Silver Wheaton Amends Silver Streaming Agreement with Barrick

Silver Wheaton Corp. (TSX:SLW,NYSE:SLW) announced that it has amended its Pascua-Lama silver streaming agreement with Barrick Gold Corp. (TSX:ABX,NYSE:ABX) via Silver Wheaton (Caymans) Ltd., its subsidiary.

Specifically, the completion test date and silver production entitlement from the Lagunas Norte, Pierina and Veladero mines have both been extended.

Furthermore, Silver Wheaton has agreed to the cancellation of the Campo Morado silver stream with Nyrstar Mining Ltd. and its affiliates in exchange for US$25 million.

As quoted in the press release:

The original contract with Barrick provided Silver Wheaton with a completion test, requiring Barrick to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015. The contract has been amended several times, and currently has a completion test deadline of December 31, 2017. In exchange for the extension of the entitlement of the production from Barrick’s Other Mines, Silver Wheaton has agreed to extend the completion test deadline to June 30, 2020. According to the silver purchase agreement, if the requirements of the completion test have not been satisfied by the amended completion date, the agreement may be terminated by Silver Wheaton. In such an event, Silver Wheaton will be entitled to the return of the upfront cash consideration of US$625 million less a credit for any silver delivered up to that date. As of September 30, 2014, the Company had received approximately 12.0 million ounces of silver related to Barrick’s Other Mines under the agreement, generating cumulative operating cash flow of approximately US$275 million. As a result, the cash obligation owed to Silver Wheaton should Barrick not satisfy the completion test, was approximately US$350 million as of September 30, 2014.

Speaking on Nyrstar, Silver Wheaton’s president and CEO, Randy Smallwood, said:

We have a great deal of confidence in Nyrstar, but considering the lower grades of the future deposits at the Campo Morado mine, we have determined in conjunction with Nyrstar that this agreement is the best outcome for both Silver Wheaton and the Campo Morado mine. The right of first refusal also provides us with an ongoing opportunity to work with Nyrstar on additional assets, especially in the lead and zinc sectors. This is another step in ensuring that our shareholders have access to the highest quality asset portfolio in the precious metals space.

Click here to read the full Silver Wheaton Corp. (TSX:SLW,NYSE:SLW) press release.