Silver Wheaton Corp. (TSX, NYSE:SLW) will buy a quarter of Goldcorp's silver production from its Penasquito project in Mexico for US$485 million in an all-debt deal.
The agreement will more than double Silver Wheaton's proven and probable silver reserves to 278 million ounces and its measured and indicated silver resources to 121 million ounces.
To fund the deal, Silver Wheaton has arranged a US$485 million loan with Scotia Capital Inc. and BMO Capital Markets.
In addition to the one-time payment, Silver Wheaton will pay Goldcorp US$3.90 price per ounce for the silver delivered under contract.
It will also have the right of first refusal to buy any additional silver from Penasquito as long as Goldcorp retains at least a 20% ownership interest in Silver Wheaton. Goldcorp owns 49% of Silver Wheaton.
Goldcorp will use the funds to pay for continued construction of its Penasquito project.
The deal, expected to close May 31, is subject to customary closing conditions and regulatory approval.
Silver Wheaton shares during the past week: between $12.20 and $12.85; 52-week high: $13.74; 52-week low: $7.41.