Silver Wheaton Corp. will take a 25% stake in Barrick Gold Corp.'s Pascua-Lima silver mine, plus all the silver production from three other mines through at least 2013, as it announced $250 million in a new stock deal to help pay for it.
Silver Wheaton shares were up 2% at $11.82 premarket, while Barrick Gold rose 3% to $41.33.
The Canadian mining company will pay Barrick $625 million in cash over three years. It will also pay the lesser amount of $3.90 per ounce of silver delivered or the prevailing price.
The stake in the Pascua-Lima mine, which is still being built by the world's largest gold-mining company, will give Silver Wheaton an estimated 9 million ounces a year for the first five years it operates. The deal requires Barrick to have 75% of design capacity completed by the end of 2015.
Retroactive to Sept. 1, Silver Wheaton will get all the silver output from the Lagunas Norte, Pierina and Veladero mines through at least 2013, estimated about 2.4 million ounces a year. If Barrick hasn't completed 75% of design capacity at the Pascua-Lima mine by 2013, Silver Wheaton will continue to get silver from the other operation minds for the next two years until Pascua-Lima is up and running.
President and Chief Executive Officer Peter Barnes said the deal "propels Silver Wheaton to the next level in terms of size and growth profile."
Silver Wheaton is paying for the deal with $70 million in cash on hand and part of its $250 million in shares sold to Genuity Capital Markets and GMP Securities LP, announced Tuesday. The remaining payments will be made from operating cash flow. The company doesn't expect a debt drawdown.
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