Wheaton pays $150 million for silver stream from Capstone Mining
(Kitco News) - Wheaton Precious Metals is putting its money to work once again announced a new streaming agreement with Capstone Mining Corp.
Friday, the precious metals streaming company said that it would pay Capstone $150 million for 50% of its silver production up to 10 million ounces. The agreement then falls to 33% of production for the rest of the mine life, the company said.
The company said that it will use its $2 billion revolving credit facility to fund the transaction.
"With trailing four-quarter operating cash flow of approximately $690 million, 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," the company said in the press release.
Wheaton will make ongoing payments for silver ounces delivered equal to 10% of the spot silver price.
"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."
Wheaton said that the new agreement will increase its proven and probable silver reserves by 6.8 million ounces, measured and indicated silver resources by 10.5 million ounces and inferred silver resources by 9.5 million ounces.
In a five-year outlook starting in 2021, Wheaton said that attributable silver production is forecast to average approximately 820 thousand ounces per year.