Wheaton Precious Metals Acquires GOLD and Palladium Stream ON Stillwater
FOR IMMEDIATE RELEASE TSX: WPM
July 16, 2018 NYSE: WPM
WHEATON PRECIOUS METALS ACQUIRES
GOLD AND PALLADIUM STREAM ON STILLWATER
Vancouver, British Columbia – Wheaton Precious Metals™ Corp. (“Wheaton” or the
“Company”) is pleased to announce that its wholly -owned subsidiary, Wheaton Precious
Metals International Ltd (“Wheaton International”) has agreed to acquire from Sibanye Gold
Limited ("Sibanye-Stillwater") (JSE: SGL; NYSE:SBGL) an amount of gold and palladium
equal to a fixed percentage of production from the Stillwater and East Boulder mines,
collectively “Stillwater” (the “ Precious Metals Stream”). Wheaton International will pay
Sibanye-Stillwater upfront cash consideration of US$500 million upon closing of the Precious
Metals Stream. In addition, Wheaton will make ongoing payments equal to 18% of the spot
gold price and spot palladium price until the reduction of the advanced payment to nil, and
22% of the spot gold price and spot palladium price thereafter. The Precious Metals Stream
is effective July 1, 2018.
TRANSACTION HIGHLIGHTS
▪ Adds to Wheaton’s existing high-quality portfolio
• Wheaton International will receive an amount of gold equal to 100% of the
Stillwater gold production for the life of mine.
• Wheaton International will initially receive an amount of palladium equal to 4.5%
of Stillwater palladium production, decreasing to 2.25% and then 1% based on
defined delivery thresholds, for the life of mine.
• Stillwater is one of the lowest cost platinum group metals mines globally and is
located in Montana in the United States.
• Subsequent to the closing of this acquisition, Wheaton’s estimated Proven and
Probable gold reserves increase by 410 thousand ounces (“Koz”) and Inferred
gold resources increase by 920 Koz. And, for the first time, Wheaton will have
estimated Proven and Probable palladium reserves of 610 Koz and Inferred
palladium resources of 430 Koz.1
▪ Adds long-term production and exploration upside potential
• For the 10 years starting in 2019, production is forecast to average approximately
14.5 Koz of gold and 29 Koz of palladium per year, or approximately 37 Koz of
gold equivalent per year.2
• For the 20 years starting in 2019, production is forecast to average approximately
14.7 Koz of gold and 24 Koz of palladium per year, or approximately 33 Koz of
gold equivalent per year.2
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• Declared current reserves are sufficient to support mining activities at Stillwater
until 2041, but this could be significantly extended should inferred resources be
upgraded.3
• Significant exploration potential exists both regionally and at depth below current
mineral reserves and resources. Of significance is the 12.2 kilometre undeveloped
mineralized section between the currently producing Stillwater and East Boulder
mines.
▪ Immediate production and cash flow
• This acquisition increases Wheaton's production profile with attributable sales
starting July 1, 2018 with expected production in the second half of 2018 forecast
to be approximately 5.4 thousand gold ounces and 10.4 thousand palladium
ounces.
"Stillwater is another accretive addition to Wheaton’s portfolio of assets that is expected to
contribute both production and cash flow for decades to come,” said Randy Smallwood,
Wheaton’s President and Chief Executive Officer. "What mainly attracted us to this
opportunity was the quality and size of the J-M Reef deposit, coupled with the ongoing
expansion at the Blitz Project . There are over 12 kilometres of undeveloped mineralization
associated with the J -M Reef between the two currently producing mines. With a mine life
extending well into the foreseeable future, we believe Stillwater will be one of Wheaton’s
foundational assets for many years to come. Finally, the acquisition will be funded through
our current r evolving credit facility, which we are comfortable utilizing given our industry
leading cash flow.”
TRANSACTION TERMS
▪ The Precious Metals Stream is effective July 1, 2018.
▪ Wheaton International will be entitled to receive from Sibanye-Stillwater an amount of
gold equal to 100% of Stillwater gold production for the life of mine.
▪ Wheaton International will be entitled to an amount of palladium equal to:
• 4.5% of Stillwater palladium production until 375 Koz delivered to Wheaton;
• Thereafter, 2.25% of Stillwater palladium production until 550 Koz delivered
to Wheaton; and,
• 1% of Stillwater palladium production thereafter for the life of mine.
▪ Wheaton International will pay Sibanye-Stillwater cash consideration of US$500
million upon closing of the Precious Metals Stream.
▪ Wheaton International will make ongoing payments equal to 18% of the spot gold
price and spot palladium price until the reduction of the advanced payment to nil, and
22% of the spot gold price and spot palladium price thereafter.4
▪ Payable rates for gold and palladium have been fixed at 99.0% and 99.6%,
respectively.
▪ Gold and palladium deliveries will be the obligation of Sibanye-Stillwater but will be
guaranteed by certain Sibanye -Stillwater subsidiaries, including Stillwater Mining
Company (the owner of Stillwater).
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▪ The Precious Metals Stream includes a completion test on the development of the
Blitz Project , including completion of underground development, critical surface
infrastructure and concentrator production output.
▪ The stream area of interest is defined as the area inclusive of all patented and
unpatented claims at the Stillwater mining operations.
▪ Closing of the transaction is expected to occur shortly following announcement and
is subject to the completion of certain corporate matters and customary conditions.
ABOUT STILLWATER
Stillwater is the only US -based mine for platinum group metals (“PGM”s) and the largest
primary producer of PGMs outside of South Africa and the Russian Federation. Located in
Montana, US, Stillwater’s operations consist of two underground PGM mines (the Stillwater
Mine and East Boulder Mine), the Blitz Project and the Columbus metallurgical complex. The
mining asse ts are located in the front range of the Beartooth Mountains with elevations
exceeding 1,500 metres above mean sea level.
The Stillwater Mine and East Boulder Mine have been in operation since 1986 and 2002,
respectively. The mines produce from the J-M Reef, the world’s highest-grade PGM deposit.
Each mine has its own milling and concentrator infrastructure on site. The Blitz Project, part
of the Stillwater mine, started ore production in 2017 and is expected to ramp up to full
production in 2021.
The Columbus metallurgical complex is a state -of-the-art operation that is capable of
providing smelting and refining processes for mine concentrates. The complex produces a
PGM-rich filter cake that is shipped to a third-party precious metal refinery.
Below are Wheaton’s attributable Mineral R eserves and Resources in respect of the
Stillwater mine.
Attributable Mineral Reserves and Mineral Resources – Stillwater, effective as of
December 31, 2017
Category
Streamed
Metal
Tonnage
Mt
Grade
Au g/t
Grade
Pd g/t
Contained
Au Moz
Contained
Pd Moz
Proven
Gold
5.0 0.31 0.05
Probable 36.8 0.31 0.36
Proven
Palladium
0.2 13.2 0.08
Probable 1.3 12.6 0.53
Total P&P
Gold 41.8 0.31 0.41
Palladium 1.5 12.7 0.61
Inferred
Gold 92.5 0.31 0.92
Palladium 1.0 12.9 0.43
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FINANCING THE TRANSACTION
The initial upfront cash payment of US$500 million will be paid by using amounts drawn from
the Company’s US$2 billion revolving credit facility. At March 31, 2018, the Company had
approximately US$116 million of cash on hand and US$663 million outstanding under the
revolving credit facility. The Company recently acquired a cobalt stream from Vale S.A.’s
Voisey’s Bay mine, which was also funded using the revolving credit facility. Net debt for the
company, including the acquisition costs of streams on Stillwater and Voisey’s Bay will be
approximately $1.4 billion. With trailing four-quarter operating cash flow of just under $ 550
million5, the Company believes it has ample capacity to service the additional debt resulting
from this transaction, especially given the low interest rate and flexible nature of the
covenants under the revolving credit facility (minimum net debt to total net worth and
minimum interest coverage tests).
PALLADIUM – A PRECIOUS METAL WITH A PURPOSE6
Palladium is a PGM and is generally considered a precious metal and offers significant
practical application as it is considered to be integral to reducing emissions caused by
gasoline-powered internal combustion engines.
Palladium mine supply is highly concentrated, with a pproximately 80% of annual supply
coming from just two countries: South Africa and Russia. Disruption in either country has
potential for outsized market influence. In addition, palladium is mined overwhelmingly as a
by-product, which results in mine supply being relatively price-inelastic (i.e. the economics of
mine supply is driven primarily by consideration of other metals). Half of mine supply comes
from nickel -copper mines, 40% comes from primary platinum mines and just under 10%
comes from primary palladium mines.
The automobile industry became the biggest end-user of PGMs in the late-1970s. PGMs in
autocatalytic converters help reduce harmful emissions caused by internal combustion
engines. Palladium resists oxidation, high temperature corrosion and is particularly effective
in scrubbing hydrocarbon emissions. Its application by the industry began to accelerate in
the late-1990s and has in the intervening years replaced its cousin – platinum – in gasoline-
powered vehicles. A spate of recent government announceme nts from around the world
regarding diesel-powered vehicles strongly suggests that gasoline-based engines – and thus
palladium – is expected to be gaining market share at the expense of diesel for the
foreseeable future.
Fully-electric vehicles do not u se PGMs; however, vehicles that are the intermediate stage
between combustion and pure battery power (e.g. hybrids, plug -in hybrids) do use
PGMs. While it is reasonable to expect combustion -vehicles to lose market share over the
coming decades , the rise of overall vehicle sales and higher loadings per vehicle are
anticipated to maintain demand for PGMs . Though North American and European markets
are saturated, the analyst community expects vehicle growth in China and India to raise the
overall global total. Tightening emission targets around the world add further support for the
long-term necessity of palladium. While the pie slice may eventually shrink, the overall pie is
growing and there will be more palladium per slice (and that’s delicious).
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UPDATED FIVE-YEAR PRODUCTION GUIDANCE
Wheaton is pleased to provide its updated five-year production guidance, which now includes
both palladium and cobalt production estimates , in the table below . Given the timing of the
effectiveness of the Stillwater and Voisey’s Bay streams, palladium and cobalt production are
given as average annual production as of 2019 and 2021, respectively. Average annual gold
production is inclusive of gold from Stillwater from 2019 to 2022 as gold production from
Stillwater in 2018 is only for half of the year. For context, on a gold equivalent ounce (“GEO”)
basis, five-year average annual production is approximately 730 thousand GEOs based on
gold, silver and palladium, or approximately 800 thousand GEOs if cobalt is included as well.7
Forecast Average Annual Production
Metal Streamed Average Annual Production
2018E 2019E 2020E 2021E 2022E
Gold 385 thousand ounces / year8
Silver 25 Million ounces / year
Palladium 10.4 koz 27 thousand ounces / year
Cobalt 2.1 million pounds / year
ABOUT SIBANYE-STILLWATER
Stillwater was purchased by Sibanye -Stillwater in May 2017. Sibanye -Stillwater is the third
largest producer of platinum and palladium and features amongst the world’s top gold
producing companies with operations in two main regions: South Africa and the U nited
States. Sibanye-Stillwater has over the years developed several safety initiatives, including
the creation and investment in “Digimine ,” a joint venture between Sibanye -Stillwater,
academic institutions and other stakeholders. This initiative priorit izes the use of digital
technology for enhanced safety applications including focus areas of seismicity and pro -
active monitoring of underground environmental conditions. Wheaton is pleased to have the
opportunity to support Sibanye-Stillwater’s initiatives through further investment linked to
Digimine, facilitating the fast tracking of certain technology prototypes into Sibanye -
Stillwater’s underground environment.
CONFERENCE CALL
A conference call will be held on July 16, 2018, starting at 11:00 am (Eastern Time) to discuss
this transaction. A presentation on the transaction will be available on the Company’s website
shortly before the conference call. To participate in the live call please use one of the following
methods:
Dial toll free from Canada or the US: 888-231-8191
Dial from outside Canada or the US: 647-427-7450
Pass code: 9391518
Live audio webcast: www.wheatonpm.com
Participants should dial in ten to fifteen minutes before the call.
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The conference call will be recorded and available until July 23, 2018 at 11:59 pm ET. The
webcast will be available for one year. You can listen to an archive of the call by one of the
following methods:
Dial toll free from Canada or the US: 855-859-2056
Dial from outside Canada or the US: 416-849-0833
Pass code: 9391518
Archived audio webcast: www.wheatonpm.com
Mr. Neil Burns, Vice President of Technical Services for Wheaton, is a "qualified person" as
such term is defined under National Instrument 43 -101 and has reviewed and approved the
technical disclosure in this news release including information on Mineral Reserves and
Mineral Resources.
ADVISORS AND COUNSEL
RBC Capital Markets acted as financial advisor and Cassels Brock & Blackwell LLP acted as legal
counsel to Wheaton.
For further information, please contact:
Patrick Drouin
Senior Vice President, Investor Relations
Wheaton Precious Metals Corp.
Tel: 1-844-288-9878
Email: [email protected]
Website: www.wheatonpm.com
End Notes
1) Please refer to the Mineral Reserves & Mineral Resources table at the end of this news release for full
disclosure of reserves and resources associated with Stillwater including accompanying footnotes.
2) Production estimates based upon Competent Person’s Report of the Montana Platinum Group Metal Mineral
Assets for Sibanye Gold Limited, United States of America, dated November 2017, and prepared by The Mineral
Corporation. Assumptions for converting to GEOs: Pd $990/oz and Gold $1,270/oz. Production forecast contain
forward looking information and readers are cautioned that actual outcomes may vary. Please see “ Cautionary
Note Regarding Forward Looking -Statements” at the end of this news release for material risks, assumptions,
and important disclosure associated with this information.
3) Mine life is based on recoverable reserves and resources as of December 31, 2017 and based on the mine
plan provided by Sibanye-Stillwater as of June 2018.
4) Production payment is subject to further downward adjustment based upon Sibanye-Stillwater’s leverage
ratios.
5) Operating cash flow based on Q2, Q3, and Q4 of 2017, and Q1 2018
6) The following sources were referenced in the discussion on palladium: Loferski, Patricia J. “Platinum-Group
Metals (Ir, Os, Pd, Pt, Rh, Ru)” Metal Prices in the United States Through 2010. United States Geological
Survey. 05-Mar-2010; Steel, James. "PGM Outlook" Commodities, Precious Metals, HSBC Global Research.
22-Nov-2017; Agate, Nell, Johann Steyn and Raghav Gupta-Chaudhary. "PGMs: Demand impact of LDV
diesel-engine erosion" Commodities Industry Focus, Commodities. Citi Research. 13-Oct-2017; Metals Focus.
Platinum & Palladium Focus 2017. May-2017.
7) GEOs are calculated based on the following commodity prices: $1,270 per gold ounce, $16.50 per silver
ounce, $960 per palladium ounce, and $40 per cobalt pound.
8) Average annual five-year gold production is the sum of the expected average annual production for all
streamed assets over 2018-2022 except for Stillwater; as 2018 is only a partial year of production, the average
annual production for Stillwater from 2019-2022 was used in the calculation for the total average annual gold
production for 2018-2022.
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ATTRIBUTABLE MINERAL RESERVES & MINERAL RESOURCES FOR STILLWATER
Effective as of December 31, 2017
Mine Category Stream Mt Au g/t Pd g/t Au Moz Pd Moz
Stillwater
Proven Gold 2.6 0.31 0.03
Probable 15.1 0.31 0.15
Proven Palladium 0.1 16.0 0.05
Probable 0.5 15.7 0.27
East
Boulder
Proven Gold 2.4 0.30 0.02
Probable 21.6 0.31 0.21
Proven Palladium 0.1 10.2 0.03
Probable 0.8 10.5 0.26
Total P&P Gold 41.8 0.31 0.41
Palladium 1.5 12.7 0.61
Stillwater
Inferred Gold
48.9 0.27 0.42
East
Boulder 43.6 0.36 0.50
Stillwater
Inferred Palladium
0.5 13.6 0.24
East
Boulder 0.5 12.2 0.19
Total Inferred Gold 92.5 0.31 0.92
Palladium 1.0 12.9 0.43
Notes on Mineral Reserves and Mineral Resources
• All Mineral Reserves and Mineral Resources have been estimated in accordance with the 2014
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards for Mineral Resources and
Mineral Reserves and National Instrument 43-101 – Standards for Disclosure for Mineral Projects (“NI
43-101”), or the 2012 Australasian Joint Ore Reserves Committee (JORC) Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves.
• Mineral Reserves and Mineral Resources are reported above in millions of metric tonnes (“Mt”), grams
per metric tonne (“g/t”) and millions of ounces (“Moz”).
• Qualified persons (“QPs”), as defined by the NI 43-101, for the Mineral Reserve and Mineral Resource
estimates are:
o Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); and
o Ryan Ulansky, M.A.Sc., P.Eng. (Senior Director, Engineering),
• The Mineral Resources reported in the above tables are exclusive of Mineral Reserves.
• Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
• Mineral Reserves and Mineral Resources are reported as of December 31, 2017 based on information
available to the Company as of the date of this document, and therefore will not reflect updates, if any,
after such date.
• Process recoveries of palladium to a PGM concentrate average approximately 92%. Process
recoveries of gold, being a by-product, is not measured but has been assumed to be line with
palladium.
• Mineral Reserves at Stillwater are estimated using appropriate process and mine recovery rates,
dilution, operating costs and the following cut-offs:
o Stillwater mine – combined platinum and palladium grade cut-offs of 10.29 g/t for Off-shaft
areas and 6.86 g/t for Farwest
o East Boulder mine – combined platinum and palladium cut-off of 6.86 g/t
• Mineral Resources at Stillwater are estimated using appropriate process recovery rates and the
following cut-offs:
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o Stillwater mine and East Boulder mine – geologic boundaries for Inferred Mineral Resources
• The Stillwater precious metals purchase agreement provides that effective July 1, 2018. Sibanye-
Stillwater will deliver 100% of the gold production for the life of the mine and 4.5% of palladium
production until 375,000 ounces are delivered, 2.25% of palladium production until a further 175,000
ounces are delivered and 1.0% of the palladium production thereafter for the life of the mine.
Attributable palladium Mineral Reserves and Mineral Resources have been calculated based upon the
4.5% / 2.25% / 1.0% production entitlements.
• The Stillwater mine has been in operation since 1986 and East Boulder mine since 2002. Individual
grades for platinum, palladium, gold and rhodium are estimated using ratios applied to the combined
platinum plus palladium grades based upon average historic production results provided to the
Company as of the date of this document. As such, the Attributable Mineral Resource and Mineral
Reserve palladium and gold grades for the Stillwater mines have been estimated using the following
ratios:
o Stillwater mine: Pd = (Pt + Pd) / (1/3.51 + 1) and Au = (Pd + Pt) x 0.0153
o East Boulder mine: Pd = (Pt + Pd) / (1/3.6 + 1) and Au = (Pd + Pt) x 0.0227
• Gold is produced as a by-product metal; therefore, the economic cut-off applied to the reporting of gold
Mineral Resources and Mineral Reserves will be influenced by changes in platinum and palladium
prices at the time.
• Full Mineral Reserve and Mineral Resource tables are available on the Company's website,
www.wheatonpm.com.
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
The information contained herein contains “forward -looking statements” within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable
Canadian securities legislation. Forward -looking statements, which are all statements other than statements of
historical fact, include, but are not limited to, statements with respect to:
• the payment of the upfront cash consideration of US$500 million to Sibanye-Stillwater in connection with
the Precious Metals Stream;
• the timing of delivery of gold and palladium by Sibanye-Stillwater under the Precious Metals Stream;
• the receipt of Wheaton of gold and palladium production in respect of Stillwater;
• the demand, uses and supply of gold and palladium;
• the construction timeline, including completion, of the Blitz Project.
• the commencement and timing of delivery of gold and palladium by Sibanye-Stilwater under the Precious
Metals Stream;
• the construction timeline, including completion, of the mine expansion, including the underground mines,
at Voisey’s Bay by Vale;
• the commencement and timing of delivery of cobalt by Vale under the Cobalt Stream;
• the receipt of cobalt by Wheaton of cobalt production in respect of Voisey’s Bay;
• future payments by the Company in accordance with precious metal purchase agreements, including
any acceleration of payments, estimated throughput and exploration potential;
• projected increases to Wheaton’s production and cash flow profile;
• the expansion and exploration potential at the Salobo and Peñasquito mines;
• projected changes to Wheaton’s production mix;
• anticipated increases in total throughput;
• the estimated future production;
• the future price of commodities;
• the estimation of mineral reserves and mineral resources;
• the realization of mineral reserve estimates;
• the timing and amount of estimated future production (including 2018 and average attributable annual
production over the next five years);
• the costs of future production;
• reserve determination;
• estimated reserve conversion rates and produced but not yet delivered ounces;
• any statements as to future dividends, the ability to fund outstanding commitments and the ability to
continue to acquire accretive precious metal stream interests;
• confidence in the Company’s business structure;