VANCOUVER, Nov. 4, 2013 /PRNewswire/ - Silver Wheaton Corp. ("Silver Wheaton" or the "Company") (TSX: SLW) (NYSE: SLW) is pleased to announce that it has agreed to acquire from Hudbay Minerals Inc. ("Hudbay") (TSX: HBM) (NYSE: HBM) 50% of the life of mine gold production from its Constancia Project ("Constancia"), located in southern Peru, for US$135 million. Silver Wheaton's August 2012 silver stream purchase agreement ("Original Agreement") for 100% of the life of mine silver production from Constancia has now been amended to include 50% of the life of mine gold production ("New Agreement").
Adds to Silver Wheaton's growth profile
Silver Wheaton will receive 50% of the life of mine gold production from Constancia.
Forecast average annual attributable gold production1 from Constancia is anticipated to be approximately 35,000 gold ounces over the first five years, and 18,000 ounces life of mine. The mine life is currently estimated at around 16 years.
Aligns the interests of both companies
Hudbay will retain 50% of gold production.
Timing of the upfront payment is linked to Constancia's capital expenditures.
Maintains conservative balance sheet�������
Silver Wheaton has the option to make the initial upfront payment in either cash or Silver Wheaton shares, calculated at the time the payment is made2.
Updating production guidance
Silver Wheaton has revised 2017 guidance to reflect recent developments.� 2017 guidance is now forecast to be 42.5 million silver equivalent ounces3 including 210 thousand ounces of gold.
2013 silver equivalent production is still expected to exceed 33.5 million ounces3 including 145 thousand ounces of gold.
"We are very encouraged by Constancia's development and the inclusion of Pampacancha into the mine plan," said Randy Smallwood, Silver Wheaton's President and Chief Executive Officer. "Given the higher gold grades present in the Pampacancha deposit, we see this gold stream as an economic opportunity for both parties. Hudbay has proven to be a strong partner both in Canada and in Peru, where we believe they are setting the standard for building strong social license in South America. This gold stream, our second precious metal stream on Constancia, clearly demonstrates the win-win nature of our agreements and further endorses the competitiveness of Silver Wheaton's streaming model."
More Gold, In Mexico More Tax . . . Mexico's senate gave general approval to the government's plan to increase tax revenues. Although the details haven't been finalized, the new law will impose a new 7.5% tax on mining sales, minus certain deductions, plus a 0.5% tax on gross revenues of gold, silver, and platinum mines. The good news is that this new tax can be deducted from corporate income tax; the bad news is that exploration expenses now need to be deducted over a ten-year period, which will hit pure exploration companies pretty hard.
The government approved the new tax structure because the mining industry supposedly "does not pay a fair contribution to the state." However, what politicians don't understand is that this will almost certainly result in a drop in investment in the country, especially in exploration projects. Major producers Grupo México and Goldcorp also warned they will focus future growth outside of Mexico, depending on the final details