VANCOUVER – On Friday, as Canadians were gearing up for the long Canada Day weekend, Barrick Gold of Toronto announced its plans to slow work at its troubled Pascua-Lama gold mine on the Chile-Argentina border (see the Northern Miner article below). The mine has been delayed by Chilean authorities, the plummeting gold price, and rapidly rising capital costs. Start-up has been deferred from the end of 2014 to mid-2016.
A look at what this means to Silver Wheaton was circulated shortly afterwards.
Silver Wheaton paid US$625 million to Barrick in 2009 in consideration of 25% of the life of mine silver production from Pascua-Lama, as well as all the silver from Barrick's Lagunas Norte, Pierina and Veladero mines until the end of 2013. The original agreement contained a completion guarantee requiring that the Pascua-Lama mine be operating at a minimum of 75% of design capacity by Dec. 31, 2015. That deadline will not be met.
For its part, Silver Wheaton has extended the completion guarantee to coincide with the new 2016 start-up date rather than terminate the agreement. At the same time the company will extend its offtake agreement with the other three Barrick mines until the end of 2015 to cover production shortfalls from Pascua-Lama.
"As long as Barrick is still advancing construction of Pascua-Lama at the end of 2015, Silver Wheaton does not intend to cancel the silver stream", said president and CEO Randy Smallwood. "We are in regular contact with Barrick, and are confident that all the right measures are being taken to achieve production at this mine. Pascua-Lama is a world class gold and silver deposit and will be a world class mine once it begins production."
Silver Wheaton has revised its 2017 production forecast to 49 million oz of silver equivalent from 53 million oz to reflect the delay at Pascua-Lama.
Silver Wheaton has a dozen or so other silver streams. Visit SilverWheaton.com to check them out.