REG - Wheaton Precious Met - Stream Acquisition from Lumina's Cangrejos Project

Wheaton Precious MetalsAnnouncement

17/05/2023 07:17

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RNS Number : 7056Z  Wheaton Precious Metals Corp.  17 May 2023

May 16, 2023
Vancouver, British Columbia

 
 

Wheaton Precious Metals Announces the Acquisition of a

Gold Stream from Lumina Gold's Cangrejos Project

 

Vancouver, British Columbia - Wheaton Precious Metals™ Corp. ("Wheaton" or
the "Company") is pleased to announce that its wholly-owned subsidiary,
Wheaton Precious Metals International Ltd. ("Wheaton International") has
entered into a definitive Precious Metal Purchase Agreement (the "Gold
Stream") with Lumina Gold Corp. ("Lumina") (TSXV: LUM) in respect to its 100%
owned Cangrejos gold-copper project located in El Oro Province, Ecuador (the
"Project" or "Cangrejos"). Cangrejos is forecast to be a high-margin mine in
the lowest half of the cost curve with a 26-year mine life 1  (#_edn1) .

 

"The Cangrejos Project is an excellent addition to Wheaton's existing
portfolio of high-quality, low-cost assets as it should provide accretive,
long-term growth as well as significant exploration potential," said Randy
Smallwood, Wheaton's President and Chief Executive Officer. "We welcome the
opportunity to work with the team at Lumina who have done an outstanding job
at working to de-risk the Project and advancing it towards construction. As
with any transaction Wheaton enters into, responsible and sustainable mining
practices are paramount, and Wheaton looks forward to supporting Lumina both
financially as they construct Cangrejos and with their ongoing comprehensive
community engagement efforts."

 

Transaction Details

(All values in US$ unless otherwise noted)

§ Upfront Consideration: Wheaton International will pay Lumina total upfront
cash consideration of $300 million (the "Deposit"), $48 million of which is
available pre-construction (the "Early Deposit"). The payment schedule for the
Early Deposit and Deposit are as follows:

o  The Early Deposit of $48 million is comprised of four components: 1) $12
million on closing; 2) $10 million 6 months after close; 3) $15 million 12
months after close; and 4) an $11 million tranche that can be drawn upon for
committed acquisition of surface rights.

o  The remaining $252 million will be payable in staged equal installments
during construction, subject to various customary conditions being satisfied.

§ Streamed Metal: Under the Gold Stream, Wheaton International will purchase
6.6% of the payable gold from the Project until 700,000 ounces ("oz") of gold
has been delivered, at which point the stream will be reduced to 4.4% of the
payable gold production for the life of the mine.

§ Production Profile(1): Attributable production is forecast to average over
24,000 oz of gold per year for the first ten years of production and over
24,500 oz of gold per year for the life of mine.

§ Production Payments: Wheaton International will make ongoing payments for
the gold ounces delivered equal to 18% of the spot price of gold ("Production
Payment") until the uncredited deposit is reduced to nil and 22.0% of the spot
price of gold thereafter.

§ Incremental Reserves and Resources(( 2  (#_edn2) )): The addition of
Cangrejos will increase Wheaton's total estimated Proven and Probable gold
reserves by 0.76 million ounces ("Moz"), Measured and Indicated gold resources
by 0.25 Moz, and Inferred gold resources by 0.16 Moz. In addition, Wheaton
believes there is strong exploration potential within the Cangrejos property.

§ Other Considerations:

o  The Gold Stream will include a customary completion test.

o  As part of the transaction, Wheaton has obtained a right of first refusal
on any future gold and silver streams.

o  In the event of a change of control, Lumina may purchase one-third of the
Gold Stream from Wheaton until the earlier of January 1, 2030, and the date
that is 12 months after first production.

o  Lumina and certain of its subsidiaries will provide Wheaton International
with corporate guarantees and certain other security over their assets.

 

Financing the Transactions

As at March 31, 2023, the Company had approximately $800 million of cash on
hand, which we believe 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 the acquisition of
the Gold Stream as well as all outstanding commitments and known contingencies
and provides flexibility to acquire additional accretive mineral stream
interests.

 

Sustainability Considerations for the Cangrejos Project

Based on work done by Lumina, several of the Project's innate characteristics
and design elements have been identified that serve to potentially minimize
its environmental impacts:

§ Since 2014, Lumina has been engaging with communities and is committed to
involve affected communities and stakeholders through ongoing participation
and consultation. The project will seek opportunities to create enduring
economic benefits for societal groups and communities that are directly
affected by operations.

§ The majority of electrical power is anticipated to come from renewable
hydroelectric sources.

§ Proximity to port is expected to minimize transportation-based greenhouse
gas emission impacts.

§ The dry stack tailings filtration plant is projected to recycle a
substantial portion of tailings water for reuse in the processing plant.

§ No acid rock drainage conditions are expected to be present in either the
waste rock storage facility or the dry stack tailings facility.

§ Aerial ore conveyor is predicted to minimize land clearance.

§ The Project is proposed to include progressive reclamation and revegetation
of tailings and waste rock facilities.

§ Reforestation of previously impacted concession lands outside of mining
facilities is anticipated to serve as offsets of disturbed areas.

 

About Lumina Gold Corp. and the Cangrejos Project

Lumina Gold Corp. is a Vancouver, Canada based precious and base metals
exploration and development company focused on the Cangrejos Gold-Copper
Project located in El Oro Province, southwest Ecuador. The Company has
completed a Preliminary Feasibility Study for Cangrejos (2023), which is the
largest primary gold deposit in Ecuador. Lumina has an experienced management
team with a successful track record of advancing and monetizing exploration
projects.

 

 

Attributable Gold Mineral Reserves and Mineral Resources - Cangrejos Project

 

 Category   Tonnage Mt  Grade Au g/t  Contained Au Moz

 Proven     --          --            --
 Probable   43.5        0.55          0.76
 P&P        43.5        0.55          0.76
 Measured   --          --            --
 Indicated  20.6        0.38          0.25
 M&I        20.6        0.38          0.25
 Inferred   13.0        0.39          0.16

 

 

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. Lumina 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.   Cangrejos Project Mineral Reserves are reported as of March 30, 2023
and Mineral Resources as of January 30, 2023.

7.   Cangrejos Project Mineral Reserves are reported above declining NSR
cut-offs of between $23.00 and $7.76 per tonne assuming $1,500 per ounce gold,
$3.00 per pound copper and $18.00 per ounce silver.

8.   Cangrejos Project Mineral Resources are reported above a 0.25 grams per
tonne gold equivalent cut-off assuming $1,600 per ounce gold, $3.50 per pound
copper and $11.00 per pound molybdenum and $21.00 per ounce silver.

9.   The Cangrejos PMPA provides that Lumina will deliver gold equal to 6.6%
of the payable gold production until 700,000 ounces of gold are delivered and
4.4% thereafter for the life of the mine.  Attributable gold reserves and
resources have been calculated on the 6.6% / 4.4% 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).

 

For further information, please contact:

 

Patrick Drouin or Emma Murray

Wheaton Precious Metals Corp.

Tel: 1-844-288-9878

Email: info@wheatonpm.com (mailto: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 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 payment by Wheaton
International of $300 million to Lumina and the satisfaction of each party's
obligations in accordance with the Gold Stream, the receipt by Wheaton of gold
production in respect of the Project, the future price of commodities, the
estimation of future production from 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 mineral
stream interests owned by Wheaton (the "Mining Operations"), the payment of
upfront cash consideration to counterparties under PMPAs, the satisfaction of
each party's obligations in accordance with PMPAs and royalty arrangements and
the receipt by the Company of precious metals and cobalt production in respect
of the applicable Mining Operations under PMPAs or other payments under
royalty arrangements, 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, future payments by the Company in accordance with
PMPAs, the costs of future production, the estimation of produced but not yet
delivered ounces, the impact of epidemics (including the COVID-19 virus
pandemic), including the potential heightening of other risks, future sales of
common shares under the ATM program, continued listing of the Company's common
shares, any statements as to future dividends, the ability to fund outstanding
commitments and the ability to continue to acquire accretive 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 CRA
Settlement, possible domestic audits for taxation years subsequent to 2016 and
international audits, the Company's assessment of the impact of any tax
reassessments, the Company's intention to file future tax returns in a manner
consistent with the CRA Settlement, the Company's climate change and
environmental commitments, and assessments of the impact and resolution of
various legal and tax matters, including but not limited to audits. 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 but not limited to risks relating to the satisfaction of each
party's obligations in accordance with the terms of the Gold Stream, risks
associated with fluctuations in the price of commodities (including Wheaton's
ability to sell its precious metals or cobalt production at acceptable prices
or at all), risks related to the Mining Operations (including fluctuations in
the price of the primary or other commodities mined at such operations,
regulatory, political and other risks of the jurisdictions in which the Mining
Operations are located, actual results of mining, risks associated with the
exploration, development, operating, expansion and improvement of the Mining
Operations, environmental and economic risks of the Mining Operations, and
changes in project parameters as plans continue to be refined), the absence of
control over the Mining Operations and having to rely 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, risks of significant impacts on Wheaton or the Mining
Operations as a result of an epidemic (including the COVID-19 virus pandemic),
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
(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, 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 supplies, 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, environmental, social and governance matters, Wheaton
and the Mining Operations ability to obtain adequate financing, the Mining
Operations ability to complete permitting, construction, development and
expansion, global financial conditions, Wheaton's acquisition strategy 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 Wheaton's Form 40-F for the year
ended December 31, 2022 on file with the U.S. Securities and Exchange
Commission on EDGAR (the "Disclosure"). Forward-looking statements are based
on assumptions management currently believes to be reasonable, including
(without limitation): the payment of $300 million to Lumina and the
satisfaction of each party's obligations in accordance with the terms of the
Gold Stream, 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 in accordance with public statements and
achieve their stated production estimates, that the mineral reserves 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 neither Wheaton nor the Mining
Operations will suffer significant impacts as a result of an epidemic
(including the COVID-19 virus pandemic), that any outbreak or threat of an
outbreak of a virus or other contagions or epidemic disease will be adequately
responded to locally, nationally, regionally and internationally, without such
response requiring any prolonged closure of the Mining Operations or having
other material adverse effects on the Company and counterparties to its PMPAs,
that the trading of the Company's common shares will not be adversely affected
by the differences in liquidity, settlement and clearing systems as a result
of multiple listings of the Common Shares on the LSE, the TSX and the NYSE,
that the trading of the Company's common shares will not be suspended, and
that the net proceeds of sales of common shares, if any, will be used as
anticipated, that expectations regarding the resolution of legal and tax
matters will be achieved (including ongoing 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 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), 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, 2022, which was filed on March 31, 2023
and other continuous disclosure documents filed by Wheaton since January 1,
2023, 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 Company reports information regarding mineral properties,
mineralization and estimates of mineral reserves and mineral resources in
accordance with Canadian reporting requirements which are governed by, and
utilize definitions required by,  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"). These definitions differ from the
definitions adopted by the United States Securities and Exchange Commission
("SEC") under the United States Securities Act of 1933, as amended (the
"Securities Act") which are applicable to U.S. companies. 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 by the SEC.
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  (#_ednref1) ) 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.
Production forecasts contain forward looking information and readers are
cautioned that actual outcomes may vary. Based on report entitled "National
Instrument (NI) 43-101 Technical Report: Pre-Feasibility Study for the
Cangrejos Project, Ecuador" with an effective date of April 7, 2023. S&P
data set for 2029 projected global gold cost curves.

 2  (#_ednref2) ) Please refer to the Attributable Mineral Reserves &
Mineral Resources table in this news release for full disclosure of reserves
and resources associated with Cangrejos including accompanying footnotes.

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