Vale Sells $800 Million of Future Gold Output to Ease Debt Load – by Danielle Bochove (Bloomberg News – August 2, 2016)

Vale SA sold more of its future gold output to Silver Wheaton Corp. as the Brazilian miner strives to lighten a $27 billion-plus net debt load, the industry’s biggest after Glencore Plc’s.

The Rio de Janeiro-based company will sell the rights to 25 percent of the Salobo mine’s gold production to Vancouver-based Silver Wheaton, expanding a 2013 streaming deal for 50 percent of output, the companies said in separate statements Tuesday. Vale will get $800 million upfront.

Chief Executive Murilo Ferreira flagged the new arrangement with Silver Wheaton on Thursday when he said the company had one transaction to announce this week and another two by year-end.

The biggest iron-ore exporter’s efforts to lower debt to $15 billion have been constrained by low prices, building a new mine and a lack of major asset sales.

Now, spending on the $14 billion S11D iron-ore project is coming to an end just as prices of the steelmaking ingredient are back above $60 a metric ton as concern over slowing Chinese demand eases. That’s giving Vale hope of retaining its credit ratings.

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