Wheaton International is acquiring a gold stream from Capstone’s Santo Domingo Project.
Wheaton Precious Metals™ Corp. (“Wheaton” or the “Company”) has announced that its wholly-owned subsidiary, Wheaton Precious Metals International Ltd. (“Wheaton International“) has entered into a definitive Precious Metal Purchase Agreement (the “Stream Transaction“) with Capstone Mining Corp. (“Capstone“) (TSX: CS) in respect to Capstone’s Santo Domingo project located in Atacama Region, Chile.
Wheaton International will purchase 100% of the payable gold production until 285 thousand ounces have been delivered, thereafter dropping to 67% of payable gold production for the life of the mine. Wheaton International will pay Capstone total upfront consideration of US$290 million, $30 million of which is payable upon closing and the remainder of which is payable during construction. In addition, Wheaton will make ongoing payments for gold ounces delivered (the “Production Payment”) 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$290 million, at which point the Production Payment will increase to 22% of the spot gold price.
The Santo Domingo project is forecast to be a first quartile copper mine with an 18 year mine life. Capstone expects major construction to commence in late 2021 with the first full year of production forecast for 2024.
Significant exploration upside potential exists. 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%. Capstone is also 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.
Fort Capital acted as Financial Advisor to Wheaton International on the Stream Transaction.
ABOUT WHEATON PRECIOUS METALS
Wheaton is the world’s premier precious metals streaming company. The Company enters into agreements to purchase all or a portion of the precious metals or cobalt production from mines located around the world for an upfront payment and an additional payment upon the delivery of the metal. Since 2004, Wheaton has assembled a high-quality portfolio of long-life, low-cost assets, which delivers amongst the highest cash operating margins in the mining industry, allowing it to pay a competitive dividend and continue to grow through accretive acquisitions.
ABOUT CAPSTONE MINING
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 100% 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.