Our Global Assets

Silver Streaming

Silver stream or silver purchase agreements allow Silver Wheaton to purchase, in exchange for an up-front payment, the by-product silver production of a mine that it does not own or operate. Since approximately 70% of all silver production occurs as a by-product of base or precious metals production, there are numerous potential opportunities for further growth with this business model.

The price that Silver Wheaton pays for future silver production is pre-determined in the agreements, typically US$3.90 per ounce with a small inflationary adjustment, which ensures costs are fixed. This allows Silver Wheaton to avoid variations in operating costs, reducing downside risk, while providing the upside of significant leverage to increases in the price of silver. As well, other than the initial up-front payment, Silver Wheaton does not contribute to future capital expenditures or exploration costs invested by the mine, yet benefits from the production and exploration growth that results from these expenditures. This often translates into significant value creation for our shareholders.

A silver stream allows a mine operator that produces silver as a by-product, such as a base metal company, to monetize the value of its future, non-core silver production. Mine operators typically receive the upfront payment in the form of cash which can be used to continue growing their company, either through exploration, capital or production expansions, or by making acquisitions. Alternatively, the proceeds can be used to strengthen their capital structure by paying down debt. In short, Silver Wheaton helps mining companies grow their businesses by offering a very attractive financing alternative over traditional sources of capital such as debt or equity.

Current Silver Purchase Agreements

Silver Wheaton pursues acquisitions that are accretive to shareholders and low-risk in terms of asset quality and political jurisdiction. To this end, the company currently has fifteen silver purchase agreements and two precious metal purchase agreements with eleven operating partners around the globe. These agreements cover fifteen operating mines and five development stage projects, and are set out in the table below. 
 

1. On August 6, 2010, Goldcorp sold the San Dimas mine, which was previously part of the Luismin mines, to Primero.  In conjunction with the sale, Silver Wheaton amended its silver purchase agreement relating to the mine. The term of the silver purchase agreement, which was set to expire in 2029, has been extended to the life of mine. During the first four years following closing of the transaction, Primero will deliver to Silver Wheaton a per annum amount equal to the first 3.5 million ounces of payable silver produced at San Dimas and 50% of any excess, plus Silver Wheaton will receive an additional 1.5 million ounces of silver per annum to be delivered by Goldcorp.  Beginning in the fifth year after closing, Primero will deliver to the Company a per annum amount equal to the first 6 million ounces of payable silver produced at San Dimas and 50% of any excess. 
2. To a maximum of 4.75 million ounces per annum. In the event that silver produced at Yauliyacu in any year totals less than 4.75 million ounces, the amount sold to Silver Wheaton in subsequent years will be increased to  make up for the shortfall, so long as production allows.                                                             
3. The Company is entitled to acquire 100% of the first 50,000 ounces of gold produced per annum and 50% thereafter, through to December 1, 2010.  Following that date, the Company is entitled to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter.                               
4. Barrick will deliver to Silver Wheaton silver production from the currently producing mines until December 31, 2013. In addition, during 2014 and 2015, Silver Wheaton will be entitled to all or a portion of the silver production from these mines to the extent of any production shortfall at Pascua-Lama, until Barrick satisfies a completion guarantee.     
5. Silver Wheaton's attributable silver production is subject to a maximum of 8% of the silver contained in the ore mined at Veladero during the period.                
6. 92% owned by Aurcana Corporation.                                                                              
7. With a nominal term of 50 years.                                                                                    
8. 95% owned by European Goldfields Ltd.                                                                                    
9. Terms of the agreement not yet finalized.