Pascua-Lama (Chile/Argentina)

Operator: Barrick
Location: Chile/Argentina
Term of Stream: Life of Mine
Stream Parameters: 25% of silver production
Upfront Consideration: US$625M
Primary Metal: Gold

Project Overview

The Pascua-Lama project is located on the border of Chile and Argentina, in the Frontera district, approximately 10 kilometres from Barrick’s Veladero mine. The Chilean part of the deposit is at an elevation of approximately 4,300 to 5,250 metres above sea level. The Pascua-Lama project is entitled to the benefits of cross-border mining operations that are granted by a mining treaty between Chile and Argentina. The Pascua-Lama project is designed as a large-scale open pit operation with processing facilities having an initial designed throughput capacity of 45,000 tonnes per day.

Construction on the Pascua-Lama project began in October 2009. During the fourth quarter of 2013, Barrick announced the temporary suspension of construction. Barrick had previously suspended construction activities on the Chilean side of the project as a result of the issuance of a preliminary injunction. The ramp-down was completed in mid-2014. In late 2015, a temporary suspension plan for Pascua-Lama was approved by the mining authorities in Chile and Argentina.

On September 1, 2016, Barrick announced the appointment of George Bee as Senior Vice President with a mandate to review a staged development of the Argentinian side of the Pascua-Lama project. The team in Chile will continue to focus on optimizing the Chilean components of the Pascua-Lama project, while working to address outstanding legal, regulatory, and permitting matters.

The rock in the Pascua-Lama area contains sulfides that, when exposed to air and water, produce acid rock drainage (“ARD”). While ARD occurs naturally in the area, disturbance caused by mining activity can accelerate the process. This can be harmful to the environment if not properly managed. In January 2013, Barrick reported a compliance failure of the water management system on the Chilean side which resulted in the Chilean Environmental Authority (SMA) issuing a fine and suspending all construction activities in Chile until the water management system is completed in accordance with permit conditions.

Precious Metal Purchase Agreement

On September 8, 2009, Silver Wheaton entered into an agreement with Barrick to acquire an amount equal to 25% of the life of mine silver production from its Pascua-Lama projectas well as 100% of the silver production from its Lagunas Norte mine and Pierina mine, which are both located in Peru, and its Veladero mine which is located in Argentina, (“Barrick’s other mines”) initially receiving silver from Barrick's three other mines up to the end of 2013, pending a completion test. After various amendments to the original agreement, Silver Wheaton will continue to receive silver from Barrick’s other mines until April 1, 2018.

During the fourth quarter of 2013, Barrick announced the temporary suspension of construction activities at its Pascua-Lama project. During 2014, the Pascua-Lama project was placed on care and maintenance. Barrick has also indicated that in late 2015, a temporary suspension plan for the Pascua-Lama project was approved by the mining authorities in Chile and Argentina and that it is preparing new business and execution plans to optimize remaining construction activities at the Pascua-Lama project. Barrick also stated that the decision to re-start construction activities will depend on improved project economics such as go-forward costs, the outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements. The original contract with Barrick provided Silver Wheaton with a completion test, requiring Barrick to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015. In exchange for the extension of the entitlement of the production from Barrick’s other mines, Silver Wheaton has agreed to extend the completion test deadline to June 30, 2020. If the requirements of the completion test have not been satisfied by the amended completion date, the agreement may be terminated by Silver Wheaton. In such an event, Silver Wheaton will be entitled to the return of the upfront cash consideration of US$625 million less a credit for any silver delivered up to that date.

Once in production, Pascua-Lama is forecast to be one of the largest and lowest cost gold mines in the world with an expected mine life in excess of 25 years. In its first full five years of operation, Silver Wheaton’s silver production attributable to Pascua-Lama is expected to average 9 million ounces annually under the existing mine plan.

More Information

For more information about Pascua-Lama, please visit Barrick Gold's website at www.barrick.com.

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