Silver Wheaton Signs Non-binding Term Sheet with Panoro Minerals

Silver Wheaton Corp. (TSX:SLW,NYSE:SLW) announced that its subsidiary, Silver Wheaton (Caymans) Ltd., has signed a non-binding term sheet with Panoro Minerals Ltd. and Cordillera Copper Ltd., its subsidiary.
Under the agreement, the parties will enter into an early deposit precious metals purchase agreement for the Peru-based Cotabambas project.
As quoted in the press release:

Upon entering into the Early Deposit Agreement, SWC will be entitled to purchase 100% of the silver production and 25% of the gold production from the Cotabambas project until 90 million silver equivalent ounces attributable to SWC have been produced, at which point the stream would drop to 66.67% of silver production and 16.67% of gold production for the life of mine. Under the proposed Early Deposit Agreement, SWC will pay a total cash consideration of US$140 million plus an ongoing production payment of the lesser of: i) US$5.90 for each silver ounce and US$450 for each gold ounce (both subject to a 1% annual inflation adjustment starting in the fourth year after the completion test is satisfied) and ii) the prevailing market price. Once certain conditions have been met, SWC will advance US$14 million to Panoro, spread over up to nine years. Following the delivery of a bankable definitive feasibility study, environmental study and impact assessment, and other related documents (collectively, the “Feasibility Documentation”), and receipt of permits and construction commencing, SWC may then advance the remaining deposit or elect to terminate the Early Deposit Agreement. If SWC elects to terminate, SWC will be entitled to a return of the portion of the US$14 million paid less US$2 million payable upon certain triggering events occurring. Until January 1, 2020, Panoro has a one-time option to repurchase 50% of the precious metals stream on a change in control for an amount based on a calculated rate of return for SWC.

The Board of Directors of Panoro and SWC have approved the term sheet, however the entering into of the Early Deposit Agreement is subject to the negotiation and completion of definitive documentation.

Randy Smallwood, president and CEO of Silver Wheaton, commented:

The proposed early deposit agreement will provide Panoro with multi-year support and liquidity, which is particularly needed in this challenging commodity price environment. At the same time, Silver Wheatoncontinues to position itself for the next cycle in base metals. For relatively little upfront capital, the early deposit agreement model allows us to get our foot in the door on high-quality, earlier stage projects like Cotabambas. This is a project that we believe will grow significantly with continued exploration of the currently defined targets, and one that will be a part of the next wave of copper assets to be developed.

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