UPDATE 2-Glencore agrees streaming deal with Silver Wheaton to cut debt

Wed Nov 4, 2015 6:50am EST
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(Updates Nov. 3 story to state Glencore is using its share of output at Antamina as reference point)

By Nicole Mordant

VANCOUVER Nov 4 (Reuters) - Glencore Plc has agreed to sell future silver output to Silver Wheaton Minerals for $900 million in cash in a so-called "streaming" deal, the two companies said on Tuesday.

Glencore, a global miner and trading company whose shares have been under pressure due to investor concerns about its debt, said it will use the funds to reduce debt.

It said it would be using its share of production at the Antamina mine in Peru as a reference point to deliver silver from elsewhere across it portfolio.

Glencore owns 33.75 percent of Compañía Minera Antamin (CMA), which owns and operates the Antamina mine. CMA was not a party to the agreement, Glencore said.

Streaming transactions are a type of alternative financing in the mining industry where funds are provided upfront to a miner in exchange for the sale of a fixed amount of future, usually by-product, production at a discounted price.

This type of alternative finance has been emerging as the new go-to funding for miners bowed by debt as weak share prices, courtesy of a four-year commodities' downturn, make raising equity and other types of finance expensive and difficult.

Glencore said in September that about $2 billion of a $10 billion debt reduction plan it had unveiled will come from asset sales, which could include precious metals streaming transactions.   Continued...