NewsVANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 23, 2006) - Silver Wheaton Corp. (TSX:SLW)(AMEX:SLW) is pleased to announce that it has agreed to purchase 4.75 million ounces of silver per year, for a period of 20 years, from Glencore International AG, equivalent to the production from their Yauliyacu mining operations in Peru. With this acquisition, Silver Wheaton is expected to have annual silver sales of over 15 million ounces in 2006, increasing to 20 million ounces by 2009 and thereafter.
Silver Wheaton will pay an upfront payment of US$285 million, comprised of US$245 million in cash and a US$40 million promissory note, and US$3.90 per ounce of silver delivered under the contract (subject to an inflationary adjustment after three years).
Yauliyacu is a low-cost silver/lead/zinc mine located in central Peru which has been in continuous operation for more than 100 years and is expected to produce an average of 6 million ounces of silver per year during the term of the contract. In the event that silver produced at Yauliyacu in any year totals less than 4.75 million ounces, the amount sold to Silver Wheaton in subsequent years will be increased to make up for the shortfall, so long as production allows.
During the term of the contract, Silver Wheaton will have a right of first refusal on any future sales of silver streams from the Yauliyacu mine and a right of first offer on future sales of silver from any other mine currently owned by Glencore. In addition, Silver Wheaton will also have an option to extend the 20 year term of the silver purchase agreement in five year increments, on substantially the same terms as the existing agreement, subject to an adjustment related to silver price expectations at the time and other factors.
In order to fund the US$245 million cash consideration, Silver Wheaton intends to use cash on hand of US$120 million, together with US$125 million of bank debt.
Closing of the transaction is subject to execution of definitive agreements and receipt of all regulatory approvals and third-party consents, including acceptance by the Toronto Stock Exchange. The transaction is expected to close by March 15, 2006.
There will be a conference call to discuss the transaction on Friday, February 24, 2006 at 11:00 a.m. (EST). You may participate in the call by dialing toll free 1-800-769-8320 in North America, or for local callers or those outside of North America by dialing 416-695-5261. The conference call will also be recorded and you can listen to a playback of the call after the event by dialing 1-888-509-0081 or 416-695-5275. A live audio webcast and replay will be available on the website at www.silverwheaton.com.
Mr. Randy Smallwood, P. Eng., Vice-President, Corporate Development of Silver Wheaton, who is a "qualified person" as such term is defined under National Instrument 43-101, has reviewed and approved the contents of this news release. Silver Wheaton has retained Watts, Griffis and McOuat Limited to prepare an independent National Instrument 43-101 technical report on Yauliyacu and expects that such report will be available on www.sedar.com within 45 days. Macquarie acted as financial advisors to Glencore on this transaction.
Silver Wheaton is the only public mining company with 100% of its revenue from silver production. Silver Wheaton is unhedged and well positioned for further growth.