TIDMWPM
RNS Number : 0716B
Wheaton Precious Metals Corp.
08 February 2022
February 8, 2022 TSX | NYSE | LSE: WPM
Vancouver, British Columbia
WHEATON PRECIOUS METALS announces the acquisition of a
gold stream from Sabina's Goose project
Wheaton Precious Metals(TM) Corp. ("Wheaton" or the "Company")
is pleased to announce that it has entered into a definitive
Precious Metal Purchase Agreement (the "Agreement") with Sabina
Gold & Silver Corp. ("Sabina") (TSX: SBB) in respect to the
Goose Project, part of Sabina's 100% owned Back River Gold District
located in Nunavut, Canada (the "Goose Project"). The Goose Project
is forecast to be a high margin mine in the lowest half of the gold
cost curve with a 15-year mine life[1].
"The Goose Project in the Back River Gold District in Nunavut
provides Wheaton with an exceptional opportunity to expand our
portfolio into one of Canada's strongest and fastest-growing mining
jurisdictions," said Randy Smallwood, Wheaton's President and Chief
Executive Officer. "Underscored by a respectful development
approach and calculated de-risking through sound environmental and
social responsibility mandates, we are proud to partner with Sabina
on the advancement of this project."
TRANSACTION DETAILS
-- Upfront Payment: Wheaton will pay Sabina an upfront payment
of US$125 million in four equal installments during construction of
the Goose Project, subject to customary conditions.
-- Streamed Metal: Wheaton will be entitled to receive 4.15% of
the payable gold production from the Mine dropping to 2.15% of the
payable gold production from the Mine after delivery of 130,000
ounces of gold and dropping to 1.5% of the payable gold production
from the Mine after delivery of 200,000 ounces of gold.
-- Production Profile (1) : With a fixed payable rate of 99.98%,
attributable gold production is forecast to average 11.7 koz per
year for the first five full years of production, and 10.7 koz per
year for the first ten full years. Sabina is finalizing its 2022
work program and expects production to commence in the first
quarter of 2025.
-- Production Payments: Wheaton will make ongoing production
payments for gold ounces delivered equal to 18% of the spot gold
price until the value of gold delivered less the cumulative
production payments is equal to the upfront consideration of US$125
million, at which point the production payment will increase to 22%
of the spot gold price.
-- Incremental Reserves and Resources ([2]) : The addition of
the Goose Project will increase Wheaton's estimated Proven and
Probable gold reserves by 0.14 Moz, Measured and Indicated gold
resources by 0.03 Moz and Inferred gold resources by 0.04 Moz.
Significant exploration upside potential exists within the Goose
Project with over 4 km of untested plunge length to be explored
within over 15,000 hectares of mineral claims and leases.
-- Community Investment Support: As part of the Agreement,
Sabina is eligible for additional community support through
Wheaton's Partner CSR Program which provides financial support for
its mining partners' economic, environmental and social initiatives
within the communities that are directly influenced by the
mines.
-- Other Considerations:
o Wheaton has a right of first refusal on any future streaming
agreement, royalty agreement or similar transaction entered into by
Sabina or any of its affiliates relating to production of any
precious metal from the Goose Project.
o Security provided in respect of the Agreement will be
subordinate to project debt and other customary permitted liens,
and pari passu with certain other debt.
o Under certain circumstances, Sabina has the option of
deferring delivery of gold ounces to Wheaton if the average market
price of gold falls below US$1,500 per ounce during a period of at
least 180 days.
o Until the Agreement parameters are met, Sabina has a one-time
option to repurchase 33% of the gold stream on a change in control
for an amount ensuring a fixed internal rate of return to
Wheaton.
o Wheaton also intends to provide up to US$20M in equity to
Sabina, subject to remaining below 10% of the outstanding shares of
Sabina.
INCREASE TO WHEATON'S LONG-TERM GUIDANCE
As a result of the Agreement and the forecast addition of
attributable production from the Goose Project, Wheaton is
increasing its ten-year production guidance to 910,000 gold
equivalent ounces[3] ("GEOs") from 900,000 GEOs. 2022 and five-year
guidance remain unchanged at 700,000 to 760,000 GEOs in 2022 and
850,000 GEOs on average for the next five years.
FINANCING THE TRANSACTION
The Upfront Payment will be paid over the construction of the
Goose Project, coinciding with the start of construction. As at
September 30, 2021, the Company had approximately US$372 million of
cash on hand, when combined with the liquidity provided by the
available credit under the $2 billion revolving term loan and
ongoing operating cash flows, positions the Company well to fund
all outstanding commitments and known contingencies as well as
providing flexibility to acquire additional accretive mineral
stream interests.
ABOUT SABINA AND THE GOOSE PROJECT
Sabina Gold & Silver Corp. is an emerging precious metals
company with district scale, advanced, high grade gold assets in
Nunavut, Canada.
The Goose Project is the first mine Sabina is advancing in its
100%-owned Back River Gold District, which is an 80km long belt
with a series of gold deposits in banded iron formation, located in
southwestern Nunavut, Canada, approximately 520 km northeast of
Yellowknife. The Goose Project is an advanced and fully permitted
project with social license in hand. Pre-development activities
have begun with the Project's Port Facility and winter ice road
being completed as well as major earth works at the Goose Project
site.
Attributable Gold Mineral Reserves and Mineral Resources - Goose
Project
Category Tonnage Grade Contained
Mt Au g/t Au Moz
----------- -------- -------- ----------
Proven 0.3 5.54 0.06
Probable 0.4 6.29 0.09
P&P 0.8 5.97 0.14
Measured 0.04 4.94 0.01
Indicated 0.1 5.18 0.02
----------- -------- ----------
M&I 0.2 5.13 0.03
-------- ----------
Inferred 0.2 6.64 0.04
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. (Vice President, Engineering),
both employees of the Company (the "Company's QPs").
4. The Mineral Resources reported in the above tables are
exclusive of Mineral Reserves. Sabina 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. Goose Project Mineral Reserves are reported as of January 15,
2021 and Mineral Resources as of December 31, 2020.
7. Goose Project Mineral Reserves are reported above the
following undiluted gold cut-off grades assuming a gold price of
$1,500 per ounce:
a. Umwelt - 1.72 grams per tonne for open pit and 3.9 grams per tonne for underground
b. Llama - 1.74 grams per tonne for open pit and 4.1 grams per tonne for underground
c. Goose Main - 1.70 grams per tonne for open pit and 4.1 grams per tonne for underground
d. Echo - 1.60 grams per tonne for open pit and 3.5 grams per tonne for underground
8. Goose Project Mineral Resources are reported above a gold
cut-off of 1.4 grams per tonne for open pit and 3.0 grams per tonne
for underground for all deposits, assuming a gold price of $1,550
per ounce.
9. The Goose PMPA provides that Sabina will deliver 4.15% of the
payable gold production, dropping to 2.15% after delivery of
130,000 ounces of gold and dropping to 1.5% after delivery of
200,000 ounces of gold. Attributable gold reserves and resources
have been calculated on the 4.15% / 2.15% / 1.5% basis.
Neil Burns, P.Geo., Vice President, Technical Services for
Wheaton Precious Metals and Ryan Ulansky, P.Eng., Vice President,
Engineering, are a "qualified person" as such term is defined under
National Instrument 43-101, and have reviewed and approved the
technical information disclosed in this news release (specifically
Mr. Burns has reviewed mineral resource estimates and Mr. Ulansky
has reviewed the mineral reserve estimates).
Patrick Drouin
Investor Relations
Wheaton Precious Metals Corp.
Tel: 1-844-288-9878
Email: info@wheatonpm.com
Website: www.wheatonpm.com
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, statements with respect to the payment by
Wheaton of US$125 million to Sabina and the satisfaction of each
party's obligations in accordance with the Agreement, the future
price of commodities, the impact of epidemics (including the
COVID-19 virus pandemic), including the potential heightening of
other risks, 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,
the commencement, timing and achievement of construction, expansion
or improvement projects by Wheaton's PMPA counterparties at Mining
Operations, the ability of Wheaton's PMPA counterparties to comply
with the terms of a PMPA (including as a result of the business,
mining operations and performance of Wheaton's PMPA counterparties)
and the potential impacts of such on Wheaton, the costs of future
production, the estimation of produced but not yet delivered
ounces, any statements as to future dividends, the ability to fund
outstanding commitments and the ability to continue to acquire
accretive PMPAs, future payments by the Company in accordance with
PMPAs, including any acceleration of payments, projected increases
to Wheaton's production and cash flow profile, projected changes to
Wheaton's production mix, the ability of Wheaton's PMPA
counterparties to comply with the terms of any other obligations
under agreements with the Company, the ability to sell precious
metals and cobalt production, confidence in the Company's business
structure, the Company's assessment of taxes payable and the impact
of the Canada Revenue Agency ("CRA") Settlement for years
subsequent to 2010, possible audits for taxation years subsequent
to 2015, the Company's intention to file future tax returns in a
manner consistent with the CRA Settlement, and assessments of the
impact and resolution of various legal and tax matters, including
but not limited to outstanding class actions. 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
(without limitation) risks associated with the satisfaction of each
party's obligations in accordance with the terms of the 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, actual results of mining and exploration
activities, environmental, economic and political risks of the
jurisdictions in which the Mining Operations are located, and
changes in project parameters as plans continue to be refined), the
absence of control over the Mining Operations and relying on the
accuracy of the public disclosure and other information Wheaton
receives from the Mining Operations, uncertainty in the estimation
of production from Mining Operations, uncertainty in the accuracy
of mineral reserve and mineral resource estimation, the ability of
each party to satisfy their obligations in accordance with the
terms of the PMPAs, the estimation of future production from Mining
Operations, Wheaton's interpretation of, compliance with or
application of, tax laws and regulations or accounting policies and
rules being found to be incorrect, any challenge or reassessment by
the CRA of the Company's tax filings being successful and the
potential negative impact to the Company's previous and future tax
filings, assessing the impact of the CRA Settlement for years
subsequent to 2010 (including whether there will be any material
change in the Company's facts or change in law or jurisprudence),
potential implementation of a 15% global minimum tax, counterparty
credit and liquidity, mine operator concentration, indebtedness and
guarantees, hedging, competition, claims and legal proceedings
against Wheaton or the Mining Operations, security over underlying
assets, governmental regulations, international operations of
Wheaton and the Mining Operations, exploration, development,
operations, expansions and improvements at the Mining Operations,
environmental regulations and climate change, Wheaton and the
Mining Operations ability to obtain and maintain necessary
licenses, permits, approvals and rulings, Wheaton and the Mining
Operations ability to comply with applicable laws, regulations and
permitting requirements, lack of suitable infrastructure and
employees to support the Mining Operations, inability to replace
and expand mineral reserves, including anticipated timing of the
commencement of production by certain Mining Operations (including
increases in production, estimated grades and recoveries),
uncertainties of title and indigenous rights with respect to the
Mining Operations, Wheaton and the Mining Operations ability to
obtain adequate financing, the Mining Operations ability to
complete permitting, construction, development and expansion,
global financial conditions, 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, 2020 and Form 6-K filed March 11, 2021 both on file
with the U.S. Securities and Exchange Commission in Washington,
D.C. and available on EDGAR (the "Disclosure"). Forward-looking
statements are based on assumptions management currently believes
to be reasonable, including (without limitation): the payment of
US$125 million to Sabina and the satisfaction of each party's
obligations in accordance with the terms of the 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 and achieve their stated
production estimates, that the mineral reserve and mineral resource
estimates from Mining Operations (including reserve conversion
rates) are accurate, that each party will satisfy their obligations
in accordance with the PMPAs, that Wheaton will continue to be able
to fund or obtain funding for outstanding commitments, that Wheaton
will be able to source and obtain accretive PMPAs, that
expectations regarding the resolution of legal and tax matters will
be achieved (including ongoing class action litigation and CRA
audits involving the Company), that Wheaton has properly considered
the interpretation and application of Canadian tax law to its
structure and operations, that Wheaton has filed its tax returns
and paid applicable taxes in compliance with Canadian tax law, that
Wheaton's application of the CRA Settlement for years subsequent to
2010 is accurate (including the Company's assessment that there
will be no material change in the Company's facts or change in law
or jurisprudence for years subsequent to 2010), 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 Annual Information Form for the year ended December 31,
2020 and other continuous disclosure documents filed by Wheaton
since January 1, 2021, available on SEDAR at www.sedar.com.
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"). 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. 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. The SEC has adopted amendments to its disclosure rules
to modernize the mineral property disclosure requirements for
issuers whose securities are registered with the SEC under the U.S.
Securities Exchange Act of 1934, as amended (the "Exchange Act").
These amendments became effective February 25, 2019 (the "SEC
Modernization Rules") with compliance required for the first fiscal
year beginning on or after January 1, 2021. Under the SEC
Modernization Rules, the historical property disclosure
requirements for mining registrants included in SEC Industry Guide
7 will be rescinded and replaced with disclosure requirements in
subpart 1300 of SEC Regulation S-K. Following the transition
period, as a foreign private issuer that is eligible to file
reports with the SEC pursuant to the multi-jurisdictional
disclosure system, the Company is not required to provide
disclosure on its mineral properties under the SEC Modernization
Rules and will continue to provide disclosure under NI 43-101. As a
result of the adoption of the SEC Modernization Rules, the SEC will
recognize estimates of "measured mineral resources", "indicated
mineral resources" and "inferred mineral resources." In addition,
the SEC has amended its definitions of "proven mineral reserves"
and "probable mineral reserves" to be "substantially similar" to
the corresponding definitions under the CIM Definition Standards
that are required under NI 43-101. However, while the above terms
are "substantially similar" to CIM Definition Standards, there are
differences in the definitions under the SEC Modernization Rules
and the CIM Definition Standards. Accordingly, there is no
assurance any mineral reserves or mineral resources that the
Company may report as "proven mineral reserves", "probable mineral
reserves", "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources" under NI 43-101 would
be the same had the Company prepared the reserve or resource
estimates under the standards adopted under the SEC Modernization
Rules. 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
https://www.sec.gov/edgar.shtml .
[1] ) 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. Based on report entitled "National Instrument (NI)
43-101 Technical Report: 2021 Updated Feasibility Study for the
Goose Project at the Back River Gold District, Nunavut, Canada"
with an effective date of January 15, 2021. Production forecasts
contain forward looking information and readers are cautioned that
actual outcomes may vary. S&P data set for 2024 projected
global cost curves.
[2] ) Please refer to the Attributable Mineral Reserves &
Mineral Resources table in this news release for full disclosure of
reserves and resources associated with the Santo Domingo project
including accompanying footnotes.
[3] ) Gold equivalent forecast production for 2022 and the
longer term outlook are based on the following updated commodity
price assumptions: $1,800 per ounce gold, $24 per ounce silver,
$2,100 per ounce palladium, $1,000 per ounce of platinum and $33.00
per pound cobalt. For complete details regarding Wheaton's
production guidance, refer to Wheaton's news release dated February
7, 2022, titled "Wheaton Precious Metals Meets 2021 Production
Guidance and Forecasts 20% Long-Term Growth."
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