UPDATE 2-Glencore agrees streaming deal with Silver Wheaton to cut debt

(Updates Nov. 3 story to state Glencore is using its share of
output at Antamina as reference point)
By Nicole Mordant
VANCOUVER, Nov 4 (Reuters) - Glencore Plc GLEN.L has
agreed to sell future silver output to Silver Wheaton Minerals
SLW.TO for $900 million in cash in a so-called "streaming"
deal, the two companies said on Tuesday.
Glencore, a global miner and trading company whose shares
have been under pressure due to investor concerns about its
debt, said it will use the funds to reduce debt.
It said it would be using its share of production at the
Antamina mine in Peru as a reference point to deliver silver
from elsewhere across it portfolio.
Glencore owns 33.75 percent of Compañía Minera Antamin
(CMA), which owns and operates the Antamina mine. CMA was not a
party to the agreement, Glencore said.
Streaming transactions are a type of alternative financing
in the mining industry where funds are provided upfront to a
miner in exchange for the sale of a fixed amount of future,
usually by-product, production at a discounted price.
This type of alternative finance has been emerging as the
new go-to funding for miners bowed by debt as weak share prices,
courtesy of a four-year commodities' downturn, make raising
equity and other types of finance expensive and difficult.
urn:newsml:reuters.com:*:nL1N11R1U4
Glencore said in September that about $2 billion of a $10
billion debt reduction plan it had unveiled will come from asset
sales, which could include precious metals streaming
transactions. urn:newsml:reuters.com:*:nL5N11D0O4
In terms of the transaction, Vancouver-based Silver Wheaton
will also make ongoing payments of 20 percent of the spot price
for silver for every ounce of metal delivered.
Glencore will deliver silver equivalent to 33.75 percent of
silver produced at Antamina to Silver Wheaton until 140 million
ounces is reached. After that, the stream will be reduced to
22.5 percent of the silver produced at Antamina.
Reuters reported in September that Glencore was in talks
with Franco-Nevada Corp FNV.TO , Silver Wheaton, Royal Gold Inc
RGLD.O and two other companies to sell portions of the future
production of three South American copper mines, including
Antamina. urn:newsml:reuters.com:*:nL1N11L2C3
Silver Wheaton pioneered the streaming concept more than a
decade ago.
The company said it would fund the $900 million from cash on
hand and also dip into its $2 billion revolving credit facility.
Glencore's partners in the Antamina mine are BHP Billiton (L:BLT)
BHP.L BHP.AX , also with 33.75 percent, Teck Resources
TCKb.TO with 22.5 percent and Mitsubishi Corp 8058.T with 10
percent.
Teck Resources did a streaming transaction on its stake in
the Antamina mine last month, raising $610 million, to help cut
its debt. urn:newsml:reuters.com:*:nL3N1272NH