Wheaton acquiring Arizona silver stream for US$115 million
Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) is adding to its portfolio by acquiring a silver stream on the Mineral Park polymetallic mine in northwest Arizona.
Owned and operated by Origin, a subsidiary of Waterton Copper LP, Mineral Park is located 25 kilometres north of Kingsman. A copper-molybdenum-silver porphyry deposit with a long mining history, Mineral Park is currently under phase 2 construction, which is expected to be completed by the end of the first quarter of 2025.
Waterton Copper is fully financed and is investing approximately US$600 million to execute phase 2.0 of its operating plan, which will bring the site to over 100 million pounds of copper equivalent annually, and fully modernize the operation.
The Phase 2.0 plan includes new primary crushers, secondary and pebble crushing circuits, and newer higher-power SAG mills.
Wheaton said it has signed a definitive precious metals agreement that requires it to pay Waterton Copper US$115 million cash in four installments during construction, including three installments of US$25 million, and a final US$40 million installment.
Under the terms of the silver stream, Wheaton will purchase 100% of the payable silver from the project for the life of the mine. Payable silver is calculated using a fixed payable factor of 90%.
Attributable production is forecast to average over 690,000 ounces of silver per year during the first five years of production and over 740,000 ounces of silver annually over the life of the mine.
Mineral Park is forecast to have a 12-year mine life with the potential to expand the lifespan to over 20 years.
Under the agreement, Wheaton will make continuing payments for the silver ounces delivered equal to 18% of the spot price of silver, until the uncredited deposit is reduced to nil and 22% of the spot price of silver thereafter.
Wheaton Precious Metals is a leading precious metals streaming company. Unlike traditional mining companies, Wheaton makes upfront payments and in return it purchases a fixed percentage of the future silver and/or gold production from a mine at a predetermined price. It can then sell the metal in the open market. In many cases, these agreements are for the life of the mine.
The company has streaming agreements covering 20 operating mines and 12 development stage projects. These include Vale’s Salobo mine in Brazil, Glencore AG’s Antamina mine in Peru and Newmont Corp’s [NGT-TSX, NEM-NYSE] Penasquito mine in Mexico.
Wheaton said the addition of Mineral Park will increase its total estimated proven and probable silver mineral reserves by 14.6 million ounces, measured and indicated silver resources by 18.4 million ounces and inferred silver resources by 16.2 million ounces.
Wheaton Precious Metals shares advanced on the news, rising 0.68% or 41 cents to $60.36. The shares trade in a 52-week range of $71.39 and $41.66.