SilverStreams
Streams

777 (Canada)

Project Overview

Hudbay Minerals Inc. (“Hudbay”) owns and operates the 777 mine (“777”), which is located in the prolific Flin Flon Greenstone Belt, Manitoba, Canada. A low-cost producer of zinc, copper, gold and silver, 777 is an underground mining operation, with an ore concentrator and zinc production facility located immediately adjacent to the mine. In August 2012, Silver Wheaton entered into an agreement with Hudbay to acquire 100% of the life of mine silver and gold production from Hudbay’s 777 mine, as well as 100% of the silver production from its Constancia Project.

777 commenced commercial production in 2004 and has a mine life based on reserves until 2021. The mine has very good exploration upside with drilling in recent years shifting from reserve definition to exploration. Over 21,000 metres of exploration drilling in 2011 will be followed up with a similar sized program in 2012, with a focus on targeting additional resources. In addition, completion of the 777 North expansion, which is well underway, will provide access to mineral resources in the north and east zones, and will also provide an underground exploration platform to enable the evaluation of additional exploration opportunities near the 777 mine.

Silver Purchase Agreement

On August 7, 2012, Silver Wheaton entered into an agreement with Hudbay to acquire 100% of the life of mine silver and gold production from Hudbay’s 777 mine, as well as 100% of the silver production from its Constancia Project. Silver Wheaton’s share of gold production at 777 will remain at 100% until the later of the end of 2016 or the satisfaction of a completion guarantee relating to the Constancia Project, after which it will be reduced to 50% for the remainder of the mine life.

Silver Wheaton will pay Hudbay total cash consideration of US$750 million, of which US$500 million is payable upon closing, with a further payment of US$125 million to be made once US$500 million in capital expenditures has been incurred at Constancia, and a final payment of US$125 million to be made once US$1 billion in capital expenditures has been incurred. In addition, Silver Wheaton will make ongoing payments of the lesser of US$5.90 per ounce of silver and US$400 per ounce of gold (both subject to an inflationary adjustment of 1% beginning in the fourth year) or the prevailing market price per ounce of silver and gold delivered. Silver Wheaton will not share in any ongoing capital or exploration expenditures at the various mines.

Hudbay has provided Silver Wheaton with a completion guarantee, requiring them to complete the Constancia processing plant to at least 90% of expected throughput and recovery by December 31, 2020. If Hudbay fails to satisfy the requirements of the completion guarantee, Silver Wheaton would be entitled to a proportionate return of the upfront cash consideration relating to Constancia.

More Information

For further information about the 777 mine, please visit Hudbay Minerals Inc.’s website at www.hudbayminerals.com.

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