Toronto-listed Capstone Mining on Friday announced a streamlining agreement with Wheaton Precious Metals, which would pay $150-million upfront for silver from the Cozamin mine, in Mexico.

Wheaton would receive half of Cozamin’s silver production until ten-million ounces had been delivered and then 33% of silver production for the life-of-mine.

“This deal is transformational, giving Capstone one of the lowest debt positions among base metal producers at a time when we are expecting significant copper production and cash flow growth. The $150-million for 50% of Cozamin’s silver is a strong validation of the ultimate mine life potential we expect to demonstrate through further resource to reserve conversion and ongoing exploration,” said Capstone CEO Darren Pylot.

Twice the mine was considered a sunset operation and subsequent exploration success resulted in significant mine life extensions with high grades. A 200-hole drill programme 2019/20 has improved the outlook for the mine. The exploration team drilled more than 108 000 m within a $10-million budget aiming to double the mine life.

In June, an updated mineral resource estimate was released, increasing total measured and indicated tonnes by 66%, with an 83% increase to contained copper metal to 949-million pounds and a 71% increase to contained silver metal to 39-million ounces of silver.

In September, an updated mineral reserve was released, increasing proven and probable mineral reserves by 97%, relative to December 31, 2019, to 10.2-million tonnes grading 1.79% copper.

Wheaton has a long history with Capstone and Cozamin and CEO Randy Smallwood said Wheaton welcomed the opportunity to bring back the mine into its portfolio.

“Over the past few years, Capstone has conducted an extensive and successful exploration and drill programme, which has significantly increased Cozamin's mine life.  We believe, as does Capstone, that the best is yet to come for Cozamin.”

Meanwhile, Wheaton is in advanced discussions with Capstone regarding a potential gold stream on the Santo Domingo project, in Chile.