Resource World Magazine

A U G U S T / S E P T E M B E R 2 0 1 8 www.resourceworld.com 9 In a conference call after the deal was announced, Smallwood said he found him- self having to bring analysts up to speed on Sibanye-Stillwater and its operations. "They didn't have a lot of knowledge about Stillwater's gold production," he said. "This is an asset that will be running for many decades to come," Smallwood said. As the streaming agreement is for the life of the mine, Wheaton expects to benefit from exploration upside that he believes will ultimately be delivered to the com- pany down the road. Wheaton is hoping that this will also hold true of a precious metals purchase agreement with Barrick Gold Corp. [ABX-TSX, NYSE] that entitled Wheaton to a 25% of the life-of-mine production silver production from the Pascua-Lama Mine, which straddles the border of Argentina and Chile. The deal also entitled Wheaton to 100% of silver production from Barrick's Lagunas Norte and Pierina mines in Peru as well as the Veladero Mine in Argentina. Once in production, Pascua-Lama is expected to be one of the world's largest and lowest cost gold mines with an antici- pated lifespan of 25 years. During the first five years in operation, Wheaton's silver production attributable to Pascua-Lama was expected to average 9 million ounces annually. However, Barrick suspended construc- tion in Q4 2013 and the site was placed on care and maintenance in 2014. By that time, Barrick had spent US $5 billion of the estimated US $8.5 billion construction cost. Construction on the Chilean side of side was halted in Q2 2013 after a court injunction was filed by indigenous com- munities concerned about potential water supply contamination stemming from con- struction activities. No date has been set for construction to resume. The original contract with Barrick pro- vided Wheaton Precious Metals with a completion test that required Barrick to complete Pascua-Lama to at least 75% of design capacity by December 31, 2013. In exchange for the entitlement of produc- tion from Barrick's other mines, Wheaton agreed to extend the completion test dead- line to June 30, 2020. If the new deadline is not met, Wheaton can walk away and the company would be entitled to recoup its US $625 million investment, less a credit for any silver delivered to date. However, Smallwood said it is very unlikely that the agreement will be ter- minated. He said Wheaton has already received about US $370 million worth of silver from the Pascau Lama deal. That leaves a net investment of US $255 million. Meanwhile, he is willing to bet that Pascua Lama will be developed eventu- ally. "I'm confident that somewhere down the line, Barrick will get it figured out or Barrick will sell it to someone that will get it figured out. When that happens, we will be getting 9 million ounces of silver per year from this asset." n PROFILE

• Cover