* Deal covers gold streams from Brazil mine, Canada projects
* Sees 2013 production of 33.5 mln silver equivalent ounces
TORONTO Feb 5 Silver Wheaton Corp said
on Tuesday it had signed a deal with Brazil's Vale SA
to acquire a share of the gold produced at some of the mines
owned by the diversified mining giant in Brazil and Canada for
$1.9 billion in cash, and 10 million warrants.
The deal will immediately boost the Canadian company's
production by adding expected average gold production of 110,000
ounces of gold per year over the next 20 years, or 5.9 million
silver equivalent ounces.
Silver Wheaton will pay $1.33 billion for 25 percent of gold
produced at the Salobo mine in Brazil over its mine life, and
$570 million for 70 percent of gold produced over a 20-year
period at some of Vale's mines in Sudbury, Ontario.
The move into gold is a departure for Vancouver-based Silver
Wheaton, which has focused almost exclusively on silver stream
"While we have traditionally focused on silver, we have
never been averse to strategically adding 'the right' gold
streams to our portfolio," said Chief Executive Randy Smallwood
in a statement.
Smallwood added that while the company believes there are
significant opportunities in the silver space, it is open to
layering more high-quality gold streams into its portfolio.
In addition to the cash and warrants, Silver Wheaton, a
precious metal streaming company, will pay a set amount, about
$400 per ounce for gold, at the time of production. The warrants
will have a strike price of $65 and a term of 10 years.
Gold was worth about $1,670 per ounce on Tuesday, while
silver was worth about $32 per ounce.
Silver Wheaton now expects to produce some 33.5 million
ounces of silver equivalent in 2013, up from some 28 million
equivalent ounces in 2012. By 2017, production is expected to
top 53 million silver equivalent ounces.
The company has secured a $1 billion revolving credit
facility with a 5-year term and a $1.5 billion bridge financing
facility with a 1-year term to finance the deal, which replace
an existing $400 million revolving credit facility.
When combined with existing cash on hand, the company
expects to fund the Vale deal while still pursuing other growth
Shares of Silver Wheaton closed at $36.11 on Tuesday on the
Toronto Stock Exchange.