FBPH acts on $300m deal between Lumina Gold and Wheaton Precious Metals
Flor Bustamante Pizarro & Hurtado has acted as Ecuadorian counsel to Wheaton Precious Metals on a US $300 million precious metals purchase agreement (Gold Stream) with Lumina Gold.
The Gold Stream, which closed on 16 May, initially represents 6.6% of the payable gold produced at the Cangrejos gold-copper project, located in the El Oro province of Ecuador. The agreement is comprised of two financing segments, (i) the upfront deposit, which will be paid during the completion of a feasibility study and permitting period, and (ii) the down payment, which will be paid during construction of the Project.
The $48 million upfront deposit provides Lumina with the capital it needs to complete definition drilling, a feasibility study and permitting work on the Project. The $252 million upfront payment provides approximately 25% of the total construction financing required for the Project.
In addition, the initial deposit of US$48 million is made up of four components: US$12 million at closing; US$10 million 6 months after closing; US$15 million 12 months after closing; and a tranche of US$11 million that can be used for specific pre-construction investments.
The US$252 million down payment will be funded over the two and a half year construction of the project.
In exchange for the Advance Deposit and Upfront Payment, Lumina will sell 6.6% of the Project’s payable gold production until 700,000 ounces of gold have been delivered, at which time the Gold Stream will be reduced to 4.4% of payable gold production. Wheaton will pay a production payment representing 18.0% of the spot gold price for the first 700,000 ounces and 22.0% of the spot gold price thereafter.
In the event of a change of control, the Company may repurchase one-third of the Gold Stream from Wheaton until the earlier of 1 January 2030 or the date 12 months after first production.
Tobar ZVS acted as Ecuadorian counsel to Lumina Gold, through attorney Cesar Zumárraga.
FBPH’s team included partner Roque Bustamante (pictured left) and associate Claudia Bustamante (pictured right).
