Silver Wheaton Corp. ("Silver Wheaton") (TSX: SLW)(NYSE: SLW) is pleased to announce that it has agreed to purchase 50% of the life of mine silver produced at the La Negra mine located in Queretaro State, Mexico. The La Negra mine, which is 80% owned by Aurcana Corporation ("Aurcana") (TSX VENTURE: AUN), is a 1,000 tonne per day polymetallic mine originally discovered, developed and operated for thirty years by Penoles S.A. de C.V. ("Penoles").
Silver Wheaton will pay Aurcana an upfront cash payment of US$25 million in order to acquire 50% of all silver produced from the La Negra 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. Payment for the transaction will be drawn from existing credit facilities. The transaction is expected to close by June 20, 2008.
As part of this agreement, Aurcana has also agreed to complete a separate life of mine silver stream agreement on its soon to be acquired Shafter Silver Mine located in Texas, USA. Terms of the future agreement are expected to be announced in the third quarter of 2008.
Penoles began operations at the La Negra mine in 1970 and processed a total of 6.7 million tonnes over a thirty year period. Average silver grades over this period were 169 grams per tonne, producing over 30 million ounces of silver along with substantive zinc, copper and lead. When Penoles placed the operation on standby in 2000, they reported mineral reserves of 1.22 million tonnes of ore with a silver grade of 161 grams per tonne, and inferred mineral resources of 2.15 million tonnes with a silver grade of 152 grams per tonne as reported by Aurcana in their news releases dated February 2 and May 21, 2008. These historic mineral reserves and resources are not National Instrument 43-101 compliant, as Penoles did not report them to NI 43-101 standards and, therefore, should not be relied on.
In early 2006, Aurcana purchased an 80% interest in the mine and initiated a drilling and development program on the Alacran and Monica zones, with a focus on testing and expanding the historical reserves and resources.
