Triple Flag outlines $350 million Peruvian streaming deal

By Dale Benton
Triple Flag, a new mining financing firm backed by U.S. hedge fund Elliott Management Corp, has said that it would pay $250 million to buy future silver...

Triple Flag, a new mining financing firm backed by U.S. hedge fund Elliott Management Corp, has said that it would pay $250 million to buy future silver production from a mine in Peru owned by Peruvian miner Compañía Minera Milpo.

In a report by Reuters, Toronto-based Triple Flag, a 7-month-old company founded by former Barrick Gold chief financial officer Shaun Usmar, said it would buy the silver "stream" from Milpo's Cerro Lindo poly-metallic zinc mine. It is Triple Flag's first deal.

In streaming transactions, mining finance companies such as Triple Flag provide miners with funds upfront in exchange for a portion of the future output - often a byproduct - from a mine at a set discounted price.

This type of financing became especially popular during a mining sector downturn in recent years when debt-laden miners did not want to tap the equity markets for finance at a time when their share prices were weak.

Triple Flag said in a statement it would pay 10 percent of the spot silver price for each ounce of silver it got from the mine. Silver delivery would start next month.

Cerro Lindo, a low-cost, long-life mine that started operations in 2007, is one of the world's 10 largest zinc mines.

Milpo is a unit of VM Holdings S.A., the metals and mining business of Votorantim S.A, a large, private Brazilian conglomerate with interests in a variety of sectors including cement, energy and orange juice.

 

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