Glencore has entered a long-term streaming agreement with Silver Wheaton for silver produced at the Antamina mine in Peru. Silver Wheaton will make an advance payment of $900 million to Glencore five business days after the closing of the transaction. Thereafter, Silver Wheaton will pay 20% of the spot price at the time of delivery for each ounce of silver delivered.
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 oz of silver have been delivered under the streaming agreement, the stream will be reduced to the equivalent of 22.5% of silver production for the life of the mine at a fixed 100% payable rate, representing two-thirds of Glencore’s stake in the operation.
Compañía Minera Antamina S.A. (CMA) owns and operates Antamina. CMA is jointly owned by subsidiaries of Glencore (33.75%), BHP Billiton (33.75%), Teck Resources (22.5%) and Mitsubishi (10%). CMA, however, is not a party to the streaming agreement with Silver Wheaton. This transaction increases Silver Wheaton’s production profile by adding expected average silver production of 5.1 million ounces per year (oz/y) in 2016 and 2017, and 4.7 million oz/ over the first 20 years.
Located high in the Peruvian Andes (4,200 m above sea level) and 270 km north of Lima, the Antamina mine is a large copper and zinc mine that began producing in 2001. Antamina is one of the lowest-cost copper mines and it produces separate copper, zinc, molybdenum and lead/bismuth concentrates, with silver predominantly contained within the copper concentrates, and additional silver contained with the lead-bismuth concentrate. In 2014, the operation produced approximately 345,000 metric tons (mt) of copper, 211,000 mt of zinc, 3.1 million lb of molybdenum and 12 million oz of silver.