Wheaton Precious Metals signs an acquisition agreement over a Mineral Park Mine in Arizona

Agreement

At the end of October, Wheaton Precious Metals announced that its subsidiary Wheaton Precious Metals International has entered into a definitive Precious Metals Purchase Agreement with Waterton Copper Corp. (subsidiary of Waterton Copper LP) concerning its 100% owned Mineral Park Mine located in Arizona.

Randy Smallwood explicated „Wheaton is excited to bring Mineral Park back into our portfolio given our long history with the mine, particularly given the work Waterton Copper has done to optimize the operation,” Moreover he highlighted the importance of this decision: „Our unique understanding of Mineral Park, and its potential, positions us well to assist Waterton Copper in bringing the mine back into production in a sustainable manner. As global efforts to transition to a low-carbon economy accelerate, critical metals, such as copper, that are produced responsibly within politically stable jurisdictions, have never been more important.”$

$600 million deal

Waterton is investing around $600 million to optimize Mineral Park with an upfront cash consideration of $ 115 million. Isser Elishis has stated: „Waterton is investing approximately $600 million to optimize Mineral Park including significant capital investments in new primary crushers, secondary and pebble-crushing circuits, and new higher-power SAG mills, which are expected to result in decades of operational excellence.”

Transaction details

According to Wheaton Precious Metals official webpage, the general transition details are:

• Upfront Consideration: WPMI will pay Waterton Copper a total upfront cash consideration of $115 million (the „Deposit”) in four payments during construction (three installments of $25 million and a final installment of $40 million).
• Streamed Metal: Under the Silver Stream, WPMI will purchase 100% of the payable silver from the Project for the life of the mine. Payable silver is calculated using a fixed payable factor of 90%.
• Production Profile: Attributable production is forecast to average over 0.69 million ounces („Moz”) of silver per year for the first five years of production and over 0.74 Moz of silver per year for the life of the mine, with construction to be completed by the end of Q1 2025. Mineral Park is forecast to have a 12-year mine life, with the potential to expand the mine life to over 20 years.
• Production Payments: WPMI will make ongoing payments for the silver ounces delivered equal to 18% of the spot price of silver („Production Payment”) until the uncredited deposit is reduced to nil and 22% of the spot price of silver thereafter.
• Incremental Reserves and Resources: The addition of Mineral Park will increase Wheaton’s total estimated Proven and Probable Mineral silver reserves by 14.6 Moz, Measured and Indicated Mineral silver resources by 18.4 Moz, and Inferred silver resources by 16.2 Moz.
• Other Considerations:
  • The Silver Stream will include a customary completion test.
  • WPMI will provide a secured debt facility of up to $25 million once the full upfront consideration has been paid.
  • WPMI has also obtained a right of first refusal on any future precious metals streams, royalty, prepay, or similar transactions.
  • Waterton Copper and Origin Mining Company, LLC (the direct owner of Mineral Park, „Origin”) will provide WPMI with corporate guarantees and certain other security over their assets.
  • Waterton Copper is expected to comply in all material respects with WPMI’s Partner/Supplier Code of Conduct, which outlines Wheaton’s expectations concerning environmental, social, and governance („ESG”) matters.

Mineral Park

Mineral Park is a polymetallic mine situated in the north of Kingsman (north-west Arizona). Mineral parks consist of copper-molybdenum-silver porphyry deposits. Currently, it is under Phase 2 construction The construction is expected to be finished by the end of Q1 2025. Waterton Copper is investing approximately $600 million to complete Phase 2 of its operating plan. This will enable to bring the site to over one hundred million pounds of copper equivalent annually and fully modernize the operation. The deposit information can be found in Table 1.

Table 1. Silver Mineral Reserves and Mineral Resources of Mineral Park Mine. Source: Official Webpage

Category	Tonnage Mt	Grade Ag g/t	Contained Ag Moz
Proven Probable	42.4 141.3	2.6 2.4	3.5 11.1
P&P	183.7	2.5	14.6
Measured Indicated	22.6 261.5	2.1 2.0	1.5 16.9
M&I	284.1	2.0	18.4
Inferred	341.2	1.5	16.2