Covers 50% Of Silver Production At Cozamin
Capstone Mining Corp. (TSX:CS) has entered into a definitive Precious Metals Purchase Agreement with Wheaton Precious Metals International Ltd.,
Capstone President and CEO, Darren Pylot, said that under the “Stream Agreement” Wheaton will pay an upfront cash consideration of C$150 million upon closing for 50% of the silver production until 10 million ounces have been delivered, thereafter dropping to 33% of silver production for the life of mine from the Capstone’s Cozamin Mine in Zacatecas, Mexico.
“This deal is transformational, giving Capstone one of the lowest debt positions amongst base metal producers at a time when we are expecting significant copper production and cash flow growth,” Mr Pylot said.
“The C$150 million for 50% of Cozamin’s silver is a strong validation of the ultimate mine life potential we expect to demonstrate through further resource to reserve conversion and ongoing exploration.
“We are now looking to strengthen our partnership with Wheaton as we are in advanced discussions for a potential gold stream on Santo Domingo.”
Upfront cash consideration of C$150 million to Capstone upon closing of the Stream Agreement is expected in January 2021. Wheaton will make ongoing payments equal to 10% of the spot silver price at the time of delivery for each ounce delivered to them. Capstone will deliver 50% of life of mine payable silver from Cozamin until 10 million ounces have been delivered, after which the stream will be reduced to 33%. The Stream Agreement is effective December 1, 2020. Closing of the transaction is subject to the completion of certain corporate matters and customary conditions.
Mr Pylot said Capstone will used the proceeds topay down net debt to zero on closing, with a target of zero debt outstanding in 2021. He said this will position Capstone to fund attractive low risk, high return, quick payback organic growth projects at Pinto Valley and Cozamin. Advancing these projects will provide sustainable benefits for all stakeholders.
Ongoing developments at Cozamin include the recent completion ofthe one-way ramp three weeks ahead of schedule, on-budget with no lost time accidents.
An 80-hole drill programme targeting the East extension to the MNFWZ is ongoing. A new MNFWZ West has been identified and is currently being drilled.
