Wheaton Precious Metals Signs Major Gold Stream Agreement with Montage Gold

Highlights

• Wheaton Precious Metals has entered into a Precious Metals Purchase Agreement with Montage Gold Corp. for the Koné Gold Project in Côte d'Ivoire.
• The transaction involves an upfront payment of US$625 million to be paid in four installments during construction.
• Under the agreement, WPMI will initially purchase 19.5% of the payable gold produced until 400,000 ounces have been delivered, then 10.8% until an additional 130,000 ounces, and finally 5.4% for the remaining life of the mine, which is projected to have an average production of 60 Koz/year for the first five years and a total life of 16 years.

Wheaton Precious Metals Corp. (LSE:WPM) has announced a significant transaction with Montage Gold Corp. through its wholly-owned subsidiary, Wheaton Precious Metals International Ltd. (WPMI). This deal entails a Precious Metals Purchase Agreement for the Koné Gold Project located in Côte d'Ivoire, aimed at enhancing Wheaton's portfolio and securing future gold production.

Key Transaction Terms

Upfront Payment

WPMI will pay Montage a total upfront consideration of US$625 million, which will be disbursed in four equal installments during the construction phase of the Koné Gold Project. This strategic investment underlines Wheaton's commitment to expanding its gold streaming activities.

Gold Stream Details

Under the terms of the agreement, WPMI will initially purchase 19.5% of the payable gold produced at the Koné project until 400,000 ounces (Koz) have been delivered. Following this, WPMI will acquire 10.8% of the payable gold until an additional 130 Koz is reached. For the remaining life of the mine, WPMI's share will be reduced to 5.4% of the payable gold. This structured approach allows Wheaton to gradually increase its stake in the gold output while ensuring consistent supply over the mine's lifespan.

Production Profile

The projected production profile for the Koné Gold Project indicates an average attributable gold stream production of:

• 60 Koz/year for the first five years
• 47 Koz/year for the first ten years
• 34 Koz/year over the mine’s total 16-year life

First production is expected to commence in early 2027, setting the stage for significant gold contributions to Wheaton’s portfolio.

Production Payments and Price Adjustments

WPMI will pay 20% of the spot price of gold for each ounce delivered. A price adjustment mechanism is included for the first five years of the agreement: if the spot price is below $2,100/oz or above $2,700/oz, adjustments will apply. For instance, if the spot price reaches $3,200/oz, WPMI would pay $675/oz, equating to 21% of the spot price. This flexibility is designed to safeguard Wheaton's financial interests in varying market conditions.

Secured Debt Facility

In addition to the upfront payment, WPMI has provided Montage with a secured debt facility of $75 million to cover project costs and potential overruns. This financial backing is crucial for the project's successful execution.

Incremental Reserves and Resources

The Koné Gold Project is expected to add significant value to Wheaton's asset base, with an estimated:

• 0.62 million ounces (Moz) of Proven and Probable gold reserves
• 0.05 Moz of Measured and Indicated gold resources
• 0.02 Moz of Inferred gold resources

This increase in reserves and resources will bolster Wheaton’s long-term gold production capabilities.

Additional Considerations

WPMI has secured a right of first refusal on any future precious metal streams, royalties, or similar transactions involving Montage. The agreement encompasses a Core Area of Interest and an Expanded Area of Interest, where ore processed at the Koné facility will be included in the stream. Moreover, compliance with environmental, social, and governance (ESG) standards, as outlined by the International Finance Corporation and the Global Industry Standard on Tailings Management, is mandated.

Financial Position

As of June 30, 2024, Wheaton Precious Metals reported approximately $540 million in cash reserves, along with access to a $2 billion revolving credit facility. This robust financial position positions the company well to fund the Gold Stream acquisition and meet its ongoing commitments.