 2.20 (TABLE CONTINUED) As of December 31, 2014 unless otherwise Measured & noted [(6)] Indicated Tonnage Grade Contained Mt g/t Moz SILVER Pe?asquito (25%) [(14)] Mill 126.2 22.8 92.4 Heap Leach 29.2 17.2 16.1 Pascua-Lama (25%) [(14)] 39.4 22.7 28.7 Yauliyacu [(11],[ 12)] 6.9 204.2 45.5 Neves-Corvo Copper 31.5 50.3 51.0 Zinc 74.3 56.4 134.8 Rosemont [(15)] 236.2 2.7 20.8 Constancia 372.0 2.1 25.0 Zinkgruvan Zinc 6.9 94.5 20.9 Copper 2.0 23.9 1.5 Aljustrel [(19)] Zinc 21.8 60.7 42.4 Stratoni 0.4 206.4 2.9 Minto 39.8 3.4 4.3 Keno Hill (25%) Underground 0.7 473.1 10.2 Elsa Tailings 0.6 119.0 2.4 Los Filos 123.7 7.8 30.9 Loma de La Plata (12.5%) 3.6 169.0 19.8 TOTAL SILVER 549.5 GOLD Salobo (50%) [(16)] 122.2 0.39 1.53 Sudbury (70%) [(11)] 28.9 0.34 0.32 Constancia (50%) 186.0 0.04 0.23 Minto 39.8 0.34 0.43 Toroparu (10%) [(17)] 8.8 0.84 0.24 TOTAL GOLD 2.76 Inferred Resources Attributable to Silver Wheaton [(1],[2],[3],[4],[5],[9],[18)] As of December 31, 2014 unless otherwise noted [(6)] Inferred Tonnage Grade Contained Mt g/t Moz SILVER Pe?asquito (25%) [(14)] Mill 4.4 19.5 2.7 Heap Leach 6.1 13.7 2.7 San Dimas [(10],[ 14)] 7.3 309.5 73.0 Pascua-Lama (25%) [(14)] 4.9 20.1 3.2 Yauliyacu [(11],[ 12)] 5.0 178.7 28.7 777 [(13)] 0.8 30.6 0.8 Neves-Corvo Copper 25.1 43.5 35.1 Zinc 21.4 48.9 33.6 Rosemont [(15)] 104.5 3.3 11.1 Constancia 200.0 1.9 12.0 Zinkgruvan Zinc 6.1 75.0 14.7 Copper 0.5 34.0 0.6 Aljustrel [(19)] Zinc 8.7 50.4 14.0 Stratoni 0.5 169.0 2.7 Minto 16.2 3.2 1.7 Keno Hill (25%) Underground 0.2 349.8 2.4 Los Filos 175.9 6.3 35.7 Loma de La Plata (12.5%) 0.2 76.0 0.4 Metates Royalty [(20)] 1.0 9.7 0.3 TOTAL SILVER 275.2 GOLD Salobo (50%) [(16)] 74.0 0.31 0.74 Sudbury (70%) [(11)] 5.5 0.67 0.12 777 [(13)] 0.4 1.77 0.02 Constancia (50%) 100.0 0.03 0.10 Minto 16.2 0.30 0.16 Toroparu (10%) [(17)] 13.0 0.74 0.31 Metates Royalty [(20)] 1.0 0.38 0.01 TOTAL GOLD 1.46 Notes: All Mineral Reserves and Mineral Resources have been calculated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum - CIM Standards on Mineral Resources and Mineral Reserves and National Instrument 43-101 - Standards for Disclosure form Mineral Projects ("NI 43-101), or the Australian 1. Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mineral Reserves and Mineral Resources are reported above in millions of metric 2. tonnes ("Mt"), grams per metric tonne ("g/t") and millions of ounces ("Moz"). Individual qualified persons ("QPs"), as defined by the NI 43-101, for the technical information contained in this document (including the Mineral Reserve 3. and Mineral Resource estimates) for the following operations are as follows: Salobo mine - Christopher Jacobs, CEng MIMMM (Vice President and Mining Economist), James Turner, CEng MIMMM (Senior Mineral Process Engineer), Barnard Foo, P. Eng., M. Eng, MBA (Senior Mining Engineer) and Jason Ch? Osmond, FGS, C.Geol, EurGeol (Senior Geologist) all of whom are a. employees of Micon International Ltd. All other operations and development projects: the Company's QPs Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); Samuel Mah, M.A.Sc., P.Eng. (Senior Director, Project Evaluations), both employees b. of the Company (the "Company's QPs"). The Mineral Resources reported in the above tables are exclusive of Mineral Reserves. The Minto mine, Neves-Corvo mine, Zinkgruvan mine, Stratoni mine and Toroparu project report Mineral Resources inclusive of Mineral Reserves. The Company's QPs have made the exclusive Mineral Resource estimates for these mines 4. based on average mine recoveries and dilution. Mineral Resources which are not Mineral Reserves do not have demonstrated 5. economic viability. Other than as detailed below, Mineral Reserves and Mineral Resources are reported as of December 31, 2014 based on information available to the Company as of the date of this document, and therefore will not reflect updates, if any, 6. after such date. Mineral Resources and Mineral Reserves for the San Dimas, Pascua-Lama, a. 777, Constancia and Minto mines are reported as of December 31, 2013. Mineral Resources and Mineral Reserves for the Toroparu project are b. reported as of March 31, 2013. Mineral Resources and Mineral Reserves for the Neves-Corvo and c. Zinkgruvan mines are reported as of June 30, 2014. d. Mineral Reserves for the Cozamin mine are reported as of June 30, 2014. Mineral Resources and Mineral Reserves for the Rosemont project are e. reported as of August 28, 2012.
|
