TSX: WPM
NYSE: WPM
LSE: WPM
VANCOUVER, BC, Dec. 11, 2020 /PRNewswire/ - 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 "Precious Metal
Stream") with Capstone Mining Corp. ("Capstone") (TSX: CS) in
respect to the Cozamin Mine located in Zacatecas, Mexico. Wheaton International will
pay Capstone upfront cash consideration of US$150 million upon closing for 50% of the silver
production until 10 million ounces ("Moz") have been delivered,
thereafter dropping to 33% of silver production for the life of the
mine. In addition, Wheaton will make ongoing payments for silver
ounces delivered equal to 10% of the spot silver price. The
Precious Metal Stream is effective December
1, 2020.
"Wheaton has a long history with Capstone and
Cozamin and welcomes the opportunity to bring back this first
quartile mine into our portfolio of low-cost, long-life assets.
Over the past few years, Capstone has conducted an extensive and
successful exploration and drill program, which has significantly
increased Cozamin's mine life. We believe, as does Capstone,
that the best is yet to come for Cozamin," said Randy Smallwood, Wheaton's President and Chief
Executive Officer. "In addition, Wheaton is in advanced discussions
with Capstone regarding a potential gold stream on their
Santo Domingo project, which would
provide additional near-term growth for the Company."
TRANSACTION HIGHLIGHTS
- Adds to Wheaton's existing high-quality portfolio
-
- Cozamin is a first quartile copper mine1 that has
been operated by Capstone since 2006.
- Subsequent to the closing of this acquisition, the addition of
Cozamin will increase Wheaton's estimated Proven and Probable
silver reserves by 6.8 Moz, Measured and Indicated silver resources
by 10.5 Moz and Inferred silver resources by 9.5
Moz.2
- Adds near-term production
-
- For the five years starting in 2021, attributable silver
production is forecast to average approximately 820 thousand ounces
per year.3
- Significant exploration upside potential
As
previously announced during 2020 by Capstone:
-
- Proven and Probable silver reserves for Cozamin as of
April 30, 2020, increased by over
100% from the prior year, and Measured and Indicated silver
resources increased by over 70%.
- Current drill program targeting down dip extension of key
producing veins and Capstone is currently considering a one
kilometer exploration drift to target continuation of
mineralization along strike.
- Capstone is in the process of completing a pre-feasibility
study of an underground paste backfill system for Cozamin that
could potentially increase the extraction ratio as mining pillars
are currently excluded in the existing mine plan.
- Significant exploration potential exists regionally.
TRANSACTION TERMS
- The Precious Metal Stream is effective December 1, 2020.
- Wheaton International will be entitled to receive 50% of the
silver production until 10 Moz have been delivered, thereafter
dropping to 33% of silver production for the life of the mine.
- Wheaton International will pay Capstone cash consideration of
US$150 million upon closing of the
Precious Metal Stream.
- Wheaton International will make ongoing payments for silver
ounces delivered equal to 10% of the spot silver price.
- Silver deliveries are guaranteed by Capstone.
- Closing of the transaction is expected to occur shortly
following announcement and is subject to the completion of certain
corporate matters and customary conditions.
FINANCING THE TRANSACTION
The initial upfront cash payment of US$150 million will be
paid by using amounts drawn from the Company's US$2 billion revolving credit facility. At
September 30, 2020, the Company had
approximately US$210 million of cash
on hand and approximately US$1.5
billion of remaining capacity under the revolving credit
facility. With trailing four-quarter operating cash flow of
approximately $690
million4, the Company has ample capacity to
service the additional debt resulting from this transaction,
especially given the low interest rate and flexible nature of the
covenants under the revolving credit facility.
ABOUT CAPSTONE AND THE COZAMIN MINE
Capstone is a Canadian base metals mining company, focused on
copper with two producing mines, the Cozamin copper-silver mine in
Zacatecas State, Mexico and the
Pinto Valley copper mine located in Arizona, US. In addition, Capstone owns 70% of
Santo Domingo, a large scale,
fully-permitted, copper-iron-gold project in Region III,
Chile, as well as a portfolio of
exploration properties. Capstone's strategy is to focus on the
optimization of operations and assets in politically stable, mining
friendly regions, centered in the Americas.
The underground Cozamin copper-silver-lead-zinc mine was
commissioned in 2006 and has undergone two successful expansions
since that time. The mill produces copper, zinc, and lead
concentrates that are shipped to the port of Manzanillo for export to world markets.
Exploration success has led to significant resource increases and
excellent potential exists to continue this expansion. As part of
the Silverstone Resources acquisition in 2009, Wheaton acquired a
precious metals stream on Cozamin, which subsequently expired in
2017.
Attributable Mineral Reserves and Mineral Resources –
Cozamin, effective as of April 30,
2020
Category
|
Tonnage
|
Grade
|
Contained
|
Mt
|
Ag
g/t
|
Ag
Moz
|
Proven
|
|
|
|
Probable
|
5.1
|
41.3
|
6.8
|
P&P
|
5.1
|
41.3
|
6.8
|
Measured
|
0.2
|
53.2
|
0.3
|
Indicated
|
8.2
|
40.1
|
10.5
|
M&I
|
8.3
|
40.4
|
10.8
|
Inferred
|
5.5
|
35.7
|
6.3
|
|
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. (Senior Director, Engineering),
|
|
both employees of the
Company (the "Company's QPs").
|
4.
|
The Mineral Resources
reported in the above tables are exclusive of Mineral
Reserves. Cozamin mine 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.
|
Cozamin mine Mineral
Reserves and Mineral Resources are reported as of April 30,
2020.
|
7.
|
Cozamin mine Mineral
Reserves are reported above a NSR cut-off of $52.29 per tonne
assuming $2.75 per pound copper and $17.00 per ounce
silver.
|
8.
|
Cozamin mine Mineral
Resources are reported above a NSR cut-off of $50 per tonne
assuming $3.25 per pound copper and $20.00 per ounce
silver.
|
9.
|
The Cozamin silver
purchase agreement provides that Capstone will deliver 50% of the
silver production until 10 million ounces are delivered and 33%
thereafter for the life of the mine. Attributable reserves
and resources have been calculated on the 50% / 33%
basis.
|
Mr. Neil Burns, Vice President of
Technical Services for Wheaton, is a "qualified person" as such
term is defined under National Instrument 43-101 and has reviewed
and approved the technical disclosure in this news release
including information on Mineral Reserves and Mineral
Resources.
FINANCIAL ADVISOR
Fort Capital Partners acted as financial advisor to Wheaton
International.
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, payment by
Wheaton International of US$150
million to Capstone and the satisfaction of each party's
obligations in accordance with the Precious Metal Stream agreement,
the receipt by Wheaton International of silver production in
respect of the Cozamin Mine, the future price of commodities, the
estimation of future production from mineral stream interests owned
by Wheaton (the "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 and the commencement,
timing and achievement of construction, expansion or improvement
projects by Wheaton's PMPA counterparties at Mining Operations.
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 associated with any specific risks
relating to the satisfaction of each party's obligations in
accordance with the terms of the Precious Metals Stream agreement,
fluctuations in the price of commodities (including Wheaton's
ability to sell its precious metals or cobalt production at
acceptable prices or at all), 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), 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, and in
Wheaton's Form 40-F for the year ended December 31, 2019 and Form 6-K filed March 11, 2020 both available on EDGAR at
www.sec.gov, as well as the risks set out in Wheaton's management's
discussions and analysis for the periods ended March 31, 2020 and September 30, 2020 both available on SEDAR and
EDGAR (together, the "Disclosure"). Forward-looking statements are
based on assumptions management currently believes to be
reasonable, including (without limitation): the payment of
US$150 million to Capstone and the
satisfaction of each party's obligations in accordance with the
terms of the Precious Metal Stream agreement, 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 reserve
and mineral resource estimates from Mining Operations (including
reserve conversion rates) are accurate, 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 Disclosure. 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 terms "mineral reserve", "proven
mineral reserve" and "probable mineral reserve" are Canadian mining
terms defined in accordance with 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 in
Industry Guide 7 ("SEC Industry Guide 7") under the U.S. Securities
Act of 1933, as amended (the "U.S. Securities Act"). Under U.S.
standards, mineralization may not be classified as a "reserve"
unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time
the reserve determination is made. Also, under SEC Industry Guide 7
standards, a "final" or "bankable" feasibility study is required to
report reserves, the three-year historical average price is used in
any reserve or cash flow analysis to designate reserves and the
primary environmental analysis or report must be filed with the
appropriate governmental authority. In addition, the terms "mineral
resource", "measured mineral resource", "indicated mineral
resource" and "inferred mineral resource" are defined in and
required to be disclosed by NI 43-101; however, these terms are not
defined terms under SEC Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed
with the SEC. Investors are cautioned not to assume that any part
or all of the mineral deposits in these categories will ever be
converted into reserves. "Inferred mineral resources" have a great
amount of uncertainty as to their existence and as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a
higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that all or any part of an inferred mineral
resource exists or is economically or legally mineable. Mineral
resources that are not mineral reserves do not have demonstrated
economic viability. Disclosure of "contained ounces" in a resource
is permitted disclosure under Canadian regulations; however, the
SEC normally only permits issuers to report mineralization that
does not constitute "reserves" by SEC standards as in place tonnage
and grade without reference to unit measures. Accordingly,
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 EDGAR at
www.sec.gov.
_________________________
|
1) Wood Mackenzie
Ltd. Data set 2020 Q3.
|
2) Please refer to
the Mineral Reserves & Mineral Resources table in this
news release for full disclosure of reserves and resources
associated with Cozamin including accompanying
footnotes.
|
3) Production
estimates based upon the report titled "NI 43-101 Technical Report
on the Cozamin Mine, Zacatecas, Mexico" prepared for Capstone
Mining and dated October 23, 2020. Production forecasts contain
forward looking information and readers are cautioned that actual
outcomes may vary. 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.
|
4) Operating cash
flow based on Q1 2019, and Q1, Q2 and Q3 of 2020.
|
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SOURCE Wheaton Precious Metals Corp.