Capstone, Wheaton Announce Streaming Agreement for Cozamin MineBy Paloma Duran | Wed, 12/16/2020 - 12:23
Capstone Mining Corp. reached a Precious Metals Purchase Agreement with Wheaton Precious Metals International. Wheaton agreed to pay US$150 million for 50 percent of Capstone Mining’s silver production until 10 million oz have been delivered. Subsequently, Wheaton will receive 33 percent of silver production for the life of Capstone’s Cozamin mine in Zacatecas.
Cozamin is the first quartile copper mine that has been operated by Capstone since 2006.The mine produces silver, copper, zinc and lead concentrates that are exported to world markets. As part of the Silverstone Resources acquisition, in 2009 Wheaton purchased Cozamin’s precious metals stream. However, the acquisition expired in 2017, reported the company.
Wheaton's President and CEO, Randy Smallwood said in a press release that both companies have a long history with Cozamin and for this reason, Wheaton welcomes the opportunity to have once again Cozamin mine in the company’s portfolio of low-cost and long-life assets.
Darren Pylot, CEO of Capstone Mining said to MBN that Cozamin is a low-cost mine due to its high-grade copper, zinc, lead and silver production. Moreover, Pylot said an increase in silver prices adds to the company’s revenues.
The $150 million streaming agreement is expected to be closed in January 2021. This agreement still depends on the completion of certain corporate matters and customary conditions. It was also established that Wheaton will make ongoing payments equal to 10 percent of the silver spot for each ounce delivered, reported Kitco.
Wheaton said that the agreement will increase its proven and probable reserves by 6.8 million oz, measured and indicate silver resources by 10.5 million oz and inferred silver resources by 9.5 million oz. Moreover, for the next five years, the company is expecting silver production of 820,000oz. per year, reported Kitco.
Jason Howe, Capstone’s SVP Corporate Development, said that the streaming agreement will allow Capstone to fund strategic growth initiatives besides decreasing its debt, which will benefit its shareholders. Pylot said both companies are discussing a potential gold stream in Santo Domingo, according to the company’s press release.