VANCOUVER, British Columbia,
August 2, 2016 /PRNewswire/ --
TSX: SLW
NYSE: SLW
Silver Wheaton Corp. ("Silver Wheaton" or the "Company")
(TSX:SLW) (NYSE:SLW) is pleased to announce that its wholly-owned
subsidiary, Silver Wheaton (Caymans) Ltd. ("SWC"), has agreed to
acquire from a subsidiary of Vale S.A. ("Vale") (NYSE:VALE) an
additional amount of gold equal to 25% of the life of mine gold
production from its Salobo mine, located in Brazil. This acquisition is in addition to the
50% of the Salobo gold production that SWC is currently entitled
to. SWC will pay upfront cash consideration of US$800 million for the increased gold stream and
the 10 million Silver Wheaton common share purchase warrants
previously issued to a subsidiary of Vale will be amended to reduce
the strike price from US$65 to
US$43.75 per common
share[1]. In addition, SWC will
make ongoing payments of the lesser of US$400 (subject to a 1% annual inflation
adjustment now commencing in 2019 on the entire 75% stream) and the
prevailing market price for each ounce of gold delivered under the
agreement.
TRANSACTION HIGHLIGHTS
- Provides immediate and long-term production and cash
flow
- SWC will receive an additional 25% of the gold production from
Vale's Salobo mine, entitling SWC to a total of 75% of the
life-of-mine gold production from the mine.
- Immediately increases Silver Wheaton's consolidated production
and cash flow profile as Salobo gold production is expected to
average approximately 300,000 ounces per year in total between 2016
and 2020, of which SWC will be entitled to 75% as of the effective
date of July 1, 2016.
- Increases Silver Wheaton's consolidated estimated Proven and
Probable gold reserves by 3.2 million ounces, Measured and
Indicated gold resources by 0.7 million ounces, and Inferred gold
resources by 0.4 million ounces.
- At current production rates, Proven and Probable reserves are
sufficient to support 50 years of mine life, with excellent
potential to further extend the mine life.
- Increases Silver Wheaton's gold growth profile
- With the additional stream from Salobo, Silver Wheaton's
estimated attributable gold production in 2016 is now forecast to
be 305,000 ounces, and estimated average annual attributable gold
production over the next five years (including 2016) is anticipated
to be approximately 330,000 ounces per year.
"The Salobo mine is a cornerstone asset for Silver Wheaton and
should be for generations to come," said Randy Smallwood, Silver Wheaton's President and
Chief Executive Officer. "We did not hesitate at the opportunity to
increase our exposure to a mine with one of the lowest copper cash
costs in the world, 50 years of mine life on reserves alone, and
what we believe to be substantial exploration and expansion
potential. As we have said on numerous occasions, Salobo is the
ideal asset for the streaming model, as it is primarily a base
metal producer where precious metals represent only a relatively
small portion of the mine's overall revenues."
"The addition of another 25% gold stream from Salobo further
adds to Silver Wheaton's robust cash flow. Given the quality of the
portfolio, with over 90% of our production coming from mines in the
lowest half of their respective cost curves, and the expected
production profile over the next five years, Silver Wheaton is very
comfortable financing this transaction using cash on hand and our
existing revolving credit facility. Based on our guidance and
current commodity prices, the upfront payment represents slightly
more than one year of anticipated cash flow. The strength of our
cash flow potential speaks volumes about the streaming model in
general and the unparalleled quality of Silver Wheaton's portfolio
in particular."
TRANSACTION TERMS
- The existing gold purchase agreement has been amended and
restated to provide for the additional 25% stream, with SWC now
receiving 75% of the life-of-mine gold production from this
mine.
- SWC will be entitled to all attributable gold production for
which an off-taker payment is received after July 1, 2016.
- SWC will pay a wholly-owned subsidiary of Vale upfront cash
consideration of US$800 million for
the increased gold stream as an advance payment against the
purchase price for the sale of gold to SWC.
- In addition, subject to the approval of the Toronto Stock
Exchange, the 10 million Silver Wheaton common share purchase
warrants, initially issued on February 28,
2013 and expiring on February 28,
2023 entitling a wholly-owned subsidiary of Vale to purchase
one common share of Silver Wheaton for each whole warrant upon
payment of US$65 per common share
(subject to the terms of the warrant indenture) will be amended
such that the per common share strike price will be decreased from
US$65 to US$43.75. The amended warrants will become
effective on August 16, 2016. Neither
Vale nor its wholly-owned subsidiary is an insider of Silver
Wheaton.
- SWC will make ongoing payments of the lesser of US$400 (subject to a 1% annual inflation
adjustment now commencing in 2019 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 2017 will now start in 2019.
- Gold deliveries for the entire 75% gold stream will be the
obligation of a wholly owned subsidiary of Vale, but will be
guaranteed by Vale and the direct holder of Salobo, Salobo Metais
S.A.
- Mill throughput at the Salobo mine is currently 24 million
tonnes per annum ("Mtpa"). If throughput capacity is expanded
within a predetermined period and depending on the grade of
material processed, SWC will be required to make an additional
payment to Vale, relative to the 75% stream, that now ranges from
US$113 million if throughput is
expanded beyond 28 Mtpa by January 1,
2036, up to US$953 million if
throughput is expanded beyond 40 Mtpa by January 1, 2021. For example, if Salobo is
expanded to 36 Mtpa between 2021 and 2025, the expansion payment
would range between US$514 million and
US$692 million.
FINANCING THE ACQUISITION
Silver Wheaton intends to use cash on hand together with
proceeds available under the Company's US$2
billion revolving credit facility ("Revolving Facility") to
pay the upfront cash payment of US$800
million. The Revolving Facility has a maturity date of
February 27, 2021.
ABOUT THE SALOBO MINE
According to Vale's public filings, the Salobo mine, located in
the Pará 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 Mtpa and subsequently expanded to 24 Mtpa 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 1.157
billion tonnes grading 0.67% copper and 0.35 g/t
gold[2], and, along with
additional Mineral Resources, also has substantial exploration and
expansion potential. The acquisition of an additional 25% life of
mine gold stream adds an estimated 3.2 million ounces of Proven and
Probable Mineral Reserves, 0.7 million ounces of Measured and
Indicated Mineral Resources, and 0.4 million ounces of Inferred
Mineral Resources attributable to Silver Wheaton. Total estimated
attributable Mineral Reserves and Mineral Resources for the now 75%
life-of-mine gold stream are detailed in the table below.
Vale has indicated that it intends to re-initiate an exploration
program at Salobo as early as 2017 that will include additional
exploration drilling.
SILVER WHEATON ANNOUNCES NEW PRODUCTION
GUIDANCE
Silver Wheaton is pleased to provide its updated one-year and
long-term production guidance, which incorporates the additional
25% life-of-mine gold stream on the Salobo mine. In 2016, Silver
Wheaton's estimated attributable gold production is now forecast to
be 305,000 ounces, up from 265,000 ounces previously, and estimated
average annual attributable gold production over the next five
years (including 2016) is anticipated to be approximately 330,000
ounces of gold per year, up from 260,000 ounces. Silver production
in 2016 is now forecast to be approximately 32 million ounces, down
slightly from 32.8 million ounces previously guided as production
from San Dimas and Peñasquito is
expected to be lower offset in part by better than expected
production from Antamina. Average annual silver production over the
next five years (including 2016) remains unchanged at 31 million
ounces per year.
Given the strong performance of the silver price year to date,
the gold:silver ratio has contracted substantially since Silver
Wheaton originally released silver equivalent production guidance
for the year. Previous guidance was based on a gold:silver ratio of
80:1. Given the recent volatility of both gold and silver prices,
Silver Wheaton will now provide production guidance on both a
silver equivalent basis (SEO) and gold equivalent basis (GEO). As
such, and based on the average LBMA gold and silver price for the
first half of 2016 ($1,234 and
$16.27,
respectively)[3], Silver Wheaton
is now forecasting 2016 production of 55 million SEOs or 730,000
GEOs, and production over the next five years (including 2016) is
forecast to average 56 million SEOs per year or 740,000 GEOs per
year.
Over the next five years, forecast production growth from
Salobo, Peñasquito and Constancia
is expected to be offset by the cessation of production from assets
with fixed terms. In particular, the 10-year-term contract on
Capstone Mining's Cozamin mine, acquired with Silver Wheaton's 2009
acquisition of Silverstone, expires in April
2017. In addition, Silver Wheaton's streaming agreement with
Barrick regarding Pascua-Lama provides the Company with silver
production from the Lagunas Norte, Veladero, and Pierina mines
until March 31, 2018. Hudbay's
Constancia mine is expected to
meet the completion test, resulting in gold production from the 777
mine attributable to Silver Wheaton dropping from 100% to 50% in
2017. And lastly, as a reminder, Silver Wheaton does not include
any production from Barrick's Pascua-Lama project or Hudbay's
Rosemont project in its
guidance.
SALOBO ACQUISITION PRESENTATION
A presentation on the highlights of the acquisition has been posted
on the Company's home page
at http://www.silverwheaton.com.
Q2 2016 CONFERENCE CALL
Silver Wheaton will discuss the transaction in more detail in
its 2016 second quarter results conference call to be held on
Thursday, August 11, 2016, starting
at 11:00 am (Eastern Time). To
participate in the live call please use one of the following
methods:
Dial toll free from Canada or
the
US: 1-888-231-8191
Dial from outside Canada or the
US:
1-647-427-7450
Pass
code: 45537734
Live audio
webcast: http://www.silverwheaton.com
Participants should dial in five to ten minutes before the
call.
The conference call will be recorded and available until
August 18, 2016 at 11:59 pm ET. The webcast will be available for
one year. You can listen to an archive of the call by one of the
following methods:
Dial toll free from Canada or
the
US: 1-855-859-2056
Dial from outside Canada or the
US:
1-416-849-0833
Pass
code: 45537734
Archived audio
webcast: http://www.silverwheaton.com
ABOUT SILVER WHEATON
Silver Wheaton is the largest pure precious metals streaming
company in the world. The Company has streams on some of the
largest and lowest cost mines in the world. Silver Wheaton's
production and growth are founded on cornerstone assets including
the Salobo mine in Brazil, the
Peñasquito and San Dimas mines in
Mexico, and the Antamina mine in
Peru. Based upon its current
agreements, forecast 2016 estimated annual attributable production
is approximately 32 million ounces of silver and 305,000 ounces of
gold. Silver Wheaton's estimated average annual attributable
production over the next five years is anticipated to be
approximately 31 million ounces of silver and 330,000 ounces of
gold per year.
Mr. 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.
[1 ]The amendment to the 10,000,000 Silver
Wheaton common share purchase warrants is subject to the approval
of the Toronto Stock Exchange.
[2 ]Silver Wheaton has previously filed a
technical report for the Salobo mine dated effective December 31, 2015, which is available on SEDAR
at http://www.sedar.com. For further details on Silver
Wheaton's attributable Salobo mineral reserves and mineral
resources, see the tables appended to this news release.
[3 ]London Bullion Market Association
(LBMA) gold prices are the average of the daily LBMA AM and PM gold
benchmark prices in the first half of 2016. The LBMA silver price
is the daily average of the LBMA silver benchmark prices in the
first half of 2016.
Silver Wheaton's Estimated Attributable Reserves and
Resources are as follows:
Proven & Probable Reserves Attributable to Silver Wheaton [1,2,3,8,22]
As of December 31, Proven Probable
2015 unless Tonnage Grade Contained Tonnage Grade Contained
otherwise noted [6] Mt g/t Moz Mt g/t Moz
SILVER
Peñasquito
(25%) [10]
Mill 99.6 32.6 104.5 47.1 24.5 37.2
Heap Leach 4.1 22.7 3.0 1.4 19.9 0.9
San Dimas
[10],[11] 1.5 325.8 15.2 3.8 330.0 40.0
Antamina (33.75%)
[12],[13] 64.5 11.0 22.7 137.4 10.5 46.2
Pascua-Lama
(25%) 8.0 69.8 17.9 73.2 64.1 150.8
Veladero [12] 3.7 12.8 1.5 66.1 12.8 27.3
Lagunas Norte
[12] 7.0 4.1 0.9 25.2 4.1 3.3
Constancia 500.0 3.0 47.8 114.0 2.9 10.8
Zinkgruvan
Zinc 8.1 80.0 20.7 3.7 51.0 6.0
Copper 3.5 35.0 3.9 - - -
Neves-Corvo
Copper 6.3 39.0 7.9 19.7 36.0 22.8
Zinc 11.5 71.5 26.4 13.9 62.0 27.6
Yauliyacu [14] 0.7 136.6 3.1 3.2 137.9 14.1
777 [15] 3.3 26.7 2.8 3.0 27.8 2.7
Stratoni 0.4 172.0 2.4 0.2 184.0 1.3
Cozamin [12] - - - 1.6 42.1 2.2
Minto 1.7 8.3 0.5 3.8 5.2 0.6
Los Filos 20.0 7.1 4.6 20.5 9.1 6.0
Rosemont [16] 279.5 4.1 37.0 325.8 4.1 43.1
Metates Royalty[17] 4.1 18.0 2.3 13.2 13.1 5.5
TOTAL SILVER 325.0 448.3
GOLD
Salobo (75%) [18] 490.8 0.38 6.03 376.7 0.31 3.72
Sudbury (70%)[12] - - - 47.4 0.43 0.66
Constancia
(50%) 250.0 0.05 0.40 57.0 0.07 0.14
777 [12],[15] 2.0 1.80 0.12 1.8 1.80 0.11
Minto 1.7 1.19 0.06 3.8 0.64 0.08
Toroparu (10%)[19] 3.0 1.10 0.10 9.7 0.98 0.31
Metates Royalty [17] 4.1 0.68 0.09 13.2 0.44 0.19
TOTAL GOLD 6.80 5.19
TABLE CONT.
Proven & Probable Reserves Attributable to Silver Wheaton [1,2,3,8,22]
As of December 31, Proven & Probable
2015 unless Tonnage Grade Contained Process
otherwise noted [6] Mt g/t Moz Recovery [7]
SILVER
Peñasquito
(25%) [10]
Mill 146.7 30.0 141.6 75-80%
Heap Leach 5.4 22.0 3.9 22-28%
San Dimas
[10],[11] 5.2 328.8 55.2 94%
Antamina (33.75%)
[12],[13] 201.8 10.6 68.9 71%
Pascua-Lama
(25%) 81.2 64.7 168.7 82%
Veladero [12] 69.8 12.8 28.8 8%
Lagunas Norte
[12] 32.2 4.1 4.2 34%
Constancia 614.0 3.0 58.6 71%
Zinkgruvan
Zinc 11.7 70.9 26.7 87%
Copper 3.5 35.0 3.9 65%
Neves-Corvo
Copper 25.9 36.7 30.6 35%
Zinc 25.3 66.3 54.0 20%
Yauliyacu [14] 3.9 137.6 17.1 85%
777 [15] 6.3 27.2 5.5 50%
Stratoni 0.7 176.2 3.7 84%
Cozamin [12] 1.6 42.1 2.2 72%
Minto 5.5 6.1 1.1 78%
Los Filos 40.5 8.1 10.5 5%
Rosemont [16] 605.3 4.1 80.1 76%
Metates Royalty[17] 17.2 14.2 7.9 76%
TOTAL SILVER 773.3
GOLD
Salobo (75%) [18] 867.6 0.35 9.75 66%
Sudbury (70%)[12] 47.4 0.43 0.66 72%
Constancia
(50%) 307.0 0.05 0.54 61%
777 [12],[15] 3.9 1.80 0.22 55%
Minto 5.5 0.81 0.14 74%
Toroparu (10%)[19] 12.7 1.01 0.41 89%
Metates Royalty [17] 17.2 0.50 0.28 89%
TOTAL GOLD 11.99
Measured & Indicated Resources Attributable to Silver Wheaton
[1,2,3,4,5,9,22]
As of December 31, Measured Indicated Measured & Indicated
2015 unless Tonnage Grade Contai- Tonnage Grade Contai- Tonnage Grade Contai-
otherwise noted[6] ned ned ned
Mt g/t Moz Mt g/t Moz Mt g/t Moz
SILVER
Peñasquito (25%)
[10]
Mill 23.6 30.5 23.2 37.7 24.6 29.9 61.3 26.9 53.0
Heap Leach 3.1 25.5 2.6 8.7 17.0 4.8 11.9 19.3 7.4
San Dimas [10],[11] 0.3 189.1 2.0 0.9 189.1 5.2 1.2 189.1 7.2
Antamina (33.75%)
[12],[13] 21.9 9.5 6.7 146.5 11.1 52.3 168.4 10.9 59.1
Pascua-Lama (25%) 3.7 26.4 3.1 35.7 22.3 25.5 39.4 22.7 28.7
Constancia 73.0 2.4 5.6 299.0 2.0 19.4 372.0 2.1 25.0
Zinkgruvan
Zinc 1.5 62.1 3.0 5.1 95.0 15.7 6.7 87.5 18.8
Copper 1.6 22.8 1.2 0.6 49.0 0.9 2.2 29.8 2.1
Neves-Corvo
Copper 8.2 51.4 13.6 36.3 48.7 56.9 44.5 49.2 70.5
Zinc 11.2 53.1 19.0 71.4 55.5 127.4 82.5 55.2 146.4
Yauliyacu [14] 1.3 162.2 6.7 7.0 199.3 44.6 8.2 193.5 51.3
777 [15] - - - 0.7 26.3 0.6 0.7 26.3 0.6
Stratoni 0.3 193.5 1.7 0.2 203.8 1.4 0.5 198.0 3.1
Minto 6.4 3.0 0.6 33.1 3.2 3.4 39.6 3.1 4.0
Los Filos 81.6 6.7 17.6 276.3 7.9 70.0 357.9 7.6 87.6
Rosemont [16] 38.5 3.0 3.7 197.7 2.7 17.1 236.2 2.7 20.8
Aljustrel [20] 1.3 65.6 2.7 20.5 60.3 39.7 21.8 60.7 42.4
Keno Hill (25%)
Underground - - - 0.8 467.2 11.5 0.8 467.2 11.5
Elsa
Tailings - - - 0.6 119.0 2.4 0.6 119.0 2.4
Loma de La Plata
(12.5%) - - - 3.6 169.0 19.8 3.6 169.0 19.8
Cotabambas [(21)] - - - 117.1 2.7 10.3 117.1 2.7 10.3
Toroparu (50%)[20] 22.2 1.2 0.8 97.9 0.7 2.3 120.1 0.8 3.1
TOTAL SILVER 113.9 561.0 674.9
GOLD
Salobo (75%)[18] 33.1 0.48 0.51 138.8 0.37 1.65 171.8 0.39 2.16
Sudbury (70%)[12] - - - 16.2 0.22 0.12 16.2 0.22 0.12
Constancia (50%) 36.5 0.05 0.06 149.5 0.04 0.18 186.0 0.04 0.23
777 [12],[15] - - - 0.4 1.83 0.02 0.4 1.83 0.02
Minto 6.4 0.34 0.07 33.1 0.34 0.37 39.6 0.34 0.44
Cotabambas (25%)[21] - - - 29.3 0.23 0.21 29.3 0.23 0.21
Toroparu (10%)[19] 0.9 0.87 0.03 7.9 0.83 0.21 8.8 0.84 0.24
TOTAL GOLD 0.67 2.76 3.42
Inferred Resources Attributable to Silver Wheaton
[(1],[2],[3],[4],[5],[9],[22)]
Inferred
As of December 31, 2015 Tonnage Grade Contained
unless otherwise noted [6] Mt g/t Moz
SILVER
Peñasquito (25%) [10]
Mill 4.9 20.6 3.2
Heap Leach 0.1 15.5 0.1
San Dimas [10],[11] 7.0 330.0 74.0
Antamina (33.75) [12],[13] 351.1 11.1 125.3
Pascua-Lama (25%) 4.9 20.1 3.2
Constancia 200.0 1.9 12.0
Zinkgruvan
Zinc 7.3 83.0 19.4
Copper 0.2 39.0 0.2
Neves-Corvo
Copper 13.4 37.0 15.9
Zinc 12.6 55.0 22.3
Yauliyacu [14] 13.5 177.6 76.9
777 [15] 0.7 32.6 0.7
Stratoni 0.5 169.0 2.7
Minto 25.3 2.5 2.1
Los Filos 141.0 9.2 41.6
Rosemont [16] 104.5 3.3 11.1
Aljustrel [20] 8.7 50.4 14.0
Keno Hill (25%)
Underground 0.3 363.4 3.0
Loma de La Plata (12.5%) 0.2 76.0 0.4
Cotabambas [21] 605.3 2.3 45.4
Toroparu (50%) [19] 64.8 0.1 0.2
Metates Royalty [17] 1.0 9.7 0.3
TOTAL SILVER 474.0
GOLD
Salobo (75%) [18] 111.5 0.31 1.11
Sudbury (70%) [12] 12.0 0.52 0.20
Constancia (50%) 100.0 0.03 0.10
777 [12],[15] 0.3 1.76 0.02
Minto 25.3 0.25 0.20
Cotabambas (25%) [21] 151.3 0.17 0.84
Toroparu (10%) [19] 13.0 0.74 0.31
Metates Royalty [17] 1.0 0.38 0.01
TOTAL GOLD 2.80
Notes on Reserves & Resources:
1. All Mineral Reserves and Mineral Resources have
been estimated in accordance with the 2014 Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) Standards for Mineral
Resources and Mineral Reserves and National Instrument 43-101 -
Standards for Disclosure for Mineral Projects ("NI 43-101"), or the
2012 Australasian Joint Ore Reserves Committee (JORC) 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 ("QPs"), as defined
by the 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 -Gerrit Vos, P.Eng., Technical Director, Mining,
Dr Georges Verly, P.Eng., Chief
Geostatistician, Dr Armando Simon,
P.Geo., Principal Geologist, Pierre
Lacombe, P.Eng., Consulting Metallurgist, Donald Hickson, P.Eng., Division Manager, Earth
and Infrastructure, Vikram Khera,
P.Eng., Senior Financial Analyst, and Stella Searston, RM SME,
Principal Geologist, all of whom are now, or were at the time of
the preparation of the Salobo Report, employees of Amec Foster
Wheeler Americas Limited (Amec Foster Wheeler).
b. All other operations and
development projects: the Company's QPs Neil Burns, M.Sc., P.Geo.
(Vice President, Technical Services); Samuel Mah, M.A.Sc., P.Eng. (Senior Director,
Project Evaluations), both employees of the Company (the "Company's
QPs").
4. The Mineral Resources reported in the above
tables are exclusive of Mineral Reserves. The San Dimas mine,
Minto mine, Neves-Corvo mine,
Zinkgruvan mine, Stratoni mine and Toroparu project (gold only)
report Mineral Resources inclusive of Mineral Reserves. The
Company's QPs 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 below, Mineral Reserves
and Mineral Resources are reported as of December 31, 2015 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 Pascua-Lama project are reported as of
December 31, 2013.
b. Mineral Resources for the
Constancia mine (including the
Pampacancha deposit) are reported as of September 30, 2013 and Mineral Reserves as of
December 31, 2013.
c. Mineral Resources and
Mineral Reserves for the Neves-Corvo and Zinkgruvan mines are
reported as of June 30, 2015.
d. Mineral Resources and
Mineral Reserves for the Rosemont
project are reported as of August 28,
2012.
e. Mineral Resources for
Aljustrel's Feitais and Moinho mines are reported as of
November 30, 2010. Mineral Resources
for the Estaçao project are reported as of December 31, 2007.
f. 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 project as of
October 15, 2014, Flame and Moth
and
Bermingham projects as of April 28,
2015, Bellekeno mine Inferred Mineral Resources as of
September 30, 2012 and Bellekeno mine
Indicated Mineral Resources as of September
30, 2013.
g. Mineral Resources for the
Loma de La Plata project are reported as of May 20, 2009.
h. Mineral Resources for the
Cotabambas project are reported as of June
20, 2013.
i. Mineral Resources and
Mineral Reserves for gold at the Toroparu project are reported as
of March 31, 2013 and Mineral
Resources for silver are reported as of September 1, 2014.
j. Mineral Resources for
Metates royalty are reported as of
February 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 (doré 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 and mine recovery rates, dilution, operating costs and the
following commodity prices:
a. Antamina mine - $2.96 per pound copper $0.99 per pound zinc, $11.91 per pound molybdenum and $21.34 per ounce silver.
b. Constancia mine -
$1,250 per ounce gold, $25.00 per ounce silver, $3.00 per pound copper and $13.50 per pound molybdenum.
c. Cozamin mine - $42.00 per tonne NSR cut-off assuming
$20.00 per ounce silver, $2.50 per pound copper, $0.85 per pound lead and $0.80 per pound zinc.
d. Lagunas Norte and Veladero
mines - $1,000 per ounce gold and
$15.00 per ounce silver.
e. Los Filos mine -
$1,100 per ounce gold and
$16.50 per ounce silver.
f. Metates royalty - 0.35 grams
per tonne gold equivalent cut-off assuming $1,200 per ounce gold and $24.00 per ounce silver.
g. Minto mine - 0.5% copper
cut-off for Open Pit and $64.40 per
tonne NSR cut-off for Underground assuming $300 per ounce gold, $3.90 per ounce silver and $2.50 per pound copper.
h. Neves-Corvo mine - 1.6%
copper cut-off for the copper Reserve and 4.8% zinc equivalent
cut-off for all the zinc Reserves, both assuming $2.50 per pound copper, $1.00 per pound lead and zinc.
i. Pascua-Lama project -
$1,100 per ounce gold, $21.00 per ounce silver and $3.00 per pound copper.
j. Peñasquito mine -
$1,100 per ounce gold, $16.50 per ounce silver, $0.90 per pound lead and $0.95 per pound zinc.
k. Rosemont project -
$4.90 per ton NSR cut-off assuming
$20.00 per ounce silver, $2.50 per pound copper and $15.00 per pound molybdenum.
l. Salobo mine - 0.253% copper
equivalent cut-off assuming $1,250
per ounce gold and $3.45 per pound
copper.
m. San Dimas mine - 2.50 grams
per tonne gold equivalent cut-off assuming $1,200 per ounce gold and $18.00 per ounce silver.
n. Stratoni mine - 15.54% zinc
equivalent cut-off assuming $0.91 per
pound lead and zinc.
o. Sudbury mines - $1,250 per ounce gold, $18.50 per ounce silver, $9.07 per pound nickel, $2.95 per pound copper, $1,550 per ounce platinum, $875 per ounce palladium and $12.50 per pound cobalt.
p. Toroparu project - 0.38
grams per tonne gold cut-off assuming $1,070 per ounce gold for fresh rock and 0.35
grams per tonne gold cut-off assuming $970 per ounce gold for saprolite.
q. Yauliyacu mine -
$17.20 per ounce silver, $2.83 per pound copper, $0.91 per pound lead and $1.02 per pound zinc.
r. Zinkgruvan mine - 3.98% zinc
equivalent cut-off for the zinc Reserve and 1.5% copper cut-off for
the copper Reserve, both assuming $2.50 per pound copper and $1.00 per pound lead and zinc.
s. 777 mine - $1,190 per ounce gold, $16.50 per ounce silver, $2.75 per pound copper and $1.16 per pound zinc.
9. Mineral Resources are estimated using
appropriate recovery rates and the following commodity prices:
a. Aljustrel mine - 4.5% zinc
cut-off for Feitais and Moinho mines zinc Resources and 4.0% zinc
cut-off for Estação zinc Resources.
b. Antamina mine - $2.96 per pound copper $0.99 per pound zinc, $11.91 per pound molybdenum and $21.34 per ounce silver.
c. Constancia mine - 0.12%
copper cut-off for Constancia and
0.10% copper cut-off for Pampacancha.
d. Cotabambas project - 0.2%
copper equivalent cut-off assuming $1,350 per ounce gold, $23,00 per ounce silver, $3.20 per pound copper and $12,50 per pound molybdenum.
e. Keno Hill mines:
i.
Bellekeno mine - $185 per tonne NSR
cut-off assuming $22.50 per ounce
silver, $0.85 per pound lead and
$0.95 per pound zinc.
ii. Flame and Moth and
Bermingham projects - $185 per tonne
NSR cut-off assuming $1,300 per ounce
gold, $20.00 per ounce silver,
$0.94 per pound lead and $1.00 per pound zinc.
iii. Lucky Queen project -
$185 per tonne NSR cut-off assuming
$1,100 per ounce gold, $18.50 per ounce silver, $0.90 per pound lead and $0.95 per pound zinc.
iv. Onek project -
$185 per tonne NSR cut-off assuming
$1,250 per ounce gold, $20.00 per ounce silver, $0.90 per pound lead and $0.95 per pound zinc.
v.
Elsa Tailings project - 50 grams per tonne silver cut-off.
f. Loma de La Plata project -
50 gram per tonne silver equivalent cut-off assuming $12.50 per ounce silver and $0.50 per pound lead.
g. Los Filos mine -
$1,300 per ounce gold and
$19.00 per ounce silver.
h. Metates royalty - 0.35 grams
per tonne gold equivalent cut-off assuming $1,200 per ounce gold and $24.00 per ounce silver.
i. Minto mine - 0.5% copper
cut-off.
j. Neves-Corvo mine - 1.0%
copper cut-off for the copper Resource and 3.0% zinc cut-off for
the zinc Resource, both assuming $2.50 per pound copper and $1.00 per pound lead and zinc.
k. Pascua-Lama project -
$1,500 per ounce gold, $24.00 per ounce silver and $3.50 per pound copper.
l. Peñasquito mine -
$1,300 per ounce gold, $19.00 per ounce silver, $1.00 per pound lead and zinc.
m. Salobo mine - 0.286% copper
equivalent cut-off assuming $1,500
per ounce gold $3.67 per pound
copper.
n. San Dimas mine - 2.00 grams
per tonne gold equivalent cut-off assuming $1,200 per ounce gold and $18.00 per ounce silver.
o. Stratoni mine - 15.54% zinc
equivalent cut-off assuming $0.91 per
pound lead and zinc.
p. Sudbury mines - $1,250 per ounce gold, $18.50 per ounce silver, $9.07 per pound nickel, $2.95 per pound copper, $1,550 per ounce platinum, $875 per ounce palladium and $12.50 per pound cobalt.
q. Rosemont project - 0.30%
copper equivalent cut-off for Mixed and 0.15% copper equivalent for
Sulfide assuming $20.00 per ounce
silver, $2.50 per pound copper and
$15.00 per pound molybdenum.
r. Toroparu project - 0.30
grams per tonne gold cut-off assuming $1,350 per ounce gold.
s. Yauliyacu mine -
$17.20 per ounce silver, $2.83 per pound copper and $0.91 per pound lead and $1.02 per pound zinc.
t. Zinkgruvan mine - 3.8% zinc
equivalent cut-off for the zinc Resource and 1.0% copper cut-off
for the copper Resource, both assuming $2.50 per pound copper and $1.00 per pound lead and zinc.
u. 777 mine - $1,190 per ounce gold, $16.50 per ounce silver, $2.75 per pound copper and $1.16 per pound zinc.
10. The scientific and technical information in
this document regarding the Peñasquito mine and the San Dimas mine was sourced by the Company from
the following SEDAR (http://www.sedar.com) filed
documents:
a. Peñasquito - Goldcorp annual
information form filed on March 29,
2016; and
b. San Dimas - Primero annual
information form filed on March 30,
2016.
The Company QP's have approved the disclosure of
scientific and technical information in respect of the Peñasquito
mine and San Dimas mine in this
document.
11. The San Dimas silver purchase agreement
provides that Primero will deliver to the Company a per annum
amount equal to the first 6.0 million ounces of payable silver
produced at the San Dimas mine
and 50% of any excess, for the
life of mine.
12. The Company's attributable Mineral Resources
and Mineral Reserves for the Lagunas Norte, Veladero, Cozamin, and
Antamina silver interests, in addition to the Sudbury and 777 gold interests, have
been constrained to the
production expected for the various contracts.
13. The Antamina Silver Purchase Agreement in
respect to the Antamina mine (November 3,
2015) provides that Glencore will deliver 33.75% of the
silver production until 140 million ounces are delivered
and 22.5% of silver production
thereafter, for a 50 year term that can be extended in increments
of 10 years at the Company's discretion. Attributable
reserves and resources have been
calculated on the 33.75%
/ 22.5% basis.
14. On November 30,
2015, the Company amended its silver purchase agreement with
Glencore in respect to the Yauliyacu mine. The term of the
agreement which was set to expire in 2026, was extended
to life of mine.
Additionally, effective January 1,
2016, Glencore will deliver to the Company a per annum
amount equal to the first 1.5 million ounces of payable silver
produced at Yauliyacu
and 50% of any
excess.
15. The 777 precious metal purchase agreement
provides that Hudbay will deliver 100% of the payable silver for
the life of mine and 100% of the payable gold until completion of
the Constancia mine,
after which the gold stream
will reduce to 50%. 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 metal
purchase agreement.
16. The Rosemont mine Mineral Resources and Mineral
Reserves do not include the SX/EW leach material since this process
does not recover silver.
17. Effective August 7,
2014, the Company entered into an agreement for a 1.5% net
smelter returns royalty on Chesapeake Gold Corp's (Chesapeake)
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%
royalty interest.
18. The Company has filed an updated technical
report for the Salobo mine prepared by Amec Foster Wheeler on
http://www.sedar.com .
19. The Company's agreement with Sandspring is an
early deposit structure whereby the Company will have the option
not to proceed with the 10% gold stream and 50% silver stream on
the Toroparu
project following the
delivery of a bankable definitive feasibility study.
20. The Company only has the rights to silver
contained in concentrates containing less than 15% copper at the
Aljustrel mine.
21. Under the terms of the Cotabambas Early Deposit
Agreement, the Company will be entitled to purchase 100% of the
silver production and 25% of the gold production from the
Cotabambas project until
90 million silver equivalent
ounces attributable to the Company have been delivered, at which
point the stream will drop to 66.67% of silver production and
16.67% of gold production for the life
of mine.
22. Silver and gold are produced as by-product
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 of reporting.
CAUTIONARY NOTE REGARDING FORWARD
LOOKING-STATEMENTS
The information contained herein contains "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and "forward-looking
information" within the meaning of applicable Canadian securities
legislation. Forward-looking statements, which are all
statements other than statements of historical fact, include, but
are not limited to, statements with respect to:
- the payment by SWC of US$800 cash
consideration to a wholly owned subsidiary of Vale and the
satisfaction of each party's obligations in accordance with the
terms of the Salobo amended gold purchase agreement;
- the amendment to the Silver Wheaton common share purchase
warrants to reduce the strike price from US$65 to US$43.75;
- the anticipated receipt by SWC of gold production from the
Salobo mine;
- projected increases and changes to Silver Wheaton's production
and cash flow profile;
- the expansion and exploration potential at the Salobo
mine;
- projected changes to Silver Wheaton's production mix;
- anticipated increases in total throughput at the Salobo
mine;
- the effect of the SAT legal claim on Primero's business,
financial condition, results of operations and cash flows for
2010-2014 and 2015-2019;
- the estimated future production;
- the future price of commodities;
- the estimation of mineral reserves and mineral resources;
- the realization of mineral reserve estimates;
- the timing and amount of estimated future production (including
2016 and average attributable annual production over the next five
years);
- the costs of future production;
- reserve determination;
- estimated reserve conversion rates;
- any statements as to future dividends, the ability to fund
outstanding commitments and the ability to continue to acquire
accretive precious metal stream interests;
- confidence in the Company's business structure;
- the Company's position relating to any dispute with the CRA and
the Company's intention to defend reassessments issued by the CRA;
the impact of potential taxes, penalties and interest payable to
the CRA; possible audits for taxation years subsequent to 2013;
estimates as to amounts that may be reassessed by the CRA in
respect of taxation years subsequent to 2010; amounts that may be
payable in respect of penalties and interest; the Company's
intention to file future tax returns in a manner consistent with
previous filings; that the CRA will continue to accept the Company
posting security for amounts sought by the CRA under notices of
reassessment for the 2005-2010 taxation years or will accept
posting security for any other amounts that may be sought by the
CRA under other notices of reassessment; the length of time it
would take to resolve any dispute with the CRA or an objection to a
reassessment; and assessments of the impact and resolution of
various tax matters, including outstanding audits, proceedings with
the CRA and proceedings before the courts; and
- assessments of the impact and resolution of various legal and
tax matters.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "plans", "expects"
or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "projects", "intends", "anticipates" or
"does not anticipate", or "believes", "potential", or variations of
such words and phrases or statements that certain actions, events
or results "may", "could", "would", "might" or "will be taken",
"occur" or "be achieved". Forward-looking statements are
subject to known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, performance
or achievements of Silver Wheaton to be materially different from
those expressed or implied by such forward-looking statements,
including but not limited to:
- risks related to the satisfaction of each party's obligations
in accordance with the terms of the Salobo amended gold purchase
agreement;
- fluctuations in the price of commodities;
- risks related to the Mining Operations (as defined in Silver
Wheaton's Annual Information Form) from which Silver Wheaton
purchases silver or gold and risks related to these Mining
Operations including risks related to fluctuations in the price of
the primary commodities mined at such operations, actual results of
mining and exploration activities, environmental, economic and
political risks of the jurisdictions in which the Mining Operations
are located, and changes in project parameters as plans continue to
be refined;
- the absence of control over Mining Operations and having to
rely on the accuracy of the public disclosure and other information
Silver Wheaton receives from the owners and operators of the Mining
Operations as the basis for its analyses, forecasts and assessments
relating to its own business;
- differences in the interpretation or application of tax laws
and regulations or accounting policies and rules; and Silver
Wheaton's interpretation of, or compliance with, tax laws and
regulations or accounting policies and rules, is found to be
incorrect or the tax impact to the Company's business operations is
materially different than currently contemplated;
- any challenge by the CRA of the Company's tax filings is
successful and the potential negative impact to the Company's
previous and future tax filings;
- the Company's business or ability to enter into precious metal
purchase agreements is materially impacted as a result of any CRA
reassessment;
- any reassessment of the Company's tax filings and the
continuation or timing of any such process is outside the Company's
control;
- any requirement to pay reassessed tax;
- the Company is not assessed taxes on its foreign subsidiary's
income on the same basis that the Company pays taxes on its
Canadian income, if taxable in Canada;
- interest and penalties associated with a CRA reassessment
having an adverse impact on the Company's financial position;
- litigation risk associated with a challenge to the Company's
tax filings;
- credit and liquidity risks;
- hedging risk;
- competition in the mining industry;
- risks related to Silver Wheaton's acquisition strategy;
- equity price risks related to Silver Wheaton's holding of
long-term investments in other exploration and mining
companies;
- risks related to the declaration, timing and payment of
dividends;
- the ability of Silver Wheaton and the Mining Operations to
retain key management employees or procure the services of skilled
and experienced personnel;
- litigation risk associated with outstanding legal matters;
- risks related to claims and legal proceedings against Silver
Wheaton or the Mining Operations;
- risks relating to unknown defects and impairments;
- risks relating to security over underlying assets;
- risks related to ensuring the security and safety of
information systems, including cyber security risks;
- risks related to the adequacy of internal control over
financial reporting;
- risks related to governmental regulations;
- risks related to international operations of Silver Wheaton and
the Mining Operations;
- risks relating to exploration, development and operations at
the Mining Operations;
- risks related to the ability of the companies with which the
Company has precious metal purchase agreements to perform their
obligations under those precious metal purchase agreements in the
event of a material adverse effect on the results of operations,
financial condition, cash flows or business of such companies;
- risks related to environmental regulations and climate
change;
- the ability of Silver Wheaton and the Mining Operations to
obtain and maintain necessary licenses, permits, approvals and
rulings;
- the ability of Silver Wheaton and the Mining Operations to
comply with applicable laws, regulations and permitting
requirements;
- lack of suitable infrastructure and employees to support the
Mining Operations;
- uncertainty in the accuracy of mineral reserve and mineral
resource estimates;
- inability to replace and expand mineral reserves;
- risks relating to production estimates from Mining Operations,
including anticipated timing of the commencement of production by
certain Mining Operations;
- uncertainties related to title and indigenous rights with
respect to the mineral properties of the Mining Operations;
- fluctuation in the commodity prices other than silver or
gold;
- the ability of Silver Wheaton and the Mining Operations to
obtain adequate financing;
- the ability of Mining Operations to complete permitting,
construction, development and expansion;
- challenges related to global financial conditions;
- risks relating to future sales or the issuance of equity
securities; and
- other risks discussed in the section entitled "Description of
the Business - Risk Factors" in Silver Wheaton's Annual Information
Form for the year ended December 31,
2015 and the additional risks identified under "Risks and
Uncertainties" in Management's Discussion and Analysis for the year
ended December 31, 2015 and any
subsequent periods, all available on SEDAR
athttp://www.sedar.com and in Silver Wheaton's Form 40-F filed
on March 30, 2016 and Form 6-K filed
May 9, 2016, both on file with the
U.S. Securities and Exchange Commission in Washington, D.C. (the "Disclosure").
Forward-looking statements are based on assumptions management
currently believes to be reasonable, including but not limited
to:
- the payment by SWC of US$800
million to a wholly owned subsidiary of Vale and the
satisfaction of each party's obligations in accordance with the
terms of the Salobo amended gold purchase agreement;
- the receipt of all necessary approvals for the amendment to the
Silver Wheaton common share purchase warrants to reduce the strike
price from US$65 to US$43.75;
- no material adverse change in the market price of
commodities;
- that the Mining Operations will continue to operate and the
mining projects will be completed in accordance with public
statements and achieve their stated production estimates;
- the continuing ability to fund or obtain funding for
outstanding commitments;
- Silver Wheaton's ability to source and obtain accretive
precious metal stream interests;
- expectations regarding the resolution of legal and tax matters,
including the ongoing class action litigation and CRA audit
involving the Company;
- Silver Wheaton will be successful in challenging any
reassessment by the CRA;
- Silver Wheaton has properly considered the application of
Canadian tax law to its structure and operations;
- Silver Wheaton will continue to be permitted to post security
for amounts sought by the CRA under notices of reassessment;
- Silver Wheaton has filed its tax returns and paid applicable
taxes in compliance with Canadian tax law;
- Silver Wheaton will not change its business as a result of any
CRA reassessment;
- Silver Wheaton's ability to enter into new precious metal
purchase agreements will not be impacted by any CRA
reassessment;
- expectations and assumptions concerning prevailing tax laws and
the potential amount that could be reassessed as additional tax,
penalties and interest by the CRA;
- any foreign subsidiary income, if taxable in Canada, would be subject to the same or
similar tax calculations as Silver Wheaton's Canadian income,
including the Company's position, in respect of precious metal
purchase agreements with upfront payments paid in the form of a
deposit, that the estimates of income subject to tax is based on
the cost of precious metal acquired under such precious metal
purchase agreements being equal to the market value of such
precious metal;
- the estimate of the carrying value of Silver Wheaton's precious
metal purchase agreements; and
- other assumptions and factors as set out in the
Disclosure.
Although Silver Wheaton has attempted to identify important
factors that could cause actual results, level of activity,
performance or achievements to differ materially from those
contained in forward-looking statements, there may be other factors
that cause results, level of activity, performance or achievements
not to be as anticipated, estimated or intended. There can be
no assurance that forward-looking statements will prove to be
accurate and even if events or results described in the
forward-looking statements are realized or substantially realized,
there can be no assurance that they will have the expected
consequences to, or effects on, Silver Wheaton. Accordingly,
readers should not place undue reliance on forward-looking
statements and are cautioned that actual outcomes may vary.
The forward-looking statements included herein for the purpose of
providing investors with information to assist them in
understanding Silver Wheaton's expected financial and operational
performance and may not be appropriate for other purposes.
Any forward looking statement speaks only as of the date on which
it is made. Silver Wheaton does not undertake to update any
forward-looking statements that are included or incorporated by
reference herein, except in accordance with applicable securities
laws.
CAUTIONARY NOTE TO UNITED
STATES INVESTORS REGARDING PRESENTATION OF MINERAL RESERVE
AND MINERAL RESOURCE ESTIMATES: The information contained
herein has been prepared in accordance with the requirements of the
securities laws in effect in Canada, which differ from the requirements of
United States securities
laws. The terms "mineral reserve", "proven mineral reserve"
and "probable mineral reserve" are Canadian mining terms defined in
accordance with Canadian National Instrument 43-101 - Standards of
Disclosure for Mineral Projects ("NI 43-101") and the Canadian
Institute of Mining, Metallurgy and Petroleum (the "CIM") - CIM
Definition Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council, as amended (the "CIM Standards"). These
definitions differ from the definitions in Industry Guide 7 ("SEC
Industry Guide 7") under the U.S. Securities Act of 1933, as
amended (the "U.S. Securities Act"). Under U.S. standards,
mineralization may not be classified as a "reserve" unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve determination is made. Also, under SEC Industry Guide
7 standards, a "final" or "bankable" feasibility study is required
to report reserves, the three-year historical average price is used
in any reserve or cash flow analysis to designate reserves and the
primary environmental analysis or report must be filed with the
appropriate governmental authority. In addition, the terms "mineral
resource", "measured mineral resource", "indicated mineral
resource" and "inferred mineral resource" are defined in and
required to be disclosed by NI 43-101; however, these terms are not
defined terms under SEC Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed
with the SEC. Investors are cautioned not to assume that any part
or all of the mineral deposits in these categories will ever be
converted into reserves. "Inferred mineral resources" have a great
amount of uncertainty as to their existence and as to their
economic and legal feasibility. It cannot be assumed that all
or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian rules, estimates of
inferred mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that all or any part of an inferred mineral
resource exists or is economically or legally mineable.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability. Disclosure of "contained ounces"
in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report
mineralization that does not constitute "reserves" by SEC standards
as in place tonnage and grade without reference to unit measures.
Accordingly, information contained herein that describes the
Company's mineral deposits may not be comparable to similar
information made public by U.S. companies subject to reporting and
disclosure requirements under the United
States federal securities laws and the rules and regulations
thereunder. United States
investors are urged to consider closely the disclosure in the
Annual Information Form, a copy of which is available
at http://www.sec.gov.
Patrick Drouin, Senior Vice
President, Investor Relations, Silver Wheaton Corp., Tel:
+1-844-288-9878, Email: info@silverwheaton.com, Website:
http://www.silverwheaton.com