By: Malaysian reserve

“With essential permits in place coupled with its impressive scale, we believe the Koné Project stands out as one of the premier gold assets in Africa, and we are excited to partner with Montage to deliver a full financing package for its development,” said Randy Smallwood, President and CEO of Wheaton Precious Metals. “Supported by strong shareholder backing from the Lundin Group and Zijin Mining, the Koné Project is expected to significantly boost Wheaton’s near-term annual gold production and further strengthen our peer-leading growth trajectory. We look forward to collaborating with Montage’s outstanding team, whose extensive experience in West Africa has driven remarkable progress in de-risking the project and advancing it towards construction.”

“We are pleased to partner with Wheaton to deliver our strategy of creating a premier African gold producer, commencing with the construction of our Koné project in Côte d’Ivoire which is set to become West-Africa’s next sizable, long-life, low production cost gold mine,” said Martino De Ciccio, CEO of Montage. “Moreover, both companies share a commitment to delivering strong social and economic benefits to host countries, which underpins our goal of becoming the partner of choice for our local stakeholders. With strong shareholder backing, along with our partnership with Wheaton, we look forward to continuing to grow our presence in West Africa.”

Transaction Key Terms
(All values in US$ unless otherwise noted)

§  Gold Stream Upfront Consideration: WPMI will pay Montage total upfront cash consideration of US$625 million (the “Deposit”) in four equal installment payments during construction, subject to certain customary conditions.

§  Streamed Metal: WPMI will purchase 19.5% of the payable gold until a total of 400 thousand ounces (“Koz”) of gold has been delivered, subject to adjustment if there are delays in deliveries relative to an agreed schedule, at which point WPMI will purchase 10.8% of the payable gold until an additional 130 Koz of gold has been delivered (the “Second Dropdown Threshold”), at which point WPMI will purchase 5.4% of payable gold for the life of the mine. Payable gold is calculated using a fixed payable factor of 99.9%.

§  Production Profile¹: Attributable Gold Stream production is forecast to average over 60 Koz of gold per year for the first five years of production, over 47 Koz of gold per year for the first 10 years of production, and over 34 Koz for the life of mine. The Project is forecast to have a 16-year mine life based on reserves, with first production anticipated in early 2027.

§  Production Payments: WPMI will make ongoing payments for the gold ounces delivered equal to 20% of the spot price of gold. For the first five years after the Precious Metals Purchase Agreement (“PMPA”) is signed, there will be a price adjustment mechanism in place if the spot price of gold is less than $2,100/oz or greater than $2,700/oz. For example, if spot gold is $3,200 per ounce, Wheaton’s production payment would be $675 per ounce, equating to 21% of the spot price. This price adjustment mechanism expires on the fifth anniversary of the PMPA, after which the production payment will be equal to 20% of the spot price going forward.

§  Secured Debt Facility: WPMI has also provided Montage with a secured debt facility of up to $75 million to be allocated to project costs, including cost overruns.

§  Incremental Reserves and Resources¹: The addition of the Koné Project will increase Wheaton’s total estimated Proven and Probable Mineral gold reserves by 0.62 million ounces (“Moz”), Measured and Indicated Mineral gold resources by 0.05 Moz and Inferred gold resources by 0.02 Moz.

§   Other Considerations:

o    The Gold Stream will include a customary completion test based on expected gold production and expected mining rates.

o    WPMI has also obtained a right of first refusal on any future precious metal streams, royalties, prepays or similar transactions.

o    The Gold Stream will apply to a Core Area of Interest inclusive of the Koné and Gbongogo deposits (the “Core Area of Interest”), with exploration upside beyond the currently defined deposits.

o    Ore from within a 100km Expanded Area of Interest (“Expanded Area of Interest”) will be subject to the stream if that ore is processed at the Koné mineral processing facility, until such time following the Second Dropdown Threshold that ounces received under the stream from the Expanded Area of Interest is equal to the remaining ounces from the Core Area of Interest, at which point the stream percentage will be reduced to nil.  If at any point after that the remaining ounces from the Core Area of Interest exceed the ounces received from the Expanded Area of Interest, the Company will continue receiving 5.4% of payable gold from the Core Area of Interest, for the remaining life of mine.

o    In the event of a change of control prior to the earlier of completion and December 31, 2026, Montage will have an option to buyback one third of the stream.

o    Montage will provide WPMI with corporate guarantees and certain other security over their assets.

o    Montage is expected to comply in all material respects with the International Finance Corporation’s Performance Standards on Environmental and Social Sustainability, the Global Industry Standard on Tailings Management, and WPMI’s Partner/Supplier Code of Conduct, which outlines Wheaton’s expectations in regard to environmental, social and governance (“ESG”) matters.

Financing the Transactions

As at June 30, 2024, the Company had approximately $540 million of cash on hand and believes that when combined with the liquidity provided by the available credit under the $2 billion revolving term loan and ongoing operating cash flows, WPMI is well positioned to fund the acquisition of the Gold Stream as well as all outstanding commitments and known contingencies and provides flexibility to acquire additional accretive mineral stream interests.

About Montage and the Koné Project

Montage Gold Corp. (TSXV: MAU) is a Canadian-listed company focused on becoming a premier multi-asset African gold producer, with its flagship, fully permitted, Koné Project, located in Côte d’Ivoire. Koné is located approximately 350 kilometres north-west of Yamoussoukro, the political capital of Côte d’Ivoire, and approximately 600 kilometres north-west of Abidjan, the commercial capital of the country. The Project is situated near existing infrastructure, accessible year-round via road, and has access to ample water resources. Based on the Feasibility Study published in 2024, Koné ranks as one of the highest quality gold projects in Africa with a long 16-year mine life, low AISC of $998/oz over its life of mine, and sizeable annual production of +300 Koz of gold over the first eight years. Over the course of 2024, the Montage management team will be leveraging their extensive track record in developing projects in Africa to progress Koné towards a construction launch, with a goal of unlocking significant value for all its stakeholders.  

Attributable Gold Mineral Reserves and Mineral Resources – Koné Project