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(Wallace Refiners) – The push to bring more copper projects online to increase supply to meet growing demand is presenting an opportunity for one precious metals streaming company.
Wheaton Precious Metals announced Thursday that its wholly-owned subsidiary, Wheaton Precious Metals International Ltd, entered into a definitive Precious Metal Purchase Agreement with Capstone Mining Corp.
Capstone Mining is in the process of developing its Santo Domingo project in Chile. Under the agreement, Wheaton will pay a total of $290 million for 100% of the payable gold production of up to 285,000 ounces. After the streaming company will receive 67% of payable gold production for the life of the mine.
“Santo Domingo is an exceptional project that provides Wheaton with an additional near-term growth opportunity. The project is forecast to be a first-quartile copper producer with a long mine life, making it an ideal fit for Wheaton’s existing high-quality portfolio,” said Randy Smallwood, Wheaton’s president and chief executive officer. “We are very excited to further build our partnership with Capstone and look forward to seeing Santo Domingo developed into a top-tier copper mine.”
According to Capstone, the Santo Domingo project is forecast to be a first quartile copper mine with an 18-year mine life. The company expects construction to commence in late 2021, with the first full year of production forecast for 2024.
Wheaton said that attributable gold production from Santo Domingo is forecast to average 35,000 to 40,000 ounces per year for the first five full years of production and 25,000 to 30,000 ounces for the first ten full years.
“The addition of the Santo Domingo project will increase Wheaton’s estimated Proven and Probable gold reserves by 0.51 million ounces, Measured and Indicated gold resources by 0.12 million ounces and Inferred gold resources by 0.03 million ounces,” the company said
Along with raising capital through the streaming agreement, Capstone said that it has also entered into a framework agreement with Puerto Abierto S.A. that assumes responsibility for financing, constructing and operating the proposed port component of the Santo Domingo project.
“The gold stream and port agreements are key steps in our reduced capital strategy, which aims to decrease the capital required by a target of $700 million. The consolidation of 100% ownership of the project allows Capstone to efficiently engage in discussions with potential strategic partners,” said Darren Pylot, president and CEO of Capstone.
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