Wheaton hungry for Alumbrera stake (March 25, 2003)

Having just acquired Rio Tinto‘s (RPT-N) quarter-stake in the Bajo de la Alumbrera gold-copper mine in Argentina, Wheaton River Minerals (WRM-T) has agreed to help take another 25% interest in the mine off of BHP Billiton (BHP-N).

The price tag on the latest deal rings in at US$180 million, with up to US$50 million deferrable until May 30, 2005. The deferred portion will bear interest at a rate of London Inter-bank Offer rate plus 2%.

Wheaton and an unidentified arm’s-length third party will spilt the cost and each take home a 12.5% share. Wheaton plans to finance its portion of the acquisition with debt and does not anticipate issuing additional equity. Subject to board and regulatory approvals, the deal is expected to wrap up in June.

In mid-March, Wheaton acquired its initial 25% interest in Alumbrera along with the Peaks gold mine in Australia from Rio Tinto for US$210. A $333.5-milion equity financing funded that acquisition.

In the end, Wheaton will hold 37.5% of the Alumbrera mine, which churned out 759,360 oz. gold and 199,550 tonnes copper during the year ended June 30, 2002. Cash cost (including copper credits) came in at minus US$18 per oz. gold. Over the next five years, the operation is expected to pour 540,000 oz. gold and 180,000 tonnes copper annually (T.N.M., Jan20-26/03).

Wheaton expects the latest addition to boost its annual production to 450,000 oz. of gold and 6.5 million oz. of silver at an estimated cash cost (including by-product copper credits) of US$99 per oz.

Wheaton River shares were trading a dime higher at $1.26 in late afternoon trade in Toronto following the news on Mar. 25.