Wheaton’s (NYSE:WPM) $441M Deal for Gold and Silver Streams

Wheaton Precious Metals (NYSE:WPM) announced just last week they will be acquiring the existing gold stream located in the Blackwater Gold Project in British Columbia, Canada. The gold stream is currently being held by New Gold Inc. (NYSE:NGD) and the company will acquire the stream for an upfront payment of $300 million. 

Wheaton has also entered into a precious metals purchase agreement with Artemis Gold Inc. (CVE:ARTG) in regards to the silver streams within the Blackwater project. The precious metals company will pay Artemis approximately $141 million upfront, which will be paid in four equal installments during construction at the project. In total, Wheaton will pay $441 million for both streams. 

New Gold did sell the Blackwater Gold Project to Artemis last year, except it retained the gold stream as partial consideration. 

Randy Smallwood, Wheaton’s President and Chief Executive Officer, commented in a press release: “Artemis’s approach of disciplined, responsible resource development aligns well with our own focus on promoting industry-leading mining practices. We are proud to partner with Artemis in the advancement of the Blackwater Project, which we believe is on track to develop into a top-tier operation, producing socially and environmentally sound minerals, right in our own backyard.”

Under terms of the new gold stream, Wheaton is entitled to receive 8% of the payable gold production until 279,908 ounces have been delivered. Once that amount has been delivered, it will drop to 4% of payable gold production for the life of the mine. 

Wheaton will also be entitled to receive 50% of the payable silver production until 17.8 million ounces have been delivered, and will then drop to 33% of payable silver production for the life of the mine.  

Wheaton Precious Metals Continue to Hunt for Growth

“The acquisition of the gold and silver streams on the Blackwater Project further enhances and diversifies Wheaton’s existing portfolio of low-cost, high-quality, long-life mines. With strong ESG commitments at every stage of development, compelling economics and significant exploration upside potential, Blackwater incorporates many of the attributes we seek for accretive growth,” said Smallwood. 

For the first five full years of production, gold production is expected to average approximately 26 koz per year, and grow up to 28 koz per year for the first ten full years. 

Silver production is forecast to average over 480 koz per year for the first five full years of production, and over 670 koz per year for the first ten full years. Compared to Silver, gold’s numbers may seem small, but there is a fixed silver recovery of 61% that also attributes to these amounts. 

Steven Dean, Chairman and CEO of Artemis commented in a press release, “The company is very pleased to have completed the Silver Stream Agreement with Wheaton.  The purchase by Wheaton of the Gold Stream provides further endorsement of the quality and first-tier status of the Blackwater project. It also facilitates simplification of administration of such agreements through development and operations and magnifies the conviction of the technical and economic merits of the project by a top tier royalty and streaming company.  We look forward to working with Wheaton as a trusted partner in the years to come”.

Wheaton has also agreed to make ongoing cash payments for gold and silver ounces delivered depending on the spot price. For gold, it will pay 35% of the spot price. For silver, it will pay equal to 18% of the spot price until the up-front deposit payment is reduced to zero, at which the payments will increase to 22% of the spot silver price.

Artemis is expected to start major construction works for the Blackwater project in the second quarter of next year, and is on track to begin production in the first quarter of 2024.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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