Canada-based Wheaton Precious Metals has agreed to acquire gold stream from Lumina Gold’s fully owned Cangrejos gold-copper project in El Oro Province, Ecuador for $300m.
As per the terms of the agreement, the precious and base metals exploration and development company will receive an early deposit of $48m for pre-construction from Wheaton Precious Metals.
The remaining $252m will be paid by Wheaton Precious Metals in staged equal instalments during construction, subject to the fulfilment of various customary conditions.
Lumina Gold founder and largest shareholder Ross Beaty said: “This transaction validates the extensive technical work that the Lumina Group has completed on Cangrejos since 2014.
“It will de-risk the execution of the Cangrejos project and form a significant part of the US$1 billion of required construction capital. Cangrejos will represent one of the largest gold producers in the world once built and Wheaton will benefit from its three decades of mine life.”
Under the agreement, the precious metals streaming company will buy 6.6% of the payable gold from the Cangrejos project until the delivery of 700,000 ounces of gold. At this point, the stream will be lowered to 4.4% of the payable gold production for the life of the mine.
Wheaton Precious Metals is expected to make a production payment equal to 18% of the spot price of gold for the first 700,000 ounces and 22% for the gold thereafter.
Wheaton Precious Metals president and CEO Randy Smallwood said: “The Cangrejos Project is an excellent addition to Wheaton’s existing portfolio of high-quality, low-cost assets as it should provide accretive, long-term growth as well as significant exploration potential.”
Located 40km from the Puerto Bolivar port, the Cangrejos gold-copper project is estimated to have an average annual payable production of 371,000 ounces of gold and an average payable by-product production of 42 million pounds of copper.
According to the positive results from the preliminary feasibility study (PFS) announced in April 2023, the project has a probable gold reserve of 11.6 million ounces and indicated gold mineral resource of 16.8 million ounces.
