Silver Wheatons Press Release on the deal Silver Wheaton to buy 10% of Sandspring's Toroparu gold
2013-11-12 06:11 ET - News Release
Mr. Randy Smallwood reports
SILVER WHEATON COMPLETES EARLY DEPOSIT GOLD STREAM AGREEMENT WITH SANDSPRING RESOURCES
Silver Wheaton Corp. has entered into an early deposit gold stream agreement with Sandspring Resources Ltd. for the Toroparu project located in Guyana, South America.
"Silver Wheaton continues to push the streaming model forward," said Randy Smallwood, Silver Wheaton's president and chief executive officer. "The early deposit agreement model allows us to get our foot in the door on high-quality, earlier-stage projects such as Toroparu for relatively little upfront capital. From Sandspring's perspective, these funds will allow them to complete the bankable feasibility study without subjecting their shareholders to excessive dilution that today's challenging equity markets would deliver. Yet again, Silver Wheaton has developed another innovative, win-win business model. In today's market environment we expect this model to be very attractive to junior exploration and development companies looking for funding."
Under the early deposit agreement, Silver Wheaton, through its wholly owned subsidiary Silver Wheaton (Caymans) Ltd., has the right to purchase 10 per cent of the life of mine gold production from the Toroparu project for total cash consideration of $148.5-million (U.S.) plus a production payment of the lesser of $400 (U.S.) (subject to a 1-per-cent annual inflation adjustment starting in the fourth year after the completion test is satisfied) and the prevailing market price. Silver Wheaton will advance $13.5-million (U.S.) to Sandspring once customary conditions have been met and at the closing of this agreement. The company may then elect to proceed with the purchase of the gold stream following the delivery of a bankable definitive feasibility study, environmental study and impact assessment, and other related documents or after Dec. 31, 2015, if the feasibility documentation has not been delivered to Silver Wheaton by such date. If Silver Wheaton elects not to proceed with the gold stream, the company will be entitled to either a return of $11.5-million (U.S.) payable by Sandspring (on the basis that $2-million (U.S.) of the advanced $13.5-million (U.S.) is non-refundable) or a reduction in the stream percentage from 10 per cent to 0.774 per cent, at Sandspring's option.
About the Toroparu project
The Toroparu gold-copper deposit was discovered in 2007 in Guyana, South America. As stated in the National Instrument 43-101 technical report titled, "Prefeasibility Study Toroparu Gold Project Upper Puruni River Area, Guyana," dated May 24, 2013, the Toroparu project has proven and probable mineral reserve of 4.1 million ounces of gold contained in 127 million tonnes of ore at a grade of one gram per tonne gold. Estimated annual production is 246,000 ounces of gold at a mill head grade of 1.32 grams per tonne produced at a cash cost of $504 per payable ounce of gold on average over the first four years and 228,000 ounces at a cash cost of $700 per ounce on average over the 16-year life of mine.