Q: WPM just announced a new streaming agreement. Could you break down the mechanics of how this actually works in simple terms. I am confused as to the purchase of the resources at 20% of spot price. For example, if spot price is $100, does Wheaton pay $20? Thx in advance.
5i Research Answer:
The deal is for an upfront payment of $275 mln. There are two $16 mln installments as early deposit payments as cetain conditions are met with the remaining amount being paid in four equal installments as construction proceeds at the site.
The deal gives WPM access to essentially purchase 75% of gold produced within a certain level of ounces (45K) and then it begins stepping down to lower amounts of the total gold produced.
Yes, WPM purchases gold at 20% of spot price under the agreement and this discount also reflects the investment being made into the company.