Wheaton invests $441 million in Artemis Blackwater Project

By Dominic Ellis
Wheaton Precious Metals will buy the Gold Stream from New Gold for $300m and pay $141m to Artemis Gold for the Silver Stream at the Blackwater Project

Wheaton Precious Metals has made a double investment move on Artemis Gold's Blackwater Projectannouncing it will buy the Gold Stream from New Gold for $300m and pay $141m to Artemis Gold for the Silver Stream.

The Gold Stream will be paid on closing of the purchase agreement, while the $141m payment - described as an "upfront deposit" - will be paid over the construction of the Blackwater Project, which contains 8m ounces of gold reserves.

The Blackwater Project is forecast to be a first quartile gold mine with a 22-year mine life. Artemis expects major construction to start in Q2 2022, with production commencing in Q1 2024.

Under the Gold Stream, Wheaton will be entitled to receive 8% of the payable gold production until 279,908 ounces have been delivered, thereafter dropping to 4% of payable gold production for the life of the mine. Under the Silver Stream, Wheaton will be entitled to receive 50% of the payable silver production until 17.8moz have been delivered, thereafter dropping to 33% of payable silver production for the life of the mine

Randy Smallwood, Wheaton’s President and CEO, said the acquisition of the gold and silver streams on the Blackwater Project further enhances and diversifies its existing portfolio of "low-cost, high-quality, long-life mines".

"With strong ESG commitments at every stage of development, compelling economics and significant exploration upside potential, Blackwater incorporates many of the attributes we seek for accretive growth,” he said.

“Artemis’s approach of disciplined, responsible resource development aligns well with our own focus on promoting industry-leading mining practices. We are proud to partner with Artemis in the advancement of the Blackwater Project, which we believe is on track to develop into a top-tier operation, producing socially and environmentally sound minerals, right in our own backyard.”

For gold ounces delivered, Wheaton will make ongoing cash payments equal to 35% of the spot gold price. For silver ounces delivered, Wheaton will make ongoing cash payments equal to 18% of the spot silver price until the value of silver delivered less the Silver Production Payment is equal to the upfront cash consideration, at which point the Silver Production Payment will increase to 22% of the spot silver price.

Attributable gold production is forecast to average approximately 26 koz per year for the first five full years of production and 28 koz per year for the first ten full years. With a fixed silver recovery of 61%, attributable silver production is forecast to average over 480 koz per year for the first five full years of production, and over 670 koz per year for the first ten full years.

The Gold and Silver Streams will increase Wheaton’s estimated Proven and Probable gold reserves by 0.47 Moz and silver reserves by 31.0 Moz, Measured and Indicated gold resources by 0.15 Moz and silver resources by 19.9 Moz, and Inferred gold resources by 0.01 Moz and silver resources by 2.3 Moz. In addition, Wheaton believes significant exploration upside potential exists as the Blackwater Project deposit remains open to the North, Northwest and at depth, and given the Gold Stream’s substantial area of interest.

Q3 Highlights

  • Over $200 million in operating cash flow during the third quarter and a record $650 million in the first nine months of 2021.
  • $269 million in revenue during the third quarter and a record $923 million in the first nine months
  • $137 million in adjusted net earnings during the third quarter and a record $460 million in the first nine months
  • Signed a non-binding term sheet with Rio2 Limited to enter into a precious metals purchase agreement in connection with the Fenix Gold project located in Chile
  • Strong financial position with approximately $372 million in cash on hand and $2 billion of additional capacity through the revolving credit facility as of September 30, 2021
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