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Wheaton agrees to terminate silver stream on Yauliyacu mine for $150 million from Glencore

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(Kitco News) - On Thursday, Wheaton Precious Metals (TSX, NYSE: WPM) announced that it has entered into a definitive agreement with certain subsidiaries of Glencore to terminate its silver stream on the Yauliyacu mine in Peru.

Wheaton said it has agreed to terminate the stream in order to help facilitate the sale by Glencore of the Yauliyacu mine, adding that the consideration is a cash payment of US$150 million, less the aggregate value of any deliveries to Wheaton of silver produced in 2022 prior to closing.

"Yauliyacu has been part of Wheaton's portfolio since 2006 and has been integral to the history of our company. Combined with San Dimas and Zinkgruvan, Yauliyacu gave us the scale to grow the streaming business and become the company we are today," said President and CEO Randy Smallwood. "Consistent with a core principle of working with our partners, Wheaton has agreed to terminate the stream, adding even more financial capacity to explore new opportunities that we believe are in the best interests of our shareholders."

"Glencore was one of the first mining companies to recognize the value that is created for all stakeholders through the streaming model, and we thank them for their stewardship of this project and look forward to maintaining our strong partnership on existing and potential future developments," he added.

Wheaton noted it acquired the silver stream on the Yauliyacu mine in 2006 for an upfront consideration of US$285 million and has subsequently generated over US$485 million in cash flow from the stream.

"Combined with the termination payment, Wheaton will have generated an absolute return of over 220% of the original investment," the company said in a statement.

As a result of the transaction, Wheaton now expects average annual production for the five-year period ending December 31, 2026, to be approximately 800,000 gold equivalent ounces (GEOs) (from 820,000 previously) and for the ten-year period ending December 31, 2031, to be approximately 850,000 GEOs (from 870,000 previously). Production in 2022 is expected to remain between 640,000 and 680,000 GEOs.

Wheaton Precious Metals is one of the largest precious metals streaming companies in the world. The company has entered into agreements to purchase all or a portion of the precious metals or cobalt production from high-quality mines for an upfront payment and an additional payment upon delivery of the metal.

Wheaton currently has streaming agreements for 23 operating mines and 13 development stage projects. The company’s production profile is driven by a portfolio of low-cost, long-life assets, including a gold stream on Vale’s Salobo mine, and a silver stream on Newmont's Peñasquito mine.

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