Wheaton Precious Metals Corp. (TSX: WPM) announced on Monday night the agreement to acquire gold and silver streams on the Blackwater project in British Columbia, a property managed by Artemis Gold Inc. (TSX: ARTG). The total consideration for the transactions is US$441 million.
The company is looking to purchase the existing gold stream held by New Gold Inc. (TSX: NGD) for an upfront consideration of US$300 million. The stream will entitle Wheaton to receive 8% of the payable gold production until 279,908 ounces have been delivered, and then 4% for the rest of the mine’s life.
On the other hand, Wheaton will also acquire a silver stream for US$141 million payable in cash to Artemis Gold and in four equal installments over the construction period of the Blackwater project. The acquisition entitles the firm to receive 50% of the payable silver production until 17.8 million ounces have been delivered, and then 33% for the life of mine.
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The sale of the gold stream currently held by New Gold to Wheaton is made possible after Artemis Gold waived its “right of first offer”. This is in exchange for New Gold waiving its “right of first refusal” on the planned sale of the silver stream, making Wheaton’s acquisition of it also possible.
Wheaton is expected to make ongoing cash payments equal to 35% of the spot gold price. With the silver stream, the company will make cash payments equal to 18% of the spot silver price, which could increase to 22% when the value of silver delivered less the total ongoing payments becomes equal to the upfront payment.
The forecast for Blackwater project’s attributable production is approximately 26,000 gold ounces and 480,000 silver ounces for the first five years, and 28,000 gold ounces and 670,000 silver ounces for the first ten years.
The company expects to finance the acquisitions from its US$372 million of cash on hand combined with under US$2 billion revolving term loan and ongoing operating cash flows.
Artemis Gold expects major construction at the project to start in Q2 2022 and production commencing in Q1 2024.
Wheaton Precious Metals last traded at $52.46 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
