TSX | NYSE | LSE: WPM
VANCOUVER, BC, Feb. 8, 2022 /CNW/ - Wheaton Precious Metals™
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
life1.
"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 Profile1: 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 Resources2:
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:
-
- 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.
- 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.
- 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.
- 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.
- 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
Mt
|
Grade Au
g/t
|
Contained 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).
______________________________
|
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."
|
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.
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SOURCE Wheaton Precious Metals Corp.