(Kitco News) - Rio2 (TSXV: RIO) announced Tuesday that it has entered into a definitive precious metals purchase agreement (the "Gold Stream") with Wheaton Precious Metals in relation to the company's Fenix gold project in Chile.
The company said that the Gold Stream is one of the components of the mine construction financing totaling approximately US$125 to US$135 million to finance the construction of a mine at the company's 100%-owned Fenix gold project in Chile.
Rio2 added that under the Gold Stream, Wheaton will purchase 6.0% of the gold production from Fenix until 90,000 ounces of gold have been delivered and 4.0% of the gold production until 140,000 ounces of gold have been delivered, after which the stream will reduce to 3.5% of the gold production for the life of mine.
Wheaton will make an upfront deposit in cash of US$50 million with US$25 million available following closing of the Gold Stream agreement, and the remaining US$25 million payable after the receipt of the EIA approval for the mine with both payments subject to completion of customary conditions, the company noted.
Jose Luis Martinez, EVP, Chief Strategy Officer stated, "Entering into this definitive agreement with Wheaton International represents a significant milestone for Rio2 and secures the foundation of the mine financing package setting the company on a solid path for development and a fast track to production."
In addition, the company said that Wheaton will make ongoing payments for gold ounces delivered equal to 18% of the spot gold price until the value of gold delivered less the production payment is equal to the upfront consideration of US$50 million, at which point the production payment will increase to 22% of the spot gold price.
By Vladimir BasovFor Kitco News
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