Canada-based Silver Wheaton will acquire two silver mines from Hudbay Minerals for a total cash consideration of $750m.
The company will own 100% of the life of mine silver production from the 777 Mine in Canada, and 100% of the life of mine silver production from the Constancia Project in southern Peru.
Silver Wheaton will also acquire 100% of the life of mine gold production from Hudbay’s 777 Mine until Constancia satisfies a completion test, or at the end of 2016, whichever is later.
At that point, Silver Wheaton’s share of gold production from 777 will be reduced to 50% for the remainder of the mine life.
Silver Wheaton will pay $500m of the total transaction amount with immediate effect and two further payments of $125m each will be made upon the satisfaction of minimum capital expenditures incurred at Constancia.
With the transaction, the company’s average annual silver equivalent is enhanced by 4.9 million oz.
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Silver Wheaton president and CEO Randy Smallwood said: "This transaction provides immediate cash flow, is accretive on all short and long-term metrics, and maintains our policy of investing in low-cost, high-quality assets."
Image: The transaction enhances Silver Wheaton’s silver and gold reserves. Photo: courtesy of Jurema Oliveira.