By Anthony O. Goriainoff
Wheaton Precious Metals Corp. said Thursday that its subsidiary Wheaton Precious Metals International Ltd. has entered into a precious-metals purchase agreement with Capstone Mining Corp. with respect to the Santo Domingo project in Chile.
The Canada-based, London-listed precious-metals streaming company said it will be entitled to receive 100% of the payable gold production until 285,000 ounces have been delivered, and that this will drop to 67% thereafter for the life of the mine.
The company said that the project's attributable gold production is forecast to average 35,000-40,000 ounces a year for the first five full years.
Wheaton said it will pay Capstone a total upfront cash consideration of $290 million. Of this, $30 million is payable upon closing and the remainder is payable during construction of the Santo Domingo project.
The company said this is subject to customary conditions being satisfied, including Capstone obtaining sufficient financing to cover total expected capital expenditures.
"Wheaton International will make ongoing payments for gold ounces delivered equal to 18% of the spot gold price until the value of gold delivered less the cumulative production payments is equal to the upfront consideration of $290 million, at which point the production payment will increase to 22% of the spot gold price," the company said.
Spot gold price refers to the price at which gold is currently bought and sold, as opposed to a date in the future.
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(END) Dow Jones Newswires