Barrick Gold in $625 million deal with Silver Wheaton

Canada's Barrick Gold Corporation, the world's largest gold miner, has agreed to sell 25 per cent of the life-of-mine silver production from its huge Pascua Lama project on the Chile-Argentina border to fellow Canadian Silver Wheaton, the world's leading silver streaming company, for $625 million as a means of financing of the project.

Under the terms, Silver Wheaton will also acquire 100 per cent of silver production from Barrick Gold's three other mines: Lagunas Norte, Pierina and Veladero commencing 1 September 2009 until the end of 2013, when the Pascua Lama project is expected to go on stream.

Silver Wheaton will make total upfront cash payments of $625 million over three years, with the initial $212.5 million on closing of the deal, and the remaining part in three equal annual installments of $137.5 million each. Additionally, the company will make on-going payments of a $3.90 per ounce or the prevailing market price whichever is less, for the silver supplied by Barrick Gold.  

Barrick Gold's president and CEO, Aaron Regent said, ''The transaction enhances Pascua-Lama's economics. The upfront cash consideration increases returns and represents an attractive source of financing for the project while still maintaining Barrick's upside on 100% of the gold and 75 per cent of silver production at Pascua-Lama."

The transaction is expected to close by 22 September, subject to customary and regulatory approvals.

Under the deal, Barrick Gold guarantees to complete the Pascua-Lama, one of the largest gold-silver mines in the world, to at least 75 per cent of design capacity by the end of 2015. During 2014-15, Silver Wheaton will be entitled to the silver production from the currently producing mines.