By Carolyn King
Silver Wheaton Corp. said Monday that it had struck a deal to
acquire an additional 25% gold royalty stream from Vale SA's Salobo
copper-gold mine in Brazil for $900 million in cash.
The deal will entitle the Canada-based royalty company to 50% of
the life-of-mine gold production from the mine, which is in the
Para state of Brazil and was commissioned in November 2012. To help
pay for the acquisition, Silver Wheaton said it had entered into an
agreement with a syndicate of underwriters to sell $800 million of
common shares at $20.55 each.
The company's shares closed Monday at $21.20 on the New York
Stock Exchange.
Silver Wheaton, which says it is the world's largest precious
metals streaming company, has other streaming agreements in South
America, including with Glencore International AG in Peru and
Barrick Gold Corp. in Peru and Argentina.
It said that, in addition to the $900 million in cash, a Silver
Wheaton unit will make ongoing payments of the lesser of $400
(subject to a 1% annual inflation adjustment) and the prevailing
market price, for each ounce of gold delivered under the agreement.
The terms of the existing gold stream on Salobo were modified so
that the annual inflation adjustment that was scheduled to start in
2016 would now start coincident with this stream in 2017. Silver
Wheaton acquired the initial 25% of the Salobo gold production in
2013.
The company said the acquisition immediately boosts its
production and cash-flow profile by adding expected average gold
production of 70,000 ounces annually for the first 10 years and
60,000 ounces annually over the first 30 years. It called the
Salobo mine one of Silver Wheaton's cornerstone assets.
Write to Carolyn King at carolyn.m.king@wsj.com
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