Singapore 04/11/2015 - Glencore has entered into a long-term streaming agreement with Silver Wheaton for silver produced at the Antamina mine in Peru as part of its debt reduction plans, the mining giant said on Tuesday.
Under the agreement, Silver Wheaton will make an advance payment of $900 million to Glencore and thereafter pay 20 percent of the spot price at the time of delivery for each ounce of silver delivered.
In return, Glencore will deliver silver to Silver Wheaton from its 33.75 percent in Antamina until 140 million ounces is reached, and thereafter, the stream will be reduced to 22.5 percent of the silver produced at the mine.
Glencore owns 33.75 percent of Compañía Minera Antamina S.A. (CMA), which owns and operates the Antamina mine. The other shareholders of CMA are BHP Billiton Plc (33.75 percent), Teck Resources Limited (22.5 percent) and Mitsubishi Corporation (ten percent).
Located 270 kilometres north of Lima, Antamina had produced 344,900 tonnes of copper, 211,000 tonnes of zinc, 3.1 million pounds of molybdenum and 12 million ounces of silver in 2014.
Streaming transactions are a form of alternative financing in the mining industry whereby a miner receives advance payment from a purchaser for a forward sale - usually at a discounted price - of future supply.
In September Glencore had announced plans to cut its $30 billion debt by raising up to $2.5 billion of new shares, alongside additional capital preservation and debt reduction measures, which when taken together have an aggregate value of up to $10.2 billion.
It has since done so with a $2.5 billion new share placement and have announced cuts to its copper and zinc production, alongside probable sale of copper assets.