Silver Wheaton pays Glencore for silver rights at Peru mine – by Ian McGugan (Globe and Mail – November 3, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Silver Wheaton Corp. of Vancouver is paying $900-million (U.S.) to embattled Glencore PLC in exchange for rights to some of the future silver production from a Peruvian mine.

The deal highlights the increasing willingness of major miners to swap tomorrow’s production in exchange for cash today.

Companies like Silver Wheaton provide upfront payments to miners in return for the rights to buy “streams” of their future output at below-market prices. Streaming companies have found ample opportunities in recent years as metals prices have slumped and commodity producers have encountered problems in raising money from traditional sources.

The deal will come as welcome news to Glencore investors, who have seen shares of the commodity trader lose more than half their value this year. The giant Swiss company has come under pressure as doubts grow about its ability to manage its massive debt load in an era of dismal commodity prices.

For its part, Silver Wheaton said the new streaming agreement will help it deliver increased dividends despite flat commodity prices.

However, the company’s earnings report, released after the close of trading on Tuesday, shows some challenges ahead.

Silver Wheaton declared a loss of $95.9-million or 24 cents a share in the quarter ended Sept. 30, largely as a result of a $154-million writedown on its interest in the 777 gold and silver mine operated by HudBay Minerals Inc.

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