Silver Wheaton Corp.
) has entered into an agreement with a subsidiary of mining giant
) to acquire gold production from mines in Brazil and Sudbury,
As per the agreement, Silver Wheaton will receive 25% of the life
of mine gold produced from Vale's Brazilian Salobo mine as well
as 70% of the production from its Sudbury Mines for a period of
Within 10 business days from the agreement date, Silver Wheaton
will pay Vale $1.9 billion in cash. It has also issued 10 million
Silver Wheaton warrants with a strike price of $65 and a term of
10 years. It will also pay up to $400 for each ounce of gold
delivered, subject to inflation adjustments and the current
Silver Wheaton will gain immensely through this deal. The
partnership will significantly increase the company's access to
percentage of revenues generated from gold production by an
average of 12% and a peak of 25% over the next 5 years.
It will also immediately increase Silver Wheaton's production
and cash flow profile by adding expected average gold production
of 110,000 ounces per year over the next 20 years. Silver Wheaton
expects to increase its organic growth profile with this
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Silver Wheaton has also entered into two new unsecured credit
facilities, comprising a $1 billion revolving credit facility
having a 5-year term (the "Revolving Facility"); and a $1.5
billion bridge financing facility having a 1-year term (the
"Bridge Facility"). The Revolving Facility and Bridge Facility
replaced the $400 million Revolver Loan and the Term Loan, with
the latter being repaid in full on Feb 22, 2013.
Silver Wheaton is the largest precious metals streaming company
in the world. The company's industry-leading growth profile is
driven by its portfolio of low-cost and long-life assets.
Silver Wheaton currently retains a Zacks Rank #3 (Hold).
Other mining companies having favorable Zacks Rank are
Sandstorm Gold Ltd.
) with both having a Zacks Rank #2 (Buy).