REG - Wheaton Precious Met - Wheaton Acquires Mineral Park Mine Silver Stream

Wheaton Precious MetalsAnnouncement

25/10/2023 07:00

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RNS Number : 2335R  Wheaton Precious Metals Corp.  25 October 2023

October 25, 2023
Vancouver, British Columbia

 
 

Wheaton Precious Metals Announces the Acquisition of a

New Silver Stream on the Mineral Park Mine

 

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. ("WPMI") has entered into a
definitive Precious Metals Purchase Agreement (the "Silver Stream") with
Waterton Copper Corp., a subsidiary of Waterton Copper LP ("Waterton Copper")
in respect to its 100% owned Mineral Park Mine located in Arizona, USA (the
"Project" or "Mineral Park").

 

"Wheaton is excited to bring Mineral Park back into our portfolio given our
long history with the mine, particularly given the work Waterton Copper has
done to optimize the operation," said Randy Smallwood, Wheaton's President and
Chief Executive Officer. "Our unique understanding of Mineral Park, and its
potential, positions us well to assist Waterton Copper in bringing the mine
back into production in a sustainable manner. As global efforts to transition
to a low-carbon economy accelerate, critical metals, such as copper, that are
produced responsibly within politically stable jurisdictions, have never been
more important.

 

"Waterton Copper is delighted to have Wheaton Precious Metals' support," said
Isser Elishis, Executive Chairman of Waterton Copper. "Waterton is investing
approximately $600 million to optimize Mineral Park including significant
capital investments in new primary crushers, secondary and pebble crushing
circuits, and new higher-power SAG mills, which are expected to result in
decades of operational excellence."

 

Transaction Details

(All values in US$ unless otherwise noted)

§ Upfront Consideration: WPMI will pay Waterton Copper total upfront cash
consideration of $115 million (the "Deposit") in four payments during
construction (three installments of $25 million and a final installment of $40
million).

§ Streamed Metal: Under the Silver Stream, WPMI 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%.

§ Production Profile(1): Attributable production is forecast to average over
0.69 million ounces ("Moz") of silver per year for the first five years of
production and over 0.74 Moz of silver per year for the life of mine, with
construction to be completed by the end of Q1 2025. Mineral Park is forecast
to have a 12-year mine life, with the potential to expand the mine life to
over 20 years.

§ Production Payments: WPMI will make ongoing payments for the silver ounces
delivered equal to 18% of the spot price of silver ("Production Payment")
until the uncredited deposit is reduced to nil and 22% of the spot price of
silver thereafter.

§ Incremental Reserves and Resources(( 1 )): The addition of Mineral Park
will increase Wheaton's total estimated Proven and Probable Mineral silver
reserves by 14.6 Moz, Measured and Indicated Mineral silver resources by 18.4
Moz and Inferred silver resources by 16.2 Moz.

§ Other Considerations:

o  The Silver Stream will include a customary completion test.

o  WPMI will provide a secured debt facility of up to $25 million once the
full upfront consideration has been paid.

o  WPMI has also obtained a right of first refusal on any future precious
metals streams, royalty, prepay or similar transactions.

o  Waterton Copper and Origin Mining Company, LLC (the direct owner of
Mineral Park, "Origin") will provide WPMI with corporate guarantees and
certain other security over their assets.

o  Waterton Copper is expected to comply in all material respects with WPMI's
Partner/Supplier Code of Conduct, which outlines Wheaton's expectations in
regard to environmental, social and governance ("ESG") matters.

 

Financing the Transactions

As at June 30, 2023, the Company had approximately $829 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 Silver Stream as well as all outstanding commitments and known
contingencies and provides flexibility to acquire additional accretive mineral
stream interests.

 

About Wheaton Precious Metals

Wheaton is the world's premier precious metals streaming company with the
highest-quality portfolio of long-life, low-cost assets. Its business model
offers investors commodity price leverage and exploration upside but with a
much lower risk profile than a traditional mining company. Wheaton delivers
amongst the highest cash operating margins in the mining industry, allowing it
to pay a competitive dividend and continue to grow through accretive
acquisitions. As a result, Wheaton has consistently outperformed gold and
silver, as well as other mining investments. Wheaton is committed to strong
ESG practices and giving back to the communities where Wheaton and its mining
partners operate. Wheaton creates sustainable value through streaming for all
of its stakeholders.

 

About Waterton Copper and Mineral Park

Owned and operated by Origin, a subsidiary of Waterton Copper LP, Mineral Park
is a polymetallic mine located in north-west Arizona, 18 miles 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 Q1 2025. Waterton Copper is fully
funded and is investing approximately $600 million to execute Phase 2 of its
operating plan, which will bring the site to over one hundred million pounds
of copper equivalent annually and fully modernize the operation.

 

 

 

Attributable Silver Mineral Reserves and Mineral Resources - Mineral Park Mine

 

 Category   Tonnage Mt  Grade Ag g/t  Contained Ag Moz

 Proven     42.4        2.6           3.5
 Probable   141.3       2.4           11.1
 P&P        183.7       2.5           14.6
 Measured   22.6        2.1           1.5
 Indicated  261.5       2.0           16.9
 M&I        284.1       2.0           18.4
 Inferred   341.2       1.5           16.2

 

 

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.

5.   Mineral Resources, which are not Mineral Reserves, do not have
demonstrated economic viability.

6.   Mineral Park Project Mineral Reserves are reported as of September 29,
2023 and Mineral Resources as of October 30, 2021.

7.   Mineral Park Mineral Reserves are reported above an NSR cut-off of
$10.50 per tonne assuming $2.81 per pound copper, $14.25 per pound molybdenum
and $16.13 per ounce silver.

8.   Mineral Park Mineral Resources are reported above a 0.15 percent copper
equivalent cut-off assuming $3.45 per pound copper, $10.00 per pound
molybdenum and $23.00 per ounce silver.

9.   The Silver Stream provides that Waterton Copper will deliver silver
equal to 100% of the payable silver production for the life of the mine.

 

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:

 

Wheaton Precious Metals:

 

Investor Contact:

Emma Murray

Vice President, Investor Relations

Tel: 1-844-288-9878

Email: info@wheatonpm.com

 

Media Contact:

Simona Antolak

Vice President, Communications & Corporate Affairs

Tel: 604-639-9870

Email: simona.antolak@wheatonpm.com (mailto:simona.antolak@wheatonpm.com)
 

 

Waterton Copper:

 

Paul Nielson, P. Eng

Head of Development Portfolio, Principal

Tel: 1-647-289-8246

Email: pnielson@watertonglobal.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 payment by WPMI of $115 million to Waterton Copper
and the satisfaction of each party's obligations in accordance with the Silver
Stream, the receipt by Wheaton of silver 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
Silver 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.sedarplus.ca
(http://www.sedarplus.ca) 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 $115 million to Waterton Copper and the
satisfaction of each party's obligations in accordance with the terms of the
Silver 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. Numbers have been rounded as required by
reporting guidelines and may result in apparent summation differences.

 

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 refer to the Attributable Mineral Reserves &
Mineral Resources table in this news release for full disclosure of reserves
and resources associated with Mineral Park including accompanying footnotes.

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