Glencore inks $900m streaming deal with Silver Wheaton

Image credit: Glencore website

Glencore has announced that it has agreed to sell its silver output from its stake in the Antamina copper mine in Peru to Silver Wheaton Minerals.

Image credit: Glencore website
Image credit: Glencore website

Glencore owns 33.75% of Compañía Minera Antamina S.A. (“CMA”), which owns and operates the Antamina mine.

“Silver Wheaton has focussed on building a portfolio of streams on high-quality, low-cost mines. Antamina has both the quality and the scale to make it an ideal addition to this portfolio, as it is not only the eighth largest copper mine in the world, but it is also one of the lowest cost,” said Randy Smallwood, Silver Wheaton’s President and Chief Executive Officer in a press release.

“In addition, we are pleased to partner once again with Glencore, a company with a long history of mining success. This transaction not only further strengthens our relationship with Glencore, but also provides almost immediate production and operating cash flow from a proven and well-established asset. As a reminder, given our unique dividend policy of paying out 20% of our cash flow, the additional cash flow starting in the fourth quarter from this acquisition should result in increased dividends, even in a flat commodity price environment.”

According to Glencore’s announcement, the deal is worth $900 million and is part of the miner’s debt-reduction plan.

Under the terms of the agreement, Glencore will also get 20% of the spot price for silver when each delivery is made.

“In return, Glencore will deliver silver to Silver Wheaton equivalent to 33.75% of silver produced by the Antamina mine at a 100% payable rate. After 140 million ounces of silver have been delivered under the streaming agreement, the stream will be reduced to the equivalent of 22.50% (corresponding to two-thirds of Glencore’s ownership interest in Antamina) of silver produced by the Antamina mine,” Glencore said.