Mr. Randy Smallwood reports
SILVER WHEATON ACQUIRES ADDITIONAL GOLD STREAM FROM VALE'S SALOBO MINE
Silver Wheaton Corp.'s wholly owned subsidiary, Silver Wheaton (Caymans) Ltd., has agreed to acquire from a subsidiary of Vale SA an amount of gold equal to 25 per cent of the life-of-mine gold production from its Salobo mine, located in Brazil. This acquisition is in addition to the 25 per cent of Salobo gold production that Silver Wheaton acquired in 2013. The company will pay Vale cash consideration of $900-million (U.S.) for the increased gold stream. In addition, Silver Wheaton will make continuing payments of the lesser of $400 (U.S.) (subject to a 1-per-cent annual inflation adjustment commencing in 2017) and the prevailing market price for each ounce of gold delivered under the agreement. The original gold purchase agreement, dated Feb. 28, 2013, has been amended to provide for the additional 25-per-cent stream.
Transaction highlights
- Provides immediate production and cash flow
- Silver Wheaton will receive an additional 25 per cent of the gold production from Vale's Salobo mine, entitling the company to a total of 50 per cent of the life-of-mine gold production from the mine.
- This immediately increases Silver Wheaton's production and cash flow profile by adding expected average gold production of 70,000 ounces per year for the first 10 years and 60,000 ounces per year over the first 30 years (five million and 4.3 million silver equivalent ounces, respectively).
- Significant expansion and exploration potential exists at Salobo, which currently has an extensive reserve base and good depth potential.
- Subsequent to the closing of this acquisition, Silver Wheaton's estimated proven and probable gold reserves increase by 3.3 million ounces, measured and indicated gold resources increase by 800,000 ounces, and inferred gold resources increase by 400,000 ounces.
- Over the next five years, gold as a percentage of Silver Wheaton's forecasted production is estimated to grow to over 40 per cent.
- Increases Silver Wheaton's growth profile
- Silver Wheaton is also pleased to announce its updated production guidance, which includes the additional stream from Salobo. In 2015, Silver Wheaton forecasts 43.5 million ounces of silver equivalent production (including 230,000 ounces of gold) growing to 51 million ounces of silver equivalent production (including 325,000 ounces of gold) in 2019.
"The Salobo mine is one of Silver Wheaton's cornerstone assets, and we are fortunate to have the opportunity to double our gold production from this high-quality mine," said Randy Smallwood, Silver Wheaton's president and chief executive officer. "Since we founded our company 10 years ago, we have had a clear vision of the characteristics of our ideal asset. To start, the asset is managed by a strong operating partner and is located in a low-political-risk jurisdiction. Furthermore, it is primarily a base metal producer, where precious metals represent only a relatively small portion of the mine's overall economics. Vale's Salobo mine possesses all of these characteristics, while also offering over 40 years of defined mine life, as well as the potential for significant exploration and expansion upside. Salobo is certainly one of the best assets we have ever seen and one that readily lends itself to streaming.
"With over 70 per cent of global silver production sourced as byproduct, we continue to believe that the silver market represents the largest market for streaming opportunities. However, Silver Wheaton has never been averse to strategically layering additional gold into the streaming mix when the right opportunity presents itself."
Transaction terms
Silver Wheaton Caymans has agreed to acquire from a subsidiary of Vale an additional 25 per cent of the life-of-mine gold production from Vale's Salobo mine. Production will accrue retroactively to Silver Wheaton Caymans as of Jan. 1, 2015.
Silver Wheaton Caymans will pay Vale cash consideration of $900-million (U.S.) for the increased gold stream. In addition, Silver Wheaton Caymans will make continuing payments of the lesser of $400 (U.S.) (subject to a 1-per-cent annual inflation adjustment commencing in 2017 for the Salobo stream) 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 will now start coincident with this stream in 2017.
Vale is in the process of ramping up mill throughput at the Salobo mine to 24 million tonnes per year. If throughput capacity is expanded within a predetermined period, Silver Wheaton Caymans will be required to make an additional payment to Vale, relative to the 50-per-cent stream, based on a set fee schedule that now ranges from $88-million (U.S.) if throughput is expanded beyond 28 million tonnes per year by Jan. 1, 2036, up to $720-million (U.S.) if throughput is expanded beyond 40 million tonnes per year by Jan. 1, 2018.
Financing the acquisition
To pay the initial upfront cash payment of $900-million (U.S.), Silver Wheaton intends to use cash on hand, together with the net proceeds of an equity offering announced concurrently as of March 2, 2015. Silver Wheaton may also use amounts borrowed under its existing revolving credit facility.
About the Salobo mine
According to Vale's public filings, the Salobo mine, located in the Para state of Brazil, is the largest copper deposit in Brazil. This low-cost copper-gold mine was commissioned in November, 2012, with a design throughput capacity of 12 million tonnes per year and subsequently expanded to 24 million tonnes per year of mill capacity in mid-2014. The mine is well-positioned relative to infrastructure and is connected to the national power grid.
The Salobo mine has total estimated mineral reserves of 1,179 million tonnes grading 0.35 gram per tonne gold, and, along with additional mineral resources, also has substantial exploration and expansion potential. The acquisition of an additional 25-per-cent life-of-mine gold stream adds an estimated 3.3 million ounces of proven and probable mineral reserves, 800,000 ounces of measured and indicated mineral resources, and 400,000 ounces of inferred mineral resources attributable to Silver Wheaton. Total estimated attributable mineral reserves and mineral resources for the now 50-per-cent life-of-mine gold stream are detailed in the attached table.
Silver Wheaton announces new production guidance
Silver Wheaton is pleased to provide its updated one-year and five-year production guidance, which incorporates the additional 25-per-cent life-of-mine gold stream on the Salobo mine. In 2015, Silver Wheaton's estimated attributable silver equivalent production is forecast to be 43.5 million silver equivalent ounces, including 230,000 ounces of gold. In 2019, estimated annual attributable production is anticipated to increase over 40 per cent compared with 2014 levels, growing to approximately 51 million silver equivalent ounces, including 325,000 ounces of gold.
The additional ounces from Salobo to Silver Wheaton's production profile, as well as the ramp-up of Hudbay Minerals Inc.'s Constancia mine in 2015 more than offset the anticipated reduction in attributable production from other assets in Silver Wheaton's current streaming portfolio. Hudbay's Constancia mine is expected to meet the completion test well before 2016, resulting in gold production from the 777 mine attributable to Silver Wheaton dropping from 100 per cent to 50 per cent in 2017. In addition, the 10-year term contract on Capstone Mining's Cozamin mine, acquired with Silver Wheaton's 2009 acquisition of Silverstone, expires in April, 2017. Finally, as Hudbay provides no formal production guidance for its Rosemont project, Silver Wheaton no longer includes any production from the Rosemont project in its production forecast for 2019. As a reminder, Silver Wheaton also does not include any production from Barrick Gold Corp.'s Pascua-Lama project in its guidance.
Silver Wheaton announces 2014 production and sales volume
Silver Wheaton reports that attributable silver equivalent production for the year ended Dec. 31, 2014, was 35.3 million ounces, compared with 35.8 million ounces in 2013, representing a decrease of 1.5 per cent.
The company reports silver equivalent sales volume for the year ended Dec. 31, 2014, was 32.9 million ounces, compared with 30 million ounces in 2013, representing an increase of 9.8 per cent.
Silver Wheaton announces updated reserves and resources
As of Dec. 31, 2014, and detailed in the attached tables in this news release, proven and probable mineral reserves attributable to Silver Wheaton were 757.7 million ounces of silver compared with 781.3 million ounces reported by the company in its management discussion and analysis for the quarter ended Sept. 30, 2014, a decrease of 3 per cent, and 9.27 million ounces of gold compared with 6.09 million ounces, an increase of 52 per cent. On an attributable measured and indicated basis, silver resources were 549.5 million ounces compared with 569.4 million ounces reported by the company in its management discussion and analysis for the quarter ended Sept. 30, 2014, a decrease of 3 per cent, and gold resources were 2.76 million ounces compared with 1.92 million ounces, an increase of 43 per cent. On an attributable inferred resource basis, silver resources were 275.2 million ounces compared with 298.7 million reported by the company in its management discussion and analysis for the quarter ended Sept. 30, 2014, a decrease of 8 per cent, and gold resources were 1.46 million ounces compared with 1.03 million ounces, an increase of 41 per cent.
The attached tables in this news release set forth the estimated mineral reserves and mineral resources (silver and/or gold only) for the 27 mining assets that are subject to the company's precious metal purchase agreements, adjusted where applicable to reflect the company's percentage entitlement to silver and/or gold produced from such assets, as of Dec. 31, 2014, unless otherwise noted. The tables are based on information available to the company as of the date of this news release, and therefore will not reflect updates, if any, after such date.
Neil Burns, vice-president of technical services, is a qualified person, as such term is defined under National Instrument 43-101, and has reviewed and approved the technical disclosure in this news release including information on mineral reserves and mineral resources.
Conference call
A conference call will be held on Monday, March 2, 2015, starting at 5 p.m. (Eastern Time) to discuss this transaction. To participate in the live call, please use one of the following methods.
Dial toll-free from Canada or the United States: 1-888-231-8191
Dial from outside Canada or the United States: 1-647-427-7450
Passcode: 94973271
Live audio webcast: On the Silver Wheaton website
Participants should dial in 10 to 15 minutes before the call.
The presentation may be obtained by contacting Scotia Capital Inc., collect in Canada, attention: equity capital markets (telephone number 416-862-5837), Scotia Plaza, 66th floor, 40 King St. W, M5W 2X6, Toronto, Ont. The presentation will also be available in PDF format for download from the Silver Wheaton website and will be filed on SEDAR.
The common shares will be offered by way of a short form prospectus relating to the offering announced concurrently on March 2, 2015, in all of the provinces of Canada. A copy of the Canadian preliminary prospectus once available may be obtained by contacting Scotia Capital Inc., collect in Canada, attention: equity capital markets (telephone number 416-862-5837), Scotia Plaza, 66th floor, 40 King St. W, M5W 2X6, Toronto, Ont.
The issuer has filed a registration statement (including a U.S. prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC website. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by contacting Scotia Capital Inc., collect in the United States, attention: equity capital markets (telephone number 212-225-6853), 250 Vesey St., 24th floor, New York, N.Y., 10281.
PROVEN AND PROBABLE RESERVES ATTRIBUTABLE TO SILVER WHEATON (1, 2, 3, 8, 18)
As of Dec. 31, Proven Probable
2014, unless Tonnage Grade Contained Tonnage Grade Contained
otherwise noted (6) (Mt) (g/t) (Moz) (Mt) (g/t) (Moz)
Silver
Penasquito (25%) (14)
Mill 84.1 33.3 90 52.7 25 42.4
Heap leach 10.9 31.7 11.1 11.5 25 9.2
San Dimas (10, 14) 0.9 345.2 10.3 4 307.3 39.2
Pascua-Lama (25%) (14) 8 69.8 17.9 73.2 64.1 150.8
Lagunas Norte (11) 12.4 4.5 1.8 52.9 4.5 7.7
Veladero (11) 5.5 14.8 2.6 90.5 14.8 43.2
Yauliyacu (11, 12) 0.8 123.5 3.1 3.4 109.8 11.9
777 (13) 4.9 24.7 3.9 5.7 24.7 4.5
Neves-Corvo
Copper 4.9 38.8 6.1 20.5 36.1 23.8
Zinc 10.4 73.1 24.4 10.2 66.9 22
Rosemont (15) 279.5 4.1 37 325.8 4.1 43.1
Constancia 506 3.1 50.3 114 2.9 10.8
Zinkgruvan
Zinc 7.4 87 20.6 4.2 51 6.9
Copper 3.3 35 3.7 0.1 35 0.1
Stratoni 0.5 174 2.9 0.3 182 1.5
Minto 3.8 5.9 0.7 5.7 5.7 1
Cozamin (11)
Copper - - - 2.8 43.8 4
Los Filos 48.8 5.7 8.9 198.4 5 32.2
Metates royalty (20) 4.1 18 2.3 13.2 13.1 5.5
Total silver 297.8 459.9
Gold
Salobo (50%) (16) 331.7 0.39 4.13 257.9 0.31 2.57
Sudbury (70%) (11) - - - 54.3 0.39 0.68
777 (13) 3.5 1.81 0.21 4.1 1.81 0.24
Constancia (50%) 253 0.05 0.42 57 0.07 0.14
Minto 3.8 0.8 0.1 5.7 0.6 0.11
Toroparu (10%) (17) 3 1.1 0.1 9.7 0.98 0.31
Metates royalty (20) 4.1 0.68 0.09 13.2 0.44 0.19
Total gold 5.04 4.23
As of Dec. 31, Proven and probable
2014, unless Tonnage Grade Contained Process
otherwise noted (6) (Mt) (g/t) (Moz) recovery (7)
Silver
Penasquito (25%) (14)
Mill 136.7 30.1 132.4 53 to 65%
Heap leach 22.4 28.3 20.4 22 to 28%
San Dimas (10, 14) 4.9 314.5 49.5 94%
Pascua-Lama (25%) (14) 81.2 64.7 168.7 82%
Lagunas Norte (11) 65.3 4.5 9.5 19%
Veladero (11) 96 14.8 45.8 6%
Yauliyacu (11, 12) 4.1 112.4 15 85%
777 (13) 10.6 24.7 8.4 64%
Neves-Corvo
Copper 25.4 36.6 29.9 35%
Zinc 20.6 70 46.4 20%
Rosemont (15) 605.3 4.1 80.1 76%
Constancia 620 3.1 61.1 71%
Zinkgruvan
Zinc 11.6 73.9 27.5 87%
Copper 3.4 35 3.8 78%
Stratoni 0.8 176.7 4.5 84%
Minto 9.5 5.7 1.8 78%
Cozamin (11)
Copper 2.8 43.8 4 72%
Los Filos 247.2 5.2 41.1 5%
Metates royalty (20) 17.2 14.2 7.9 76%
Total silver 757.7
Gold
Salobo (50%) (16) 589.6 0.35 6.7 66%
Sudbury (70%) (11) 54.3 0.39 0.68 81%
777 (13) 7.7 1.81 0.45 73%
Constancia (50%) 310 0.06 0.56 61%
Minto 9.5 0.68 0.21 74%
Toroparu (10%) (17) 12.7 1.01 0.41 89%
Metates royalty (20) 17.2 0.5 0.28 89%
Total gold 9.27
MEASURED AND INDICATED RESOURCES ATTRIBUTABLE TO SILVER WHEATON (1, 2, 3, 4, 5, 9, 18)
As of Dec. 31, Measured Indicated Measured and indicated
2014, unless otherwise Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained
noted (6) (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) (Mt) (g/t) (Moz)
Silver
Penasquito (25%) (14)
Mill 34.4 26.1 28.9 91.7 21.5 63.5 126.2 22.8 92.4
Heap leach 5.1 19.3 3.1 24.1 16.7 13 29.2 17.2 16.1
Pascua-Lama (25%) (14) 3.7 26.4 3.1 35.7 22.3 25.5 39.4 22.7 28.7
Yauliyacu (11, 12) 1 127.3 4 6 216.6 41.5 6.9 204.2 45.5
Neves-Corvo
Copper 5.8 48.5 9 25.7 50.8 42 31.5 50.3 51
Zinc 14.1 59.6 27 60.2 55.7 107.8 74.3 56.4 134.8
Rosemont (15) 38.5 3 3.7 197.7 2.7 17.1 236.2 2.7 20.8
Constancia 73 2.4 5.6 299 2 19.4 372 2.1 25
Zinkgruvan
Zinc 2.2 66.8 4.6 4.7 107.1 16.3 6.9 94.5 20.9
Copper 1.6 20 1 0.4 39.1 0.5 2 23.9 1.5
Aljustrel (19)
Zinc 1.3 65.6 2.7 20.5 60.3 39.7 21.8 60.7 42.4
Stratoni 0.2 200.4 1.5 0.2 213.3 1.4 0.4 206.4 2.9
Minto 7.5 3.6 0.9 32.3 3.4 3.5 39.8 3.4 4.3
Keno Hill (25%)
Underground - - - 0.7 473.1 10.2 0.7 473.1 10.2
Elsa tailings - - - 0.6 119 2.4 0.6 119 2.4
Los Filos 11.4 11 4 112.3 7.4 26.9 123.7 7.8 30.9
Loma de La Plata (12.5%) - - - 3.6 169 19.8 3.6 169 19.8
Total silver 99.2 450.2 549.5
Gold
Salobo (50%) (16) 24.6 0.47 0.37 97.7 0.37 1.16 122.2 0.39 1.53
Sudbury (70%) (11) - - - 28.9 0.34 0.32 28.9 0.34 0.32
Constancia (50%) 36.5 0.05 0.06 149.5 0.04 0.18 186 0.04 0.23
Minto 7.5 0.42 0.1 32.3 0.32 0.33 39.8 0.34 0.43
Toroparu (10%) (17) 0.9 0.87 0.03 7.9 0.83 0.21 8.8 0.84 0.24
Total gold 0.56 2.2 2.76
INFERRED RESOURCES ATTRIBUTABLE TO
SILVER WHEATON (1, 2, 3, 4, 5, 9, 18)
As of Dec. 31, Inferred
2014, unless Tonnage Grade Contained
otherwise noted (6) (Mt) (g/t) (Moz)
Silver
Penasquito (25%) (14)
Mill 4.4 19.5 2.7
Heap leach 6.1 13.7 2.7
San Dimas (10, 14) 7.3 309.5 73.0
Pascua-Lama (25%) (14) 4.9 20.1 3.2
Yauliyacu (11, 12) 5.0 178.7 28.7
777 (13) 0.8 30.6 0.8
Neves-Corvo
Copper 25.1 43.5 35.1
Zinc 21.4 48.9 33.6
Rosemont (15) 104.5 3.3 11.1
Constancia 200.0 1.9 12.0
Zinkgruvan
Zinc 6.1 75.0 14.7
Copper 0.5 34.0 0.6
Aljustrel (19)
Zinc 8.7 50.4 14.0
Stratoni 0.5 169.0 2.7
Minto 16.2 3.2 1.7
Keno Hill (25%)
Underground 0.2 349.8 2.4
Los Filos 175.9 6.3 35.7
Loma de La Plata (12.5%) 0.2 76.0 0.4
Metates royalty (20) 1.0 9.7 0.3
Total silver 275.2
Gold
Salobo (50%) (16) 74.0 0.31 0.74
Sudbury (70%) (11) 5.5 0.67 0.12
777 (13) 0.4 1.77 0.02
Constancia (50%) 100.0 0.03 0.10
Minto 16.2 0.30 0.16
Toroparu (10%) (17) 13.0 0.74 0.31
Metates royalty (20) 1.0 0.38 0.01
Total gold 1.46
Notes:
(1) All mineral reserves and mineral resources have been calculated in accordance with
the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) standards on mineral
resources and mineral reserves and National Instrument 43-101, Standards for
Disclosure For Mineral Projects, or the Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves.
(2) Mineral reserves and mineral resources are reported above in millions of metric
tonnes (Mt), grams per metric tonne (g/t) and millions of ounces (Moz).
(3) Individual qualified persons, as defined by NI 43-101, for the technical information
contained in this document (including the mineral reserve and mineral resource estimates)
for the following operations are as follows:
(a) Salobo mine -- Christopher Jacobs, CEng, MIMMM, vice-president and mining economist);
James Turner, CEng, MIMMM, senior mineral process engineer); Barnard Foo, PEng, MEng,
MBA, senior mining engineer; and Jason Che Osmond, FGS, CGeol, EurGeol, senior
geologist, all of whom are employees of Micon International Ltd.
(b) All other operations and development projects -- the company's qualified persons are
Neil Burns, MSc, PGeo, vice-president, technical services; Samuel Mah, MASc, PEng,
senior director, project evaluations, both of whom are employees of the company.
(4) The mineral resources reported in the tables are exclusive of mineral reserves. The
Minto mine, Neves-Corvo mine, Zinkgruvan mine, Stratoni mine and Toroparu project report
mineral resources inclusive of mineral reserves. The company's qualified persons have
made the exclusive mineral resource estimates for these mines based on average mine
recoveries and dilution.
(5) Mineral resources, which are not mineral reserves, do not have demonstrated economic
viability.
(6) Other than as detailed as follows, mineral reserves and mineral resources are reported as
of Dec. 31, 2014, based on information available to the company as of the date of this
document, and therefore will not reflect updates, if any, after such date.
(a) Mineral resources and mineral reserves for the San Dimas, Pascua-Lama, 777, Constancia
and Minto mines are reported as of Dec. 31, 2013.
(b) Mineral resources and mineral reserves for the Toroparu project are reported as of
March 31, 2013.
(c) Mineral resources and mineral reserves for the Neves-Corvo and Zinkgruvan mines are
reported as of June 30, 2014.
(d) Mineral reserves for the Cozamin mine are reported as of June 30, 2014.
(e) Mineral resources and mineral reserves for the Rosemont project are reported as of
Aug. 28, 2012.
(f) Mineral resources for the Constancia project (including the Pampacancha deposit) are
reported as of Sept. 30, 2013.
(g) Mineral resources for Aljustrel's Feitais and Moinho mines are reported as of Nov. 30,
2010. Mineral resources for the Estacao project are reported as of Dec. 31, 2007.
(h) Mineral Resources for Keno Hill's Elsa tailings project are reported as of April 22,
2010; Lucky Queen project as of July 27, 2011; Onek and Bermingham projects as of
Oct. 15, 2014; Flame and Moth project as of Jan. 30, 2013; Bellekeno mine inferred
mineral resources as of Sept. 30, 2012; and Bellekeno mine indicated mineral resources
as of Sept. 30, 2013.
(i) Mineral resources for the Loma de La Plata project are reported as of May 20, 2009.
(j) Mineral resources for Metates are reported as of Feb. 16, 2012, and mineral reserves
as of March 18, 2013.
(7) Process recoveries are the average percentage of silver or gold in a saleable product
(dore or concentrate) recovered from mined ore at the applicable site process plants
as reported by the operators.
(8) Mineral reserves are estimated using appropriate process recovery rates and the following
commodity prices:
(a) Penasquito mine -- $1,300 per ounce gold, $22 per ounce silver, 90 cents per pound lead
and 90 cents per pound zinc;
(b) San Dimas mine -- 2.7-gram-per-tonne-gold-equivalent cut-off, assuming $1,250 per gold
ounce and $20 per ounce silver;
(c) Pascua-Lama project -- $1,100 per ounce gold, $21 per ounce silver and
$3 per pound copper;
(d) Lagunas Norte and Veladero mines -- $1,100 per ounce gold and $17 per ounce silver;
(e) Yauliyacu mine -- $20 per ounce silver, $3.29 per pound copper, $1.02 per pound
lead and zinc;
(f) 777 mine -- $1,250 per ounce gold, $25 per ounce silver, $3 per pound copper
and $1.06 per pound zinc;
(g) Neves-Corvo mine -- 1.6-per-cent-copper cut-off for the copper reserve and
4.8-per-cent-zinc-equivalent cut-off for all the zinc reserves, both assuming
$2.50 per pound copper and $1 per pound lead and zinc;
(h) Rosemont project -- $4.90-per-tonne net-smelter-return cut-off, assuming $20 per ounce
silver, $2.50 per pound copper and $15 per pound molybdenum;
(i) Constancia project -- $1,250 per gold ounce, $25 per ounce silver, $3 per pound
copper and $14 per pound molybdenum;
(j) Zinkgruvan mine -- 3.98-per-cent-zinc-equivalent cut-off for the zinc reserve and
1.5-per-cent-copper cut-off for the copper reserve, both assuming $2.50 per pound
copper and $1 per pound lead and zinc;
(k) Stratoni mine -- 18.02-per-cent-zinc-equivalent, assuming $16.50 per ounce silver,
$3 per pound copper and 95 cents per pound lead and zinc;
(l) Minto mine -- 0.5-per-cent-copper cut-off for open pit and $64.40-per-tonne
net-smelter-return cut-off for underground, assuming $300 per ounce gold, $3.90 per
ounce silver and $2.50 per pound copper;
(m) Cozamin mine -- $42.50-per-tonne net-smelter-return cut-off, assuming $20 per ounce
silver, $2.50 per pound copper, 85 cents per pound lead and 80 cents per pound zinc;
(n) Los Filos mine -- $1,300 per ounce gold and $22 per ounce silver;
(o) Salobo mine -- 0.253-per-cent-copper-equivalent cut-off, assuming $1,250 per ounce
gold and $3.45 per pound copper;
(p) Sudbury mines -- $1,250 per ounce gold, $22 per ounce silver, $10.43 per pound nickel,
$3.45 per pound copper, $1,800 per ounce platinum, $1,000 per ounce palladium and
$13 per pound cobalt;
(q) Toroparu project -- 0.38-gram-per-tonne-gold cut-off, assuming $1,070 per ounce
gold for fresh rock, and 0.35-gram-per-tonne-gold cut-off, assuming $970 per ounce
gold for saprolite;
(r) Metates royalty -- 0.35-gram-per-tonne-gold-equivalent cut-off, assuming $1,200 per
ounce gold and $24 per ounce silver.
(9) Mineral resources are estimated using appropriate recovery rates and the
following commodity prices:
(a) Penasquito mine -- $1,500 per ounce gold, $24 per ounce silver, $1 per pound lead
and $1 per pound zinc;
(b) San Dimas mine -- 0.2 gram per tonne gold equivalent, assuming $1,300 per ounce
gold and $20 per ounce silver;
(c) Pascua-Lama project -- $1,500 per ounce gold, $24 per ounce silver and
$3.50 per pound copper;
(d) Yauliyacu mine -- $20 per ounce silver, $3.29 per pound copper and $1.02 per
pound lead and zinc;
(e) 777 mine -- $1,250 per ounce gold, $25 per ounce silver, $3 per pound copper
and $1.06 per pound zinc;
(f) Neves-Corvo mine -- 1-per-cent-copper cut-off for the copper resource and
3-per-cent-zinc cut-off for the zinc resource, both assuming $2.50 per
pound copper and $1 per pound lead and zinc;
(g) Rosemont project -- 0.3-per-cent-copper-equivalent cut-off for mixed and
0.15-per-cent-copper equivalent for sulphide, assuming $20 per ounce silver,
$2.50 per pound copper and $15 per pound molybdenum;
(h) Constancia project -- 0.12-per-cent-copper cut-off for Constancia and
0.1-per-cent-copper cut-off for Pampacancha;
(i) Zinkgruvan mine -- 3.8-per-cent-zinc-equivalent cut-off for the zinc resource
and 1-per-cent-copper cut-off for the copper resource, both assuming $2.50 per
pound copper and $1 per pound lead and zinc;
(j) Aljustrel mine -- 4.5-per-cent-zinc cut-off for Feitais and Moinho zinc
resources and 4-per-cent-zinc cut-off for Estacao zinc resources;
(k) Stratoni mine -- cut-off is geological due to the sharpness of the mineralized
contacts and the high-grade nature of the mineralization;
(l) Minto mine -- 0.5-per-cent-copper cut-off;
(m) Keno Hill mines:
(i) Bellekeno mine -- $185-per-tonne net-smelter-return cut-off, assuming
$22.50 per ounce silver, 85 cents per pound lead and 95 cents per pound zinc;
(ii) Flame and Moth project -- $185-per-tonne net-smelter-return cut-off, assuming
$1,400 per ounce gold, $24 per ounce silver, 85 cents per pound lead and 95 cents
per pound zinc;
(iii) Bermingham project -- $185-per-tonne net-smelter-return cut-off, assuming
$1,250 per ounce gold, $20 per ounce silver, 90 cents per pound lead and
95 cents per pound zinc;
(iv) Lucky Queen project -- $185-per-tonne net-smelter-return cut-off, assuming
$1,100 per ounce gold, $18.50 per ounce silver, 90 cents per pound lead and
95 cents per pound zinc;
(v) Onek project -- $185-per-tonne net-smelter-return cut-off, assuming $1,250 per
ounce gold, $20 per ounce silver, 90 cents per pound lead and 95 cents
per pound zinc;
(vi) Elsa tailings project -- 50-gram-per-tonne-silver cut-off;
(n) Los Filos mine -- $1,500 per ounce gold and $24 per ounce silver;
(o) Loma de La Plata project -- 50-gram-per-tonne-silver-equivalent cut-off, assuming
$12.50 per ounce silver and 50 cents per pound lead;
(p) Salobo mine -- 0.296-per-cent-copper-equivalent, assuming $1,500 per ounce gold
and $3.70 per pound copper;
(q) Sudbury mines -- $1,250 per ounce gold, $22 per ounce silver, $10.43 per pound
nickel, $3.45 per pound copper, $1,800 per ounce platinum, $1,000 per ounce
palladium and $13 per pound cobalt;
(r) Toroparu project -- 0.3-gram-per-tonne-gold cut-off, assuming $1,350 per ounce gold;
(s) Metates royalty -- 0.35-gram-per-tonne-gold-equivalent cut-off, assuming $1,200 per
ounce gold and $24 per ounce silver.
(10) The San Dimas silver purchase agreement provides that Primero will deliver to the
company a per-annum amount equal to the first six million ounces of payable silver
produced at the San Dimas mine and 50 per cent of any excess for the life of the mine.
(11) The company's attributable mineral resources and mineral reserves for the Lagunas Norte,
Veladero, Cozamin and Yauliyacu silver interests, in addition to the Sudbury and 777
gold interests, have been constrained to the production expected for the various contracts.
(12) The company's Yauliyacu silver purchase agreement (March, 2006) with Glencore provides
for the delivery of up to 4.75 million ounces of silver per year for 20 years. In the
event that silver sold and delivered to Silver Wheaton in any year totals less than
4.75 million ounces, the amount sold and delivered to Silver Wheaton in subsequent years
will be increased to make up for any cumulative shortfall, to the extent production
permits. Depending upon production levels, it is possible that the company's current
attributable tonnage may not be mined before the agreement expires.
(13) The 777 precious metals purchase agreement provides that Hudbay will deliver 100 per cent
of the payable silver for the life of the mine and 100 per cent of the payable gold
until completion of the Constancia project, after which the gold stream will reduce to
50 per cent. The gold figures in this table represent the attributable 777 mine
mineral resources and mineral reserves constrained to the production expected for the
777 precious metals purchase agreement.
(14) The scientific and technical information in these tables regarding the Penasquito and
San Dimas mines and the Pascua-Lama project was sourced by the company from the
following SEDAR filed documents:
(a) Penasquito -- Goldcorp management discussion and analysis dated Feb. 19, 2015;
(b) San Dimas -- Primero annual information form filed on March 31, 2014;
(c) Pascua-Lama -- Barrick Gold management discussion and analysis dated Feb. 19, 2015.
The companies' qualified persons have approved the disclosure of scientific and
technical information in respect of the Penasquito and San Dimas mines and the Pascua-Lama
project in these tables.
(15) The Rosemont mine mineral resources and mineral reserves do not include the SX/EW
(solvent extraction/electrowinning) leach material since this process does not
recover silver.
(16) The company has filed a technical report for the Salobo mine, which is available on SEDAR.
(17) The company's agreement with Sandspring is an early deposit structure, whereby the company
will have the option not to proceed with the 10-per-cent gold stream on the Toroparu project
following the delivery of a bankable definitive feasibility study.
(18) Silver and gold are produced as byproduct metal at all operations, with the exception of
silver at the Keno Hill mines and Loma de La Plata project and gold at the Toroparu project;
therefore, the economic cut-off applied to the reporting of silver and gold mineral
resources and mineral reserves will be influenced by changes in the commodity prices
of other metals at the time.
(19) Silver Wheaton has agreed to waive its rights to silver contained in copper concentrate
at the Aljustrel mine.
(20) Effective Aug. 7, 2014, the company entered into an agreement for a 1.5-per-cent
net-smelter-return royalty on Chesapeake Gold Corp.'s Metates property, located in Mexico.
As part of the agreement, Chesapeake will have the right, at any time, for a period of
five years, to repurchase two-thirds of the royalty, with the company retaining a
0.5-per-cent royalty interest.
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.