Mr. Neil Burns reports
SILVER WHEATON COMPLETES DEFINITIVE AGREEMENT WITH VALE S.A. AND DEFINITIVE AGREEMENT ON NEW CREDIT FACILITIES
Further to the press release dated Feb.
5, 2013, Silver Wheaton Corp. has entered into a definitive agreement to
acquire from a subsidiary of Vale S.A. an amount
of gold equal to 25 per cent of the life-of-mine gold production from its
Salobo mine, located in Brazil, as well as 70 per cent of the gold production,
for a 20-year term, from certain of its Sudbury mines located in
Canada. The transaction is no longer subject to Vale board approval,
which has now been obtained.
The company will pay Vale, within 10 business days of this press
release, total cash consideration of $1.90-billion (U.S.) and has issued to
Vale 10 million Silver Wheaton warrants with a strike price of $65
(U.S.) and a term of 10 years (1). A total of $1.33-billion (U.S.) will be paid for 25 per cent of the gold production from
Salobo, while $570-million (U.S.), plus the 10 million Silver Wheaton
warrants issued to Vale, will be the consideration for 70 per cent of the
Sudbury gold production. Silver Wheaton will make continuing payments of
the lesser of $400 (U.S.) (subject to a 1-per-cent annual inflation adjustment from
2016 for Salobo) and the prevailing market price, for each ounce of
gold delivered under the agreement.
In addition, Silver Wheaton has finalized the terms and entered into two
new unsecured credit facilities, composed of: (1) a $1-billion
revolving credit facility having a five-year term and (2) a $1.5-billion bridge financing facility having a one-year term. The revolving facility and bridge
facility replaced the $400-million revolver loan and the term loan,
with the latter being repaid in full on Feb. 22, 2013. For the
revolving facility, Scotiabank and BMO Capital Markets acted as co-lead
arrangers and joint bookrunners, Canadian Imperial Bank of Commerce,
Royal Bank of Canada and Toronto-Dominion Bank acted as
co-documentation agents, and Bank of Tokyo-Mitsubishi UFJ (Canada), HSBC
Bank Canada and Export Development Canada acted as senior managers. For
the bridge facility, Scotiabank and BMO Capital Markets acted as
co-lead arrangers and joint bookrunners, Canadian Imperial Bank of
Commerce and Royal Bank of Canada acted as co-documentation agents, and
Toronto-Dominion Bank and Export Development Canada acted as senior
managers. Combined with cash on hand, the additional credit capacity offered by
these new credit facilities provides Silver Wheaton with sufficient
access to capital to finance the upfront payment to Vale, while continuing
its pursuit of additional accretive growth opportunities.
Neil Burns, Silver Wheaton's vice-president, 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
(1) The issue of the warrants is subject to receipt of all requisite
regulatory approvals, including those from the Toronto Stock Exchange
and the New York Stock Exchange.
(2) Silver equivalent production forecast assumes a gold/silver ratio of
53.3 to 1.
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