Pascua-Lama (Chile/Argentina)

Project Overview

Barrick Gold Corporation’s (“Barrick”) 100% owned Pascua-Lama gold-silver project (“Pascua-Lama) straddles the border of Chile and Argentina and is one of the largest silver deposits in the world.  In addition to being a key growth asset for Barrick, Pascua-Lama significantly increases Silver Wheaton’s long term growth profile and will be a cornerstone asset for years to come. Silver Wheaton’s 25% share of the estimated average annual silver production for the first full five years is nine million ounces.

Pascua-Lama hosts 676 million ounces of contained silver within Barrick’s reported proven and probable gold reserves, with an additional 185 million ounces of contained silver within Barrick’s reported measured and indicated gold resources. Average annual production in the first full five years is forecast at approximately 800,000 – 850,000 ounces of gold and 35 million ounces of silver. Total cash costs over this period are negative US$225 – $275 per ounce of gold¹, which would make Pascua-Lama one of the largest and lowest-cost gold mines in the world. Pascua-Lama is a long-life asset with an expected mine life in excess of 25 years. Forecast life of mine silver production is expected to average between 20-25 million ounces per year.

Key construction permits and environmental approvals have been received and construction at Pascua-Lama is well underway. Pre-production capital cost estimates are US$8 - $8.5 billion, and production is forecast to commence in the second half of 2014. The Pascua-Lama project has strong bi-national government support and strong support from local citizens and regional stakeholders in both countries.

Pascua-Lama will be an open pit mine with ore processing by wet grind milling and conventional gold and silver recovery methods. Throughput capacity, once at full production, will be 45,000 tonnes per day with average expected silver recoveries of 81%.

1. Assuming a silver price of US$25 per ounce

Silver Purchase Agreement

On September 8, 2009, Silver Wheaton entered into a silver purchase agreement with Barrick to acquire 25% of the life of mine silver production from Barrick’s Pascua-Lama project, as well as 100% of the silver production from their Lagunas Norte, Pierina and Veladero mines until the end of 2013. Silver Wheaton will make a total upfront cash payment of US$625 million to Barrick, of which US$487.5 million has been paid to date. The remaining US$137.5 million is due on the third anniversary of the transaction. Silver Wheaton will also make ongoing production payments of the lesser of US$3.90 (subject to an annual inflationary adjustment starting three years after achieving project completion at Pascua-Lama) and the prevailing market price, for each ounce of silver delivered under the agreement. Silver Wheaton will not share in any ongoing capital or exploration expenditures at the various mines.

Barrick has provided Silver Wheaton with a completion guarantee, requiring them to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015. During 2014 and 2015, Silver Wheaton will be entitled to the silver production from the Lagunas Norte, Pierina and Veladero mines to the extent of any production shortfall at Pascua-Lama, until Barrick satisfies the completion guarantee. If Barrick fails to satisfy the requirements of the completion guarantee, the agreement may be terminated by Silver Wheaton. In such an event, Silver Wheaton would be entitled to the return of the upfront cash consideration of US$625 million less a credit for silver delivered up to the date of that event. 

Barrick has granted Silver Wheaton a five year right of first refusal on any further metal stream sales in connection with Pascua-Lama, where more than 50% of the value is from silver. 

Reserves and Resources