Silver Wheaton expands into early-stage mine financing

Tue Nov 12, 2013 6:27pm EST
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By Nicole Mordant and Julie Gordon

VANCOUVER (Reuters) - Only a day after announcing its first deal using a novel financing method to fund an early-stage mining project, Silver Wheaton Corp SLW.TO hopes to follow up with a second one soon, and sees plenty of demand down the road.

Known as "early deposit streaming," the deals give mine exploration companies cash upfront in exchange for their future production of such byproducts as silver or gold at a set price.

Silver Wheaton CEO Randy Smallwood expects plenty of demand for the new form of financing from junior mining companies desperate for funds because slumping metal prices and soaring mining costs have dried up money from equity and debt markets.

"I've been in this business for over 30 years and I've never seen it this bad for the junior explorers. There is no capital for them in the capital markets," Smallwood said in an interview in Vancouver, where Silver Wheaton is headquartered.

Until now, Silver Wheaton has generally signed deals with mining companies on assets that are either already in production or well into development.

Late on Monday, the company said it had signed a deal with Sandspring Resources Ltd SSP.V, a small junior mining company that is developing the Toroparu project in Guyana.

The copper-gold project is still early-stage and Sandspring has not yet completed a bankable feasibility study to determine its commercial viability.

For an upfront payment of $13.5 million, followed by an additional $135 million payable during construction, Silver Wheaton has secured the right to buy 10 percent of the gold output over the mine's life at $400 an ounce.   Continued...