Silver Wheaton Corp. is spending US$800 million to increase its share of gold production from a Brazilian copper and gold mine owned by a subsidiary of Vale SA.
The Vancouver-based company will pay cash for 25 per cent of the mine’s gold production, adding to the 50 per cent of output it already receives from the Salobo mine. The company estimates the mine to have a 50-year life and says it will immediately increase its consolidated production and cash flow.
“The Salobo mine is a cornerstone asset for Silver Wheaton and should be for generations to come,” Silver Wheaton Chief Executive Officer Randy Smallwood said in a statement Tuesday.
Silver Wheaton said it will use cash on hand, as well as proceeds from its US$2 billion revolving credit line to fund the deal. In addition, the strike price on warrants issued by Silver Wheaton to Vale in 2013 will be lowered to US$43.75 a share from US$65, Silver Wheaton said. The warrants give Vale the right to buy Silver Wheaton shares.
Vale’s Salobo mine, in the Para state, is the country’s largest copper deposit and produces about 300,000 ounces of gold a year.
