Blackwater in British Columbia, Canada
Streaming major Wheaton Precious Metals has agreed to buy the gold and silver streams on the Blackwater project, in British Columbia, for $441-million, the group announced on Monday.
Wheaton would buy the existing gold stream, held by TSX-listed New Gold, for $300-million and entered into a silver stream agreement with TSX-V-listed Artemis Gold for $141-million.
New Gold retained the gold stream as partial consideration for the divesture of the Blackwater project to Artemis in August last year.
"The acquisition of the gold and silver streams on the Blackwater Project further enhances and diversifies Wheaton's existing portfolio of low-cost, high-quality, long-life mines,” said Wheaton CEO Randy Smallwood.
The gold stream entitles Wheaton to 8% of the gold produced from Blackwater, reducing to 4% of gold production once about 280 000 oz of gold have been delivered to Wheaton.
Under the silver stream, Wheaton would be entitled to receive 50% of the payable silver production until 17.8-million ounces have been delivered, thereafter dropping to 33% of payable silver production for the life of the mine.
Wheaton stated that attributable gold production was forecast to average 26 000 oz/y for the first five full years of production and 28 000 oz/y for the first ten full years. With a fixed silver recovery of 61%, attributable silver production was forecast to average over 480 000 oz/y for the first five full years of production, and more than 670 000 oz/y for the first ten full years.
For gold ounces delivered, Wheaton would make ongoing cash payments equal to 35% of the spot gold price. For silver ounces delivered, Wheaton would make ongoing cash payments equal to 18% of the spot silver price until the value of silver delivered less the silver production payment was equal to the upfront cash consideration, at which point the silver production payment would increase to 22% of the spot silver price.
Blackwater is a project with eight-million ounces of gold in reserves, environmental assessment approval and the potential to develop into one of the biggest gold mines in Canada. The Blackwater project is forecast to be a first-quartile gold mine with a 22-year mine life.
Artemis expects major construction to start in the second quarter of 2022, with production starting in the first quarter of 2024.