Vancouver-based Capstone Mining on Thursday announced three agreements to advance the Santo Domingo project, in Chile, including a $290-million gold stream with Wheaton Precious Metals, a binding port deal and the consolidation of its ownership in the project.
The $1.5-billion copper project will produce magnetite and gold as a byproduct, and has the potential to produce battery-grade cobalt sulphate.
Capstone entered into a port framework agreement with Puerto Abierto, which will finance, construct and operate the proposed port component of the project. This represents about $250-million of the initial capital required and the company said that it was in discussions with Sigdo Kopper’s rail business for an opportunity to reduce capital costs by another $150-million.
CEO Darren Pylot said that the gold stream and port agreements were key steps in the company’s reduced capital strategy, which aimed to decrease the capital required by about $700-million.
In terms of the gold stream agreement, Wheaton will receive 100% of the gold production from the project until 285 000 oz has been delivered, thereafter dropping to 67% of the gold production.
Capstone will receive an upfront $30-million from Wheaton as an early deposit for the initial payment to buy out Korea Chile Mining Corporation, a subsidiary of Korea Resources, over the next four years. The company will buy Kores’ 30% ownership interest in Santo Domingo for a total of $120-million.
“The consolidation of ownership in the project allows Capstone to efficiently engage in discussions with potential strategic partners,” Pylot added.
The Santo Domingo project will produce an average of 137-million pounds a year of copper, 4.2-million tons a year of iron and 17 000 oz/y of gold over its 18-year mine life.