Randy Smallwood would be happy – eager, even – to contribute a billion dollars toward the restart of Pascua-Lama, the massive gold project in South America that Barrick Gold Corp. mothballed three years ago.
In fact, Mr. Smallwood, the chief executive officer of Silver Wheaton Corp. of Vancouver, can’t help rubbing his hands – literally – at the prospect of a Pascua-Lama revival.
“It’s the best half-built gold mine in the world,” he says in an interview. He adds: “We’re willing to work with Barrick in terms of helping them finance a restart.” For Mr. Smallwood and his company, a re-emergence of Pascua-Lama would help solve a problem: The disappearance of big deals in the so-called “streaming” sector.
Streaming companies offer cash to miners today in exchange for the rights to buy part of their production tomorrow at heavily discounted prices. Silver Wheaton, which pioneered the strategy, focuses on acquiring “streams” of silver or gold that are produced as byproducts of mining for other metals, such as copper or lead. By doing so, the company locks in prices for precious metals that are far below current market values.
The worldwide collapse of metal prices that began after 2012 provided fertile ground for the company’s deal making. Many miners, even giants such as Glencore and Vale, were hard up for cash and eager to strike an agreement.
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