Vale S.A. : Vale S.A. :Vale to sell

                     Vale S.A. : Vale S.A. :Vale to sell

Vale to sell a portion of the gold by-product stream from some of its
copper and nickel mines
Rio de Janeiro, February 5, 2013 - Vale S.A. (Vale) informs that it has
entered into an agreement with
Silver Wheaton Corp. (SLW), a Canadian company traded on the TSX and NYSE, to
sell 25% of the
payable gold by-product stream from the Salobo copper mine for the life of the
mine and 70% of the
payable gold by-product stream from its Sudbury nickel mines - Coleman, Copper
Cliff, Creighton,
Garson, Stobie, Totten and Victor - for 20 years.
The transaction
Vale will receive an initial cash payment of US$ 1.9 billion plus 10 million
warrants of SLW with a strike
price of US$ 65 and a 10-year term, valued at US$ 100 million. US$ 1.33
billion will be paid for 25% of
the gold by-product stream from Salobo while US$ 570 million plus 10 million
SLW warrants will be paid
for 70% of the Sudbury gold by-product stream.
In addition, Vale will also receive future cash payments for each ounce (oz)
of gold delivered to SLW
under the agreement, equal to the lesser of US$ 400 per oz (plus a 1% annual
inflation adjustment from
2016 in the case of Salobo) and the prevailing market price.
Vale may also receive an additional cash payment contingent on its decision to
expand the capacity to
process Salobo copper ores to more than 28 Mtpy before 2031. Salobo I, which
is ramping up, and
Salobo II, coming on stream in 1H14, will have a total capacity to process 24
Mtpy of run-of-mine (ROM).
The additional amount would range from US$ 67 million to US$ 400 million
depending on timing and size
of the expansion.
There is no firm commitment from Vale to quantities of gold delivered - SLW is
entitled not to specific
volumes but to a percentage of the gold by-product stream from Salobo and
Sudbury and thus bears the
production risk, both on the upside and on the downside. As for the risk of
price volatility, Vale is subject
to gold price risk for the SLWs deliveries only if the price of gold drops
below the US$ 400/oz trailing
payment.
The transaction is still subject to the settlement of definitive agreements
and the approval of our Board of
Directors. Scotiabank acted as the sole financial advisor to Vale.
The strategic background and value creation
The deal unlocks substantial value from our high quality base metals
operations as it values the Salobo
payable gold stream at US$ 5.32 billion plus payments of US$ 400 per oz upon
delivery, given that no
additional costs will be incurred by Vale to extract gold from copper
concentrates produced by Salobo.
The estimated capex for Salobo - Salobo I and Salobo II - with a nominal
capacity to deliver 200,000 tpy
2
of copper in concentrates plus gold by-product is US$ 4.2 billion, of which
US$ 3.05 billion was spent until
Dec 31, 2012. Salobo I is currently ramping up as planned while Salobo II will
come on stream in 1H14.
Our base metals business is undergoing changes in order to achieve significant
performance
improvement and to deliver shareholder value on a sustainable basis. Alongside
the efforts to unlock
value from its operations such as the gold streaming transaction and the
potential divestiture of non-core
assets, Vale is pursuing lower costs and higher productivity arising from the
simplification of its flowsheet,
the idling of loss making operations, the feeding of smelters only with high
value concentrates resulting
from the optimization of mining plans and the use of technological innovation,
such as the implementation
of the CORe (Challenging Ore Recovery) project at the Clarabelle mill and the
fully integrated
hydrometallurgical flowsheet of Long Harbour, coming on stream in 2H13.
The execution of our strategic plan leads us to remain strongly confident on
the potential of our worldclass
base metals assets to create sizeable shareholder value through the cycles.
For further information, please contact:
+55-21-3814-4540
Roberto Castello Branco: roberto.castello.branco@vale.com
Viktor Moszkowicz: viktor.moszkowicz@vale.com
Carla Albano Miller: carla.albano@vale.com
Andrea Gutman: andrea.gutman@vale.com
Christian Perlingiere: christian.perlingiere@vale.com
Marcelo Correa : marcelo.correa@vale.com
Marcio Loures Penna: marcio.penna@vale.com
Samantha Pons: samantha.pons@vale.com
This press release may include statements that present Vale's expectations
about future events or results. All statements, when based upon
expectations about the future and not on historical facts, involve various
risks and uncertainties. Vale cannot guarantee that such statements will prove
correct. These risks and uncertainties include factors related to the
following: (a) the countries where we operate, especially Brazil and Canada;
(b) the
global economy; (c) the capital markets; (d) the mining and metals prices and
their dependence on global industrial production, which is cyclical by
nature; and (e) global competition in the markets in which Vale operates. To
obtain further information on factors that may lead to results different from
those forecast by Vale, please consult the reports Vale files with the U.S.
Securities and Exchange Commission (SEC), the Brazilian Comissão de
Valores Mobiliários (CVM), the French Autorité des Marchés Financiers (AMF),
and The Stock Exchange of Hong Kong Limited, and in particular the
factors discussed under "Forward-Looking Statements" and "Risk Factors" in
Vale's annual report on Form 20-F.
Vale to sell

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Source: Vale S.A. via Thomson Reuters ONE
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