ML & Silver WheatonMercator Closes US$42 million Silver Sale Transaction with Silver Wheaton
Thursday June 12, 6:13 pm ET
TRADING SYMBOL: TSX - ML
VANCOUVER, June 12 /CNW/ - Mercator Minerals Ltd. ("Mercator") is pleased to announce today that its wholly-owned affiliate has closed the previously announced agreement with an affiliate ("Silver Wheaton") of Silver Wheaton Corp. for the sale of the life-of-mine silver production from Mercator's Mineral Park copper/molybdenum mine in Arizona. Under the agreement, Silver Wheaton's affiliate has made an up-front payment of US$42 million in cash to Mercator's affiliate. Upon delivery of the silver, Silver Wheaton's affiliate will then also pay Mercator's affiliate in cash the lesser of the silver spot price or US$3.90 per ounce of silver (escalated by 1% per annum starting in the fourth year of silver production).
Commenting on the closing, Michael L. Surratt, President and Chief Executive Officer of Mercator, said: "We are delighted to have completed this important transaction with Silver Wheaton. Silver at Mineral Park is a by-product of the copper and molybdenum operation, and represents less than 2% of our payable revenue at Mineral Park. By monetizing most of our silver revenue now, we will obtain funds that can be used to pay for the second stage of the construction of the Mineral Park milling facilities, expected to increase the operation to 50,000 tons per day. By having the funds now rather than waiting on phase one cash flow, we can save money completing many construction activities now while we have construction workers on site, rather than needing to remobilize after phase one. In addition, we will have the opportunity to accelerate phase two equipment deliveries. Every day we can speed up Phase Two is very important to our bottom line."
Surratt also stated: "It was a pleasure dealing with the Silver Wheaton team and we look forward to a long term relationship with them."
The up-front payment will be used for the completion of the second phase of the Mineral Park mill expansion to a 50,000 ton-per-day milling operation with production of copper and molybdenum concentrates expected, as previously disclosed, to average 56.4 million pounds of copper, 10.3 million lbs of molybdenum and 0.6 million ounces of silver per year over the first 10 years of operation.
Additionally, the Company has declared and will be making a special pro rata payment to the Noteholders equal to 1% of the issued and outstanding principal amount of Notes on June 26, 2008, to Noteholders of record on June 23, 2007.
Mercator Minerals Ltd.
Mercator is a copper producer that owns and operates the Mineral Park copper/molybdenum mine in Arizona, with a corporate strategy focused on maximizing the production potential of the Mineral Park copper-molybdenum deposit and growing through mergers and acquisitions. Mercator is in an advanced stage of construction of the molybdenum-copper expansion at Mineral Park. At full capacity, the Mineral Park mine average annual production during the first 10 years is forecast to be approximately 56.4 million pounds of copper, 10.3 million pounds of molybdenum and 0.6 million ounces of silver.
On Behalf of the Board of Directors MERCATOR MINERALS LTD. Per: "Michael L. Surratt" Michael L. Surratt, President Forward Looking Information