VANCOUVER (miningweekly.com) – Seven-months-old mine finance firm Triple Flag has acquired its first silver streaming agreement with Milpo UK, a subsidiary of Latin American conglomerate Votorantim’s Compañía Minera Milpo, for most silver output from Cerro Lindo, a poly-metallic zinc mine, in Peru.
Under the streaming agreement, Triple Flag, which is backed by US-based global investment firm Elliott Management that has more than $30-billion of assets under management, will make an upfront payment of $250-million to Milpo by December 21 and pay 10% of the spot silver price per ounce for deliveries starting in January 2017.
Cerro Lindo is one of the world’s ten largest zinc mines and is expected to provide low-cost staged expansion potential, as well as reserve replacement and life extension. “It is an ideal cornerstone asset for the business and Triple Flag looks forward to a long-term partnership with Milpo, which has a long history of successful operations,” Triple Flag founder and former Barrick Gold CFO Shaun Usmar stated.
The stream will be based on all payable silver from the Cerro Lindo stream area. Initially, Triple Flag will be entitled to 65% of all payable silver until 19.5-million ounces have been delivered under the agreement. Thereafter, Triple Flag will be entitled to 25% of payable silver.
Milpo is the 100% owner of Cerro Lindo and is a subsidiary of VM Holding, part of Votorantim’s portfolio.
Cerro Lindo is an underground stoping mine with a conventional 19 300 t/d concentrator that produces zinc, lead and copper concentrates. When operations started in 2007, the initial milling capacity was 5 000 t/d, which was expanded to 10 000 t/d in 2011, 15 000 t/d in 2012 and 18 000 t/d in December 2014. The last quarter of 2015 reached 19 500 t/d, with plans in place to lift throughput to 19 000 t/d by 2018.
Triple Flag also has a right of first refusal over any future streams on the Cerro Lindo area of interest.
In a recent interview, the pioneer and foremost proponent of the precious metals streaming model Silver Wheaton chief executive Randy Smallwood told Mining Weekly Online that there are many new market entrants vying to get a "foot in the door". He noted the space is very competitive, with companies in general making aggressive bids on opportunities that do not necessarily pass muster.