Silver Wheaton Corp. ("Silver Wheaton") (TSX: SLW)(NYSE: SLW) is pleased to announce that it has agreed to purchase 75% of the life of mine silver produced by Farallon Resources Ltd. ("Farallon") (TSX: FAN), at its Campo Morado property in Guerrero State, Mexico. The first deposit on the Campo Morado property to be developed will be the high-grade G-9 polymetallic deposit, which Farallon is targeting for production during the third quarter of 2008.
Silver Wheaton will pay Farallon US$80 million in order to acquire 75% of all silver produced from the Campo Morado property, including the G-9 mine, for the lesser of US$3.90 (subject to a one percent annual adjustment starting in year four after production commences) or the prevailing market price per ounce of silver delivered. The upfront payment will be made on a draw down basis to fund ongoing capital expenditures at the Campo Morado property. Payment for the transaction will be drawn from existing credit facilities. Silver Wheaton will also receive a right of first refusal over any future silver stream involving Farallon.
The Campo Morado property is located 160 kilometers southwest of Mexico City and hosts one of the largest volcanogenic massive sulfide systems in Mexico. Since 1995, Farallon has discovered and/or delineated several mineral deposits on the property including the high grade G-9 massive sulfide deposit. The Reforma, El Rey, Naranjo and El Largo deposits are among the many other massive sulfide occurrences also discovered within the 116 km2 project area.
Construction at G-9 is well underway and Farallon is targeting production to begin in the third quarter of 2008. It will be an underground mine employing a drift and fill mining method to feed a flotation mill with a throughput capacity of 1,500 tonnes per day. According to a news release dated December 28, 2007, in addition to producing at least 1 million ounces of silver per year, the G-9 Project is expected to produce 120 million pounds of zinc, 15 million pounds of copper, 9,000 ounces of gold and 6 million pounds of lead per year. Discovered only in 2005, Farallon is still actively drilling the G-9 deposit and expanding the resource base, as illustrated with recent drill results (see Farallon news releases dated May 1 and 9, 2008).
"We are very pleased to be partnered with Farallon in their development of the Campo Morado district," said Peter Barnes, President and Chief Executive Officer of Silver Wheaton. "The high grade and still growing G-9 deposit should form the cornerstone for the development of a world class massive sulfide district. This project has all the right ingredients - good management, a quality asset, low political risk, near-term production and rich exploration potential."
A conference call will be held on Tuesday, May 13, 2008 at 1:00 pm (Eastern Time) to discuss this transaction.
