Wheaton's (WPM) Arm to Acquire Silver Stream From Capstone

Wheaton Precious Metals Corp.’s WPM wholly-owned subsidiary, Wheaton Precious Metals International Ltd., recently entered into an agreement with Capstone Mining Corp. to purchase silver stream from the latter’s Cozamin Mine located in Zacatecas, Mexico.

Per the above-mentioned agreement, Wheaton International will purchase 50% of the mine’s silver production until 10 million ounces have been delivered. Following this, the company will purchase 33% of the silver production for the life of the mine. Wheaton International will pay Capstone a total cash consideration of $150 million upon the deal’s closure. Apart from this, Wheaton International will make payments for 10% of the silver spot price for all payable silver ounces delivered. This precious metals stream agreement came into effect from Dec 1, 2020.    

Wheaton will draw from its revolving credit facility of $2 billion for the initial cash payment. As of Sep 30, 2020, the company had cash balance of approximately $210 million and $1.5 billion available under its revolving credit facility. Wheaton has ample capacity to pay down debt related to this transaction given its solid cash position, sales volume, revenues and strong operating cash flows combined with existing credit capacity. These also provide flexibilities to acquire additional accretive precious metals.