Wheaton Acquires Gold and Palladium Stream

- July 16th, 2018

Wheaton Precious Metals’ subsidiary will be acquiring gold and palladium equal to a fixed percentage of production from Sibanye Gold’s Stillwater and East Boulder mines.

Wheaton Precious Metals’ (TSX:WPM, NYSE:WPM) wholly-owned subsidiary, Wheaton Precious Metals International, is set to acquire gold and palladium equal to a fixed percentage of production from the Stillwater and East Boulder mines, collectively referred to as Stillwater, from Sibanye Gold (JSE: SGL; NYSE: SBGL).

As quoted in the press release:

Wheaton International will pay Sibanye-Stillwater upfront cash consideration of US$500 million upon closing. In addition, Wheaton will make ongoing payments equal to 18 percent of the spot gold price and spot palladium price until the reduction of the advanced payment to nil, and 22 percent of the spot gold price and spot palladium price thereafter. The precious metals stream is effective July 1, 2018.

Highlights are as follows:

  • Adds to Wheaton’s existing high-quality portfolio
    • Wheaton International will receive an amount of gold equal to 100 percent of the Stillwater gold production for the life of mine.
    • Wheaton International will initially receive an amount of palladium equal to 4.5 percent of Stillwater palladium production, decreasing to 2.25 percent and then 1 percent based on defined delivery thresholds, for the life of mine.
    • Stillwater is one of the lowest cost platinum group metals mines globally and is located in Montana in the United States.
    • Subsequent to the closing of this acquisition, Wheaton’s estimated proven and probable gold reserves increase by 410 thousand ounces (“Koz”) and inferred gold resources increase by 920 Koz. And, for the first time, Wheaton will have estimated proven and probable palladium reserves of 610 Koz and inferred palladium resources of 430 Koz.
  • Adds long-term production and exploration upside potential
    • For the 10 years starting in 2019, production is forecast to average approximately 14.5 Koz of gold and 29 Koz of palladium per year, or approximately 37 Koz of gold equivalent per year.
    • For the 20 years starting in 2019, production is forecast to average approximately 14.7 Koz of gold and 24 Koz of palladium per year, or approximately 33 Koz of gold equivalent per year.
    • Declared current reserves are sufficient to support mining activities at Stillwater until 2041, but this could be significantly extended should inferred resources be upgraded.
    • Significant exploration potential exists both regionally and at depth below current mineral reserves and resources. Of significance is the 12.2 kilometre undeveloped mineralized section between the currently producing Stillwater and East Boulder mines.
  • Immediate production and cash flow
    • This acquisition increases Wheaton’s production profile with attributable sales starting July 1, 2018 with expected production in the second half of 2018 forecast to be approximately 5.4 thousand gold ounces and 10.4 thousand palladium ounces.

Randy Smallwood, Wheaton president and CEO commented:

Stillwater is another accretive addition to Wheaton’s portfolio of assets that is expected to contribute both production and cash flow for decades to come. What mainly attracted us to this opportunity was the quality and size of the J-M Reef deposit, coupled with the ongoing expansion at the Blitz project.”

Click here to read the full Wheaton Precious Metals (TSX:WPM, NYSE:WPM) press release.

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