Wheaton backs Adventus, Salazar in US$235.5 million deal
Adventus Mining Corp. [ADZN-TSXV, ADVZF-OTCQX] and Salazar Resources Ltd. [SLR-TSXV] have secured US$235.5 million for development of the Curipamba Copper Project in Ecuador via financing deals with Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) and Trafigura Pte Ltd.
Curipamba, held 75% and Adventus and 25% by Salazar, is forecast to be a high-margin mine in the lowest half of the copper cost curve with a 10-year open-pit mine life and the potential to transition into an underground mine subsequent to the open pit. Adventus and Salazar said the financing deal validates a detailed feasibility study for the project, which was completed in late 2021, and which envisages a capital cost of US$248 million.
Adventus anticipates construction activities to begin as early as late 2022, with commissioning of mine operations occurring as early as 2024. Attributable production is expected to average 17,000 ounces of gold and 551,000 ounces of silver annually for the first five years of production.
The US$235 million secured includes a US$180.5 million financial commitment from Wheaton and a US$55 million from Trafigura, money that is available via agreements between Alliance Metals International, a unit of the mine holders’ joint venture company Salazar Holdings Ltd., Wheaton after Trafigura.
Salazar shares advanced on the news, rising 6.9% or $0.02 to 31 cents. The shares are trading in a 52-week range of 41.5 cents and 21 cents. Adventus was up 2.9% or $0.03 to $1.05 on volume of 459,530, and now trade in a 52-week range of $1.28 and 81 cents.
The companies said Wheaton will deliver an upfront cash payment of US$175.5 million to Adventus. Of that amount, $13 million is available preconstruction and $500,000 will be used to support certain local development initiatives around Curipamba.
Wheaton will purchase 50% of the payable gold production referenced from Curipamba, dropping to 33% for the life of mine once 150,000 ounces of refined gold has been delivered.
Wheaton will also buy 75% of the payable silver production referenced from Curipamba, dropping to 50% for the life of the mine once 4.6 million ounces of refined silver has been delivered.
As well, Wheaton will make continuing payments for the gold and silver ounces delivered equal to 18% of the spot prices until the value of the gold and silver delivered less the production payment is equal to the deposit, at which point the production payment will rise to 22% of the spot prices.
Wheaton also intends to provide up to US$5 million in equity to Adventus Mining, subject to a maximum Wheaton ownership level of 10%.
The US$55 million financial commitment from Trafigura consists of a US$45 million senior debt facility, including a US$5 million early deposit for pre-construction activities, with the balance being available during future construction.
Under the deal, Trafigura is receiving certain concentrate offtake rights for future production. Trafigura also intends to provide US$10 million in equity to Adventus.
The total agreement leaves Adventus and Salazar with US$23.5 million to fund pre-construction activities.