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Wheaton Precious Metals To Acquire Gold Stream From Capstone; Street Says Buy

Wheaton Precious Metals, through its subsidiary Wheaton Precious Metals International is acquiring a gold stream from Capstone Mining’s Santo Domingo Project for an upfront consideration of $290 million payable at certain milestones.

Wheaton’s (WPM) President and CEO, Randy Smallwood said, “Santo Domingo is an exceptional project that provides Wheaton with an additional near-term growth opportunity. The project is forecast to be a first quartile copper producer with a long mine life, making it an ideal fit for Wheaton’s existing high-quality portfolio.”

Smallwood further added, “We are very excited to further build our partnership with Capstone and look forward to seeing Santo Domingo developed into a top-tier copper mine.”

Wheaton will own 100% of payable gold production from the mine until the 285 thousand ounces (koz) milestone is reached and then dropping to the 67% of payable gold production for the remainder of the mine’s life, estimated at 18 years.

Of the total $290 million consideration, Wheaton expects to pay $30 million upon closing of the transaction. The rest of the payment is to be made over the construction of the project. (See Wheaton Precious Metals stock analysis on TipRanks)

On March 11, Canaccord Genuity analyst Carey MacRury reiterated a Buy rating on the stock with a target price of $61.99 (64% upside potential). Commenting after the company’s 4Q performance, MacRury said, “Wheaton repaid $293 million on its credit facility and ended 2020 effectively net debt neutral, a significant improvement from net debt of ~$770 million at YE19. We forecast a net cash position of ~$320 million by YE21 at spot metal prices. Wheaton has ~$2 billion in available liquidity for new transactions.”

Turning to rest of the Street, the stock has a Strong Buy consensus rating alongside an average analyst price target of $51.94 (37.4% upside potential) based on 9 Buys and 3 Holds. Shares have rallied about 36% over the past year.

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