Silver Wheaton in $1.9-bn gold mining deal with Vale

Canada's Silver Wheaton Corp, the world's largest silver streaming company, said that it has executed a deal worth over $1.9 billion with Brazilian mining giant Vale SA for a share of Vale's gold production on a long-term basis, thereby significantly increasing the company's exposure to gold business.

Under the terms of the agreement, Vancouver-based Silver Wheaton will acquire 25 per cent of the life of the gold production mine from Vale's new Salobo mine in Brazil and 70 per cent of gold production from its Sudbury mines in Canada for a period of 20 years.

In addition to the $1.9 billion in cash, Vale will get 10 million warrants of Silver Wheaton with a strike price of $65 each over a 10-year term. An amount for $1.33 billion will be paid for the Salobo share, while $570 million will be paid for Sudbury.

The new Salobo mine has an extensive reserve base, while Sudbury currently has the Totten mine in start-up and the Victor mine under development.

Silver Wheaton's president and chief executive officer Randy Smallwood said, "Partnering with Vale on two new gold streams represents a significant step forward for Silver Wheaton and for the streaming model as a whole.''

Production will accrue retroactively to Silver Wheaton as of 1 January 2013, the company said.