Wheaton Precious Metals Announces the Acquisition of a Gold Stream from Lumina Gold's Cangrejos Project

17 May 2023

Wheaton Precious Metals™ Corp is pleased to announce that its wholly-owned subsidiary, Wheaton Precious Metals International Ltd.has entered into a definitive Precious Metal Purchase Agreement (the "Gold Stream") with Lumina Gold Corp. ("Lumina") (TSXV: LUM) in respect to its 100% owned Cangrejos gold-copper project located in El Oro Province, Ecuador (the "Project" or "Cangrejos"). Cangrejos is forecast to be a high-margin mine in the lowest half of the cost curve with a 26-year mine life1.

"The Cangrejos Project is an excellent addition to Wheaton's existing portfolio of high-quality, low-cost assets as it should provide accretive, long-term growth as well as significant exploration potential," said Randy Smallwood, Wheaton's President and Chief Executive Officer. "We welcome the opportunity to work with the team at Lumina who have done an outstanding job at working to de-risk the Project and advancing it towards construction. As with any transaction Wheaton enters into, responsible and sustainable mining practices are paramount, and Wheaton looks forward to supporting Lumina both financially as they construct Cangrejos and with their ongoing comprehensive community engagement efforts."

Transaction Details
(All values in US$ unless otherwise noted)

  • Upfront Consideration: Wheaton International will pay Lumina total upfront cash consideration of $300 million (the "Deposit"), $48 million of which is available pre-construction (the "Early Deposit"). The payment schedule for the Early Deposit and Deposit are as follows:
  • The Early Deposit of $48 million is comprised of four components: 1) $12 million on closing; 2) $10 million 6 months after close; 3) $15 million 12 months after close; and 4) an $11 million tranche that can be drawn upon for committed acquisition of surface rights.
  • The remaining $252 million will be payable in staged equal installments during construction, subject to various customary conditions being satisfied.
  • Streamed Metal: Under the Gold Stream, Wheaton International will purchase 6.6% of the payable gold from the Project until 700,000 ounces ("oz") of gold has been delivered, at which point the stream will be reduced to 4.4% of the payable gold production for the life of the mine.
  • Production Profile1: Attributable production is forecast to average over 24,000 oz of gold per year for the first ten years of production and over 24,500 oz of gold per year for the life of mine.  
  • Production Payments: Wheaton International will make ongoing payments for the gold ounces delivered equal to 18% of the spot price of gold ("Production Payment") until the uncredited deposit is reduced to nil and 22.0% of the spot price of gold thereafter.
  • Incremental Reserves and Resources2: The addition of Cangrejos will increase Wheaton's total estimated Proven and Probable gold reserves by 0.76 million ounces ("Moz"), Measured and Indicated gold resources by 0.25 Moz, and Inferred gold resources by 0.16 Moz. In addition, Wheaton believes there is strong exploration potential within the Cangrejos property.

Other Considerations:

  • The Gold Stream will include a customary completion test.
  • As part of the transaction, Wheaton has obtained a right of first refusal on any future gold and silver streams.
  • In the event of a change of control, Lumina may purchase one-third of the Gold Stream from Wheaton until the earlier of January 1, 2030, and the date that is 12 months after first production.
  • Lumina and certain of its subsidiaries will provide Wheaton International with corporate guarantees and certain other security over their assets.

Financing the Transactions
As at March 31, 2023, the Company had approximately $800 million of cash on hand, which we believe when combined with the liquidity provided by the available credit under the $2 billion revolving term loan and ongoing operating cash flows, positions the Company well to fund the acquisition of the Gold Stream as well as all outstanding commitments and known contingencies and provides flexibility to acquire additional accretive mineral stream interests.

Sustainability Considerations for the Cangrejos Project
Based on work done by Lumina, several of the Project's innate characteristics and design elements have been identified that serve to potentially minimize its environmental impacts:

  • Since 2014, Lumina has been engaging with communities and is committed to involve affected communities and stakeholders through ongoing participation and consultation. The project will seek opportunities to create enduring economic benefits for societal groups and communities that are directly affected by operations.
  • The majority of electrical power is anticipated to come from renewable hydroelectric sources.
  • Proximity to port is expected to minimize transportation-based greenhouse gas emission impacts.
  • The dry stack tailings filtration plant is projected to recycle a substantial portion of tailings water for reuse in the processing plant.
  • No acid rock drainage conditions are expected to be present in either the waste rock storage facility or the dry stack tailings facility.
  • Aerial ore conveyor is predicted to minimize land clearance.
  • The Project is proposed to include progressive reclamation and revegetation of tailings and waste rock facilities.
  • Reforestation of previously impacted concession lands outside of mining facilities is anticipated to serve as offsets of disturbed areas