Wheaton To Purchase Marmato Project Gold And Silver
Leading global precious metals streaming company Wheaton Precious Metals Corp.’s (TSX:WPM) has signed a non-binding term sheet with Caldas Gold Corp. to enter into a Precious Metals Purchase Agreement for the Marmato Project located in Colombia.
The Marmato Project comprises an operating Upper Mine and the Marmato Deeps Zone (MDZ) development, both of which are covered by the Precious Metals Stream.
“Wheaton is excited to partner with Caldas Gold in developing the Marmato Project,” President and Chief Executive Officer, Randy Smallwood, said.
“The strength and potential upside of this project was especially apparent during our onsite due diligence trip, prior to travel restrictions being put into place.
“We remain unwavering in our focus on delivering the highest quality portfolio of precious metals production to our shareholders through our top tier asset base, strong organic growth profile and acquisition of accretive growth opportunities such as Marmato.
“As can be seen, Wheaton continues to be very active on the corporate development front despite limitations resulting from the current global COVID-19 pandemic.”
Upon entering into the Precious Metals Stream, Wheaton International will purchase 6.5% of the gold production and 100% of the silver production until 190,000 ounces of gold and 2.15 million ounces of silver have been delivered, after which the stream drops to 3.25% of the gold production and 50% of the silver production for the life of mine.
Under the proposed Precious Metals Stream, Wheaton International will pay a total cash consideration of C$110 million, C$38 million of which is payable upon closing and the remaining portion of which is payable during the construction of the MDZ project, subject to receipt of required permits and licenses, sufficient financing having been obtained to cover total expected capital expenditures, and other customary conditions. In addition,
Wheaton International will make ongoing payments equal to 18% of the spot gold and silver price until the uncredited portion of the upfront payment is reduced to zero, and 22% of the spot gold and silver price thereafter. The entering into of the Precious Metals Stream is subject to, among other matters, the negotiation and completion of definitive documentation.2
As part of the Precious Metals Stream, Caldas Gold has agreed to provide funding to support the local communities around the Marmato Project.
Caldas Gold’s Marmato Project comprises the existing producing underground gold and silver mine in the Upper Zone, the existing 1,200 tonnes per day (tpd) processing plant and the area encompassing the MDZ. The current mine has been in operation since 1991.
The Marmato Project has excellent infrastructure as it is located by the Pan American Highway with access to Medellin to the north and Manizales to the south, and has access to the national electricity grid, which runs near the property.
The Preliminary Economic Assessment completed in 2019 charts a path for expansion of mining operations at the Marmato Project, ultimately comprised of two distinct operations, the existing Upper Mine operation and the MDZ project, which sits directly below the Upper Zone vein system. In 2019, the Upper Mine produced 25,750 ounces of gold and 39,560 ounces of silver.
Implementation of a mine optimisation programmd in the Upper Mine is expected to increase gold production starting in 2020 and reduce total cash costs per ounce. A Prefeasibility Study, currently in process and expected to be completed mid-2020, is focused on the development of mining operations in the MDZ, including construction of an additional 4,000 tpd plant and new dry stack tailings storage facilities. Mechanized mining, using an underground longhole stoping method, in the MDZ is expected to further increase production commencing by 2023