REG - Wheaton Precious Met - Acquisition of Stream from Sabina's Goose Project

Wheaton Precious MetalsAnnouncement

08/02/2022 16:40

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RNS Number : 0716B  Wheaton Precious Metals Corp.  08 February 2022

 

 

February 8, 2022                                                                             TSX | NYSE | LSE: WPM
Vancouver, British Columbia

 

WHEATON PRECIOUS METALS announces the acquisition of a

gold stream from Sabina's Goose project

 

Wheaton Precious Metals™ Corp. ("Wheaton" or the "Company") is pleased to
announce that it has entered into a definitive Precious Metal Purchase
Agreement (the "Agreement") with Sabina Gold & Silver Corp. ("Sabina")
(TSX: SBB) in respect to the Goose Project, part of Sabina's 100% owned Back
River Gold District located in Nunavut, Canada (the "Goose Project"). The
Goose Project is forecast to be a high margin mine in the lowest half of the
gold cost curve with a 15-year mine life 1 .

 

"The Goose Project in the Back River Gold District in Nunavut provides Wheaton
with an exceptional opportunity to expand our portfolio into one of Canada's
strongest and fastest-growing mining jurisdictions," said Randy Smallwood,
Wheaton's President and Chief Executive Officer. "Underscored by a respectful
development approach and calculated de-risking through sound environmental and
social responsibility mandates, we are proud to partner with Sabina on the
advancement of this project."

 

TRANSACTION DETAILS

§ Upfront Payment: Wheaton will pay Sabina an upfront payment of US$125
million in four equal installments during construction of the Goose Project,
subject to customary conditions.

§ Streamed Metal: Wheaton will be entitled to receive 4.15% of the payable
gold production from the Mine dropping to 2.15% of the payable gold production
from the Mine after delivery of 130,000 ounces of gold and dropping to 1.5% of
the payable gold production from the Mine after delivery of 200,000 ounces of
gold.

§ Production Profile(1): With a fixed payable rate of 99.98%, attributable
gold production is forecast to average 11.7 koz per year for the first five
full years of production, and 10.7 koz per year for the first ten full years.
Sabina is finalizing its 2022 work program and expects production to commence
in the first quarter of 2025.

§ Production Payments: Wheaton will make ongoing production payments for gold
ounces delivered equal to 18% of the spot gold price until the value of gold
delivered less the cumulative production payments is equal to the upfront
consideration of US$125 million, at which point the production payment will
increase to 22% of the spot gold price.

§ Incremental Reserves and Resources(( 2 )): The addition of the Goose
Project will increase Wheaton's estimated Proven and Probable gold reserves by
0.14 Moz, Measured and Indicated gold resources by 0.03 Moz and Inferred gold
resources by 0.04 Moz. Significant exploration upside potential exists within
the Goose Project with over 4 km of untested plunge length to be explored
within over 15,000 hectares of mineral claims and leases.

§ Community Investment Support: As part of the Agreement, Sabina is eligible
for additional community support through Wheaton's Partner CSR Program which
provides financial support for its mining partners' economic, environmental
and social initiatives within the communities that are directly influenced by
the mines.

§ Other Considerations:

o  Wheaton has a right of first refusal on any future streaming agreement,
royalty agreement or similar transaction entered into by Sabina or any of its
affiliates relating to production of any precious metal from the Goose
Project.

o  Security provided in respect of the Agreement will be subordinate to
project debt and other customary permitted liens, and pari passu with certain
other debt.

o  Under certain circumstances, Sabina has the option of deferring delivery
of gold ounces to Wheaton if the average market price of gold falls below
US$1,500 per ounce during a period of at least 180 days.

o  Until the Agreement parameters are met, Sabina has a one-time option to
repurchase 33% of the gold stream on a change in control for an amount
ensuring a fixed internal rate of return to Wheaton.

o  Wheaton also intends to provide up to US$20M in equity to Sabina, subject
to remaining below 10% of the outstanding shares of Sabina.

 

 

INCREASE TO WHEATON'S LONG-TERM GUIDANCE

 

As a result of the Agreement and the forecast addition of attributable
production from the Goose Project, Wheaton is increasing its ten-year
production guidance to 910,000 gold equivalent ounces 3  ("GEOs") from 900,000
GEOs. 2022 and five-year guidance remain unchanged at 700,000 to 760,000 GEOs
in 2022 and 850,000 GEOs on average for the next five years.

 

FINANCING THE TRANSACTION

 

The Upfront Payment will be paid over the construction of the Goose Project,
coinciding with the start of construction. As at September 30, 2021, the
Company had approximately US$372 million of cash on hand, when combined with
the liquidity provided by the available credit under the $2 billion revolving
term loan and ongoing operating cash flows, positions the Company well to fund
all outstanding commitments and known contingencies as well as providing
flexibility to acquire additional accretive mineral stream interests.

 

ABOUT SABINA AND THE GOOSE PROJECT

 

Sabina Gold & Silver Corp. is an emerging precious metals company with
district scale, advanced, high grade gold assets in Nunavut, Canada.

 

The Goose Project is the first mine Sabina is advancing in its 100%-owned Back
River Gold District, which is an 80km long belt with a series of gold deposits
in banded iron formation, located in southwestern Nunavut, Canada,
approximately 520 km northeast of Yellowknife. The Goose Project is an
advanced and fully permitted project with social license in hand.
Pre-development activities have begun with the Project's Port Facility and
winter ice road being completed as well as major earth works at the Goose
Project site.

 

 

 

Attributable Gold Mineral Reserves and Mineral Resources - Goose Project

 

 Category   Tonnage Mt  Grade Au g/t  Contained Au Moz

 Proven     0.3         5.54          0.06
 Probable   0.4         6.29          0.09
 P&P        0.8         5.97          0.14
 Measured   0.04        4.94          0.01
 Indicated  0.1         5.18          0.02
 M&I        0.2         5.13          0.03
 Inferred   0.2         6.64          0.04

 

 

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. (Vice President, Engineering),

both employees of the Company (the "Company's QPs").

4.   The Mineral Resources reported in the above tables are exclusive of
Mineral Reserves. Sabina 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.   Goose Project Mineral Reserves are reported as of January 15, 2021 and
Mineral Resources as of December 31, 2020.

7.   Goose Project Mineral Reserves are reported above the following
undiluted gold cut-off grades assuming a gold price of $1,500 per ounce:

a.   Umwelt - 1.72 grams per tonne for open pit and 3.9 grams per tonne for
underground

b.   Llama - 1.74 grams per tonne for open pit and 4.1 grams per tonne for
underground

c.   Goose Main - 1.70 grams per tonne for open pit and 4.1 grams per tonne
for underground

d.   Echo - 1.60 grams per tonne for open pit and 3.5 grams per tonne for
underground

8.   Goose Project Mineral Resources are reported above a gold cut-off of
1.4 grams per tonne for open pit and 3.0 grams per tonne for underground for
all deposits, assuming a gold price of $1,550 per ounce.

9.   The Goose PMPA provides that Sabina will deliver 4.15% of the payable
gold production, dropping to 2.15% after delivery of 130,000 ounces of gold
and dropping to 1.5% after delivery of 200,000 ounces of gold.  Attributable
gold reserves and resources have been calculated on the 4.15% / 2.15% / 1.5%
basis.

 

Neil Burns, P.Geo., Vice President, Technical Services for Wheaton Precious
Metals and Ryan Ulansky, P.Eng., Vice President, Engineering, are a "qualified
person" as such term is defined under National Instrument 43-101, and have
reviewed and approved the technical information disclosed in this news release
(specifically Mr. Burns has reviewed mineral resource estimates and Mr.
Ulansky has reviewed the mineral reserve estimates).

 

 

 

 

Patrick Drouin

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,
statements with respect to the payment by Wheaton of US$125 million to Sabina
and the satisfaction of each party's obligations in accordance with the
Agreement, the future price of commodities, the impact of epidemics (including
the COVID-19 virus pandemic), including the potential heightening of other
risks, 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, the commencement, timing and achievement of construction,
expansion or improvement projects by Wheaton's PMPA counterparties at Mining
Operations, the ability of Wheaton's PMPA counterparties to comply with the
terms of a PMPA (including as a result of the business, mining operations and
performance of Wheaton's PMPA counterparties) and the potential impacts of
such on Wheaton, the costs of future production, the estimation of produced
but not yet delivered ounces, any statements as to future dividends, the
ability to fund outstanding commitments and the ability to continue to acquire
accretive PMPAs, future payments by the Company in accordance with PMPAs,
including any acceleration of payments, projected increases to Wheaton's
production and cash flow profile, projected changes to Wheaton's production
mix, the ability of Wheaton's PMPA counterparties to comply with the terms of
any other obligations under agreements with the Company, the ability to sell
precious metals and cobalt production, confidence in the Company's business
structure, the Company's assessment of taxes payable and the impact of the
Canada Revenue Agency ("CRA") Settlement for years subsequent to 2010,
possible audits for taxation years subsequent to 2015, the Company's intention
to file future tax returns in a manner consistent with the CRA Settlement, and
assessments of the impact and resolution of various legal and tax matters,
including but not limited to outstanding class actions. 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 (without limitation) risks associated with the satisfaction of each
party's obligations in accordance with the terms of the 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, actual results of mining and exploration
activities, environmental, economic and political risks of the jurisdictions
in which the Mining Operations are located, and changes in project parameters
as plans continue to be refined), the absence of control over the Mining
Operations and relying on the accuracy of the public disclosure and other
information Wheaton receives from the Mining Operations, uncertainty in the
estimation of production from Mining Operations, uncertainty in the accuracy
of mineral reserve and mineral resource estimation, the ability of each party
to satisfy their obligations in accordance with the terms of the PMPAs, the
estimation of future production from Mining Operations, Wheaton's
interpretation of, compliance with or application of, tax laws and regulations
or accounting policies and rules being found to be incorrect, any challenge or
reassessment by the CRA of the Company's tax filings being successful and the
potential negative impact to the Company's previous and future tax filings,
assessing the impact of the CRA Settlement for years subsequent to 2010
(including whether there will be any material change in the Company's facts or
change in law or jurisprudence), potential implementation of a 15% global
minimum tax, counterparty credit and liquidity, mine operator concentration,
indebtedness and guarantees, hedging, competition, claims and legal
proceedings against Wheaton or the Mining Operations, security over underlying
assets, governmental regulations, international operations of Wheaton and the
Mining Operations, exploration, development, operations, expansions and
improvements at the Mining Operations, environmental regulations and climate
change, Wheaton and the Mining Operations ability to obtain and maintain
necessary licenses, permits, approvals and rulings, Wheaton and the Mining
Operations ability to comply with applicable laws, regulations and permitting
requirements, lack of suitable infrastructure and employees to support the
Mining Operations, inability to replace and expand mineral reserves, including
anticipated timing of the commencement of production by certain Mining
Operations (including increases in production, estimated grades and
recoveries), uncertainties of title and indigenous rights with respect to the
Mining Operations, Wheaton and the Mining Operations ability to obtain
adequate financing, the Mining Operations ability to complete permitting,
construction, development and expansion, global financial conditions, 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 (http://www.sedar.com) , and in Wheaton's Form 40-F for the year
ended December 31, 2020 and Form 6-K filed March 11, 2021 both on file with
the U.S. Securities and Exchange Commission in Washington, D.C. and available
on EDGAR (the "Disclosure"). Forward-looking statements are based on
assumptions management currently believes to be reasonable, including (without
limitation): the payment of US$125 million to Sabina and the satisfaction of
each party's obligations in accordance with the terms of the 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 and achieve their stated production estimates, that the
mineral reserve and mineral resource estimates from Mining Operations
(including reserve conversion rates) are accurate, that each party will
satisfy their obligations in accordance with the PMPAs, that Wheaton will
continue to be able to fund or obtain funding for outstanding commitments,
that Wheaton will be able to source and obtain accretive PMPAs, that
expectations regarding the resolution of legal and tax matters will be
achieved (including ongoing class action litigation and CRA audits involving
the Company), that Wheaton has properly considered the interpretation and
application of Canadian tax law to its structure and operations, that Wheaton
has filed its tax returns and paid applicable taxes in compliance with
Canadian tax law, that Wheaton's application of the CRA Settlement for years
subsequent to 2010 is accurate (including the Company's assessment that there
will be no material change in the Company's facts or change in law or
jurisprudence for years subsequent to 2010), 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 Annual Information
Form for the year ended December 31, 2020 and other continuous disclosure
documents filed by Wheaton since January 1, 2021, available on SEDAR at
www.sedar.com. 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"). 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. 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. The SEC has
adopted amendments to its disclosure rules to modernize the mineral property
disclosure requirements for issuers whose securities are registered with the
SEC under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange
Act"). These amendments became effective February 25, 2019 (the "SEC
Modernization Rules") with compliance required for the first fiscal year
beginning on or after January 1, 2021. Under the SEC Modernization Rules, the
historical property disclosure requirements for mining registrants included in
SEC Industry Guide 7 will be rescinded and replaced with disclosure
requirements in subpart 1300 of SEC Regulation S-K. Following the transition
period, as a foreign private issuer that is eligible to file reports with the
SEC pursuant to the multi-jurisdictional disclosure system, the Company is not
required to provide disclosure on its mineral properties under the SEC
Modernization Rules and will continue to provide disclosure under NI 43-101.
 As a result of the adoption of the SEC Modernization Rules, the SEC will
recognize estimates of "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources." In addition, the SEC has amended
its definitions of "proven mineral reserves" and "probable mineral reserves"
to be "substantially similar" to the corresponding definitions under the CIM
Definition Standards that are required under NI 43-101. However, while the
above terms are "substantially similar" to CIM Definition Standards, there are
differences in the definitions under the SEC Modernization Rules and the CIM
Definition Standards. Accordingly, there is no assurance any mineral reserves
or mineral resources that the Company may report as "proven mineral reserves",
"probable mineral reserves", "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources" under NI 43-101 would be the same
had the Company prepared the reserve or resource estimates under the standards
adopted under the SEC Modernization Rules. 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 https://www.sec.gov/edgar.shtml
(https://www.sec.gov/edgar.shtml) .

 

 

 

 1 ) 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. Based on report entitled
"National Instrument (NI) 43-101 Technical Report: 2021 Updated Feasibility
Study for the Goose Project at the Back River Gold District, Nunavut, Canada"
with an effective date of January 15, 2021. Production forecasts contain
forward looking information and readers are cautioned that actual outcomes may
vary. S&P data set for 2024 projected global cost curves.

 2 ) Please refer to the Attributable Mineral Reserves & Mineral Resources
table in this news release for full disclosure of reserves and resources
associated with the Santo Domingo project including accompanying footnotes.

 3 ) Gold equivalent forecast production for 2022 and the longer term outlook
are based on the following updated commodity price assumptions: $1,800 per
ounce gold, $24 per ounce silver, $2,100 per ounce palladium, $1,000 per ounce
of platinum and $33.00 per pound cobalt. For complete details regarding
Wheaton's production guidance, refer to Wheaton's news release dated February
7, 2022, titled "Wheaton Precious Metals Meets 2021 Production Guidance and
Forecasts 20% Long-Term Growth."

 

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