Gold mining

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.

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.