Wheaton Precious Metals Corp. - Exhibit 99.1 - Filed by newsfilecorp.com
FOR IMMEDIATE RELEASE |
TSX: WPM |
May 10, 2018 |
NYSE: WPM |
WHEATON PRECIOUS METALS ANNOUNCES CLOSING OF NEW PRECIOUS
METALS PURCHASE AGREEMENT WITH FIRST MAJESTIC ON THE SAN
DIMAS MINE AND EARLY WARNING REPORT FILED
Vancouver, British Columbia Wheaton Precious Metals Corp.
(Wheaton or the Company) is pleased to announce that the new precious metals
purchase agreement with First Majestic Silver Corp (First Majestic) (the
First Majestic PMPA) on the San Dimas mine has now closed following the
completion of the plan of arrangement (the Arrangement) whereby First Majestic
has acquired all of the outstanding common shares of Primero Mining Corp.
(Primero).
As previously announced on January 12, 2018, in connection with
the Arrangement, Wheaton Precious Metals International Ltd. (Wheaton
International) agreed to terminate the existing San Dimas silver purchase
agreement with Primero (the Existing SPA) and enter into the First Majestic
PMPA. The Arrangement was completed on May 10, 2018.
First Majestic PMPA Terms:
- 25% of gold production plus an additional amount of gold equal to 25% of
silver production converted to gold at a fixed gold to silver exchange ratio
of 70:1 from San Dimas, with provisions to adjust the gold to silver ratio if
the average gold to silver ratio moves above or below 90:1 or 50:1,
respectively, for a period of six months
- For each ounce of gold delivered, Wheaton International will pay to First
Majestic a production payment equal to the lesser of US$600/oz, subject to a
1% annual inflationary adjustment, and the prevailing market price
For more information on the First Majestic PMPA, please refer
to Wheatons news release dated January 12, 2018.
As part of the transaction and in addition to the new stream,
First Majestic issued 20,914,590 First Majestic common shares to Wheaton
International (the First Majestic Shares).
The acquisition of Primero by First Majestic marks the start
of a new chapter for the San Dimas mine, said Randy Smallwood, President and
Chief Executive Officer of Wheaton. We believe First Majestic has an excellent
opportunity to unlock the significant exploration and operational potential of
San Dimas, including the silver-rich areas. We are excited to now be the largest
shareholder of First Majestic as they re-establish San Dimas as one of the
premier precious metals mines in Mexico.
In connection with the Arrangement, Wheaton International
released the guarantee previously provided by Goldcorp Inc. (Goldcorp) under
the Existing SPA in consideration for a payment of US$10 million from Goldcorp
to Wheaton International. Furthermore, the US$0.50 per ounce penalty for each ounce less than 215 million
ounces delivered by 2031 has been extinguished.
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In addition, Wheaton also announces that it has terminated the
guarantee previously provided by Wheaton and certain of its subsidiaries under
Primeros existing revolving credit facility.
The First Majestic Shares represent approximately 11% of First
Majestics current issued and outstanding shares and have been issued pursuant
to exemptions from prospectus requirements. The First Majestic Shares are
subject to Canadian, United States and contractual resale restrictions,
including a six month hold period (subject to certain exceptions) with volume
selling restrictions thereafter. The First Majestic Shares are currently being
held for investment purposes, however Wheaton may from time to time in the
future increase or decrease its ownership, control or direction over securities
of First Majestic, through market transactions, private agreements or
otherwise.
Wheaton is continued under the laws of Ontario and Wheaton's
head office is located at 3500 1021 West Hastings Street, Vancouver, British
Columbia, V6E 0C3 and its registered office is located at Suite 2100, 40 King
Street West, Toronto, Ontario, M5H 3C2. First Majestics head office is located
at 1800 925 West Georgia Street, Vancouver, British Columbia V6C 3L2. A copy
of the Early Warning Report to which this press release relates can be obtained
from Patrick Drouin, Senior Vice President, Investor Relations at Wheaton, at
1-844-288-9878 or info@wheatonpm.com or on the SEDAR profile of First Majestic
at www.sedar.com.
Advisors and Counsel
BMO Capital Markets acted as
financial advisor and Cassels Brock & Blackwell LLP and Goodmans LLP acted
as legal counsel to Wheaton.
For further information, please contact:
Patrick Drouin
Senior Vice President, Investor
Relations
Wheaton Precious Metals Corp.
Tel: 1-844-288-9878
Email:
info@wheatonpm.com
Website: www.wheatonpm.com
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
The information contained herein contains forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and forward-looking information within the
meaning of applicable Canadian securities legislation. Forward-looking
statements, which are all statements other than statements of historical fact,
include, but are not limited to, statements with respect to:
- the receipt by the Company of gold and gold equivalent production in
respect of the San Dimas mine and the expansion and exploration potential at
the San Dimas mine;
- the ability to sell the First Majestic Shares after the expiry of hold
periods and the value that may be realized for such First Majestic Shares;
- the effect of the Servicio de Administracion Tributaria (SAT) legal
claim on the business, financial condition, results of operations and cash
flows for 2010-2014 and 2015-2019 in respect of the San Dimas mine;
- the impact on the operations of the San Dimas mine as a result of labour
disruptions;
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- future payments by Wheaton in accordance with precious metal purchase
agreements, including any acceleration of payments, estimated throughput and
exploration potential;
- projected increases to Wheatons production and cash flow profile;
- the expansion and exploration potential at the Salobo and Peñasquito
mines;
- projected changes to Wheatons production mix;
- anticipated increases in total throughput;
- the estimated future production;
- the future price of commodities;
- the estimation of mineral reserves and mineral resources;
- the realization of mineral reserve estimates;
- the timing and amount of estimated future production (including 2018 and
average attributable annual production over the next five years);
- the costs of future production;
- reserve determination;
- estimated reserve conversion rates and produced but not yet delivered
ounces;
- any statements as to future dividends, the ability to fund outstanding
commitments and the ability to continue to acquire accretive precious metal
stream interests;
- confidence in the Companys business structure;
- the Companys position relating to any dispute with the Canada Revenue
Agency (the CRA) and the Companys intention to defend reassessments issued
by the CRA; the impact of potential taxes, penalties and interest payable to
the CRA; possible audits for taxation years subsequent to 2015; estimates as
to amounts that may be reassessed by the CRA in respect of taxation years
subsequent to 2010; amounts that may be payable in respect of penalties and
interest; the Companys intention to file future tax returns in a manner
consistent with previous filings; that the CRA will continue to accept the
Company posting security for amounts sought by the CRA under notices of
reassessment for the 2005-2010 taxation years or will accept posting security
for any other amounts that may be sought by the CRA under other notices of
reassessment; the length of time it would take to resolve any dispute with the
CRA or an objection to a reassessment; and assessments of the impact and
resolution of various tax matters, including outstanding audits, proceedings
with the CRA and proceedings before the courts; and
- assessments of the impact and resolution of various legal and tax matters,
including but not limited to outstanding class actions.
Generally, these forward-looking statements can be identified
by the use of forward-looking terminology such as plans, expects or does
not expect, is expected, budget, scheduled, estimates, forecasts,
projects, intends, anticipates or does not anticipate, or believes,
potential, or variations of such words and phrases or statements that certain
actions, events or results may, could, would, might or will be taken,
occur or be achieved. Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of Wheaton Precious
Metals to be materially different from those expressed or implied by such
forward-looking statements, including but not limited to:
- risks related to the sale of the First Majestic Shares, including the
value that may be realized;
- First Majestic not being able to defend the validity of the 2012 APA, is
unable to pay taxes in Mexico based on realized silver prices or the SAT
proceedings or actions otherwise having an adverse impact on the business,
financial condition or results of operation in respect of the San Dimas mine;
- risks related to the satisfaction of each partys obligations in
accordance with the terms of the Companys precious metal purchase agreements,
including any acceleration of payments, estimated throughput and exploration
potential;
- fluctuations in the price of commodities;
- risks related to the Mining Operations including risks related to
fluctuations in the price of the primary commodities mined at such operations,
actual results of mining and exploration activities, environmental, economic
and political risks of the jurisdictions in which the Mining Operations are
located, and changes in project parameters as plans continue to be refined;
- absence of control over the Mining Operations and having to rely on the
accuracy of the public disclosure and other information Wheaton receives from
the owners and operators of the Mining Operations as the basis for its
analyses, forecasts and assessments relating to its own business;
- differences in the interpretation or application of tax laws and
regulations or accounting policies and rules;
- Wheatons interpretation of, or compliance with, tax laws and regulations
or accounting policies and rules, being found to be incorrect or the tax
impact to the Companys business operations being materially different than
currently contemplated;
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- any challenge by the CRA of the Companys tax filings being successful and
the potential negative impact to the Companys previous and future tax
filings;
- the Companys business or ability to enter into precious metal purchase
agreements (as defined herein) being materially impacted as a result of any
CRA reassessment;
- any reassessment of the Companys tax filings and the continuation or
timing of any such process is outside the Companys control;
- any requirement to pay reassessed tax and the amount of any tax, interest
and penalties that may be payable changing due to currency fluctuations;
- the Company not being assessed taxes on its foreign subsidiarys income on
the same basis that the Company pays taxes on its Canadian income, if taxable
in Canada;
- interest and penalties associated with a CRA reassessment having an
adverse impact on the Companys financial position;
- litigation risk associated with a challenge to the Companys tax filings;
- credit and liquidity risks;
- indebtedness and guarantees risks;
- mine operator concentration risks;
- hedging risk;
- competition in the mining industry;
- risks related to Wheatons acquisition strategy;
- risks related to the market price of the common shares of Wheaton (the
Common Shares);
- equity price risks related to Wheatons holding of long-term investments
in other exploration and mining companies;
- risks related to interest rates;
- risks related to the declaration, timing and payment of dividends;
- the ability of Wheaton and the Mining Operations to retain key management
employees or procure the services of skilled and experienced personnel;
- litigation risk associated with outstanding legal matters;
- risks related to claims and legal proceedings against Wheaton or the
Mining Operations;
- risks relating to unknown defects and impairments;
- risks relating to security over underlying assets;
- risks related to ensuring the security and safety of information systems,
including cyber security risks;
- risks related to the adequacy of internal control over financial
reporting;
- risks related to governmental regulations;
- risks related to international operations of Wheaton and the Mining
Operations;
- risks relating to exploration, development and operations at the Mining
Operations;
- risks related to the ability of the companies with which the Company has
precious metal purchase agreements to perform their obligations under those
precious metal purchase agreements in the event of a material adverse effect
on the results of operations, financial condition, cash flows or business of
such companies;
- risks related to environmental regulations and climate change;
- the ability of Wheaton and the Mining Operations to obtain and maintain
necessary licenses, permits, approvals and rulings;
- the ability of Wheaton and the Mining Operations to comply with applicable
laws, regulations and permitting requirements;
- lack of suitable infrastructure and employees to support the Mining
Operations;
- uncertainty in the accuracy of mineral reserve and mineral resource
estimates;
- inability to replace and expand mineral reserves;
- risks relating to production estimates from Mining Operations, including
anticipated timing of the commencement of production by certain Mining
Operations;
- uncertainties related to title and indigenous rights with respect to the
mineral properties of the Mining Operations;
- fluctuations in the commodity prices other than silver or gold;
- the ability of Wheaton and the Mining Operations to obtain adequate
financing;
- the ability of the Mining Operations to complete permitting, construction,
development and expansion;
- challenges related to global financial conditions;
- risks relating to future sales or the issuance of equity securities; and
- other risks discussed in the section entitled Description of the Business
Risk Factors in Wheaton Precious Metals Annual Information Form available
on SEDAR at www.sedar.com, and in Wheaton Precious Metals Form 40-F filed
March 29, 2018 and Form 6-K filed March 21, 2018 both on file with the U.S.
Securities and Exchange Commission in Washington, D.C. (the Disclosure).
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Forward-looking statements are based on assumptions management
currently believes to be reasonable, including but not limited to:
- that if it elects to do so, Wheaton will be able to sell the First
Majestic Shares and obtain fair value;
- that each party will satisfy their obligations in accordance with the
precious metal purchase agreements;
- that there will be no material adverse change in the market price of
commodities;
- that the Mining Operations will continue to operate and the mining
projects will be completed in accordance with public statements and achieve
their stated production estimates;
- that Wheaton will continue to be able to fund or obtain funding for
outstanding commitments;
- that Wheaton will be able to source and obtain accretive precious metal
stream interests;
- expectations regarding the resolution of legal and tax matters, including
the ongoing class action litigation and CRA audit involving the Company;
- that Wheaton will be successful in challenging any reassessment by the
CRA;
- that Wheaton has properly considered the application of Canadian tax law
to its structure and operations;
- that Wheaton will continue to be permitted to post security for amounts
sought by the CRA under notices of reassessment;
- that Wheaton has filed its tax returns and paid applicable taxes in
compliance with Canadian tax law;
- that Wheaton will not change its business as a result of any CRA
reassessment;
- that Wheatons ability to enter into new precious metal purchase
agreements will not be impacted by any CRA reassessment;
- expectations and assumptions concerning prevailing tax laws and the
potential amount that could be reassessed as additional tax, penalties and
interest by the CRA;
- that any foreign subsidiary income, if taxable in Canada, would be subject
to the same or similar tax calculations as Wheatons Canadian income,
including the Companys position, in respect of precious metal purchase
agreements with upfront payments paid in the form of a deposit, that the
estimates of income subject to tax is based on the cost of precious metal
acquired under such precious metal purchase agreements being equal to the
market value of such precious metal while the deposit is outstanding, and the
cash cost thereafter;
- the estimate of the recoverable amount for any precious metal purchase
agreement with an indicator of impairment; and
- such other assumptions and factors as set out in the Disclosure.
Although Wheaton Precious Metals has attempted to identify
important factors that could cause actual results, level of activity,
performance or achievements to differ materially from those contained in
forward-looking statements, there may be other factors that cause results, level
of activity, performance or achievements not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements will prove
to be accurate and even if events or results described in the forward-looking
statements are realized or substantially realized, there can be no assurance
that they will have the expected consequences to, or effects on, Wheaton
Precious Metals. Accordingly, readers should not place undue reliance on
forward-looking statements and are cautioned that actual outcomes may vary. The
forward-looking statements included herein are for the purpose of providing
investors with information to assist them in understanding Wheaton Precious
Metals expected financial and operational performance and may not be
appropriate for other purposes. Any forward looking statement speaks only as of
the date on which it is made. Wheaton Precious Metals does not undertake to
update any forward-looking statements that are included or incorporated by
reference herein, except in accordance with applicable securities laws.