Silver
Wheaton Signs Binding Letter Agreement To Acquire Future Silver Production
From Augusta Resource's Rosemont Project
Vancouver, British Columbia - Silver Wheaton Corp. ("Silver
Wheaton") is pleased to announce that it has signed a binding letter agreement
to purchase between 45% and 90% of the life-of-mine silver to be produced by
the Rosemont Copper Project ("Rosemont"), a 100%-owned property of
Augusta Resource Corporation ("Augusta") (AMEX,TSX: AZC). Augusta
must elect the percentage of life-of-mine silver subject to the transaction,
which will be between a minimum of 45% and a maximum of 90%, on or before
March 31, 2008.
Subject to the finalization of the structure of the
transaction, including tax considerations, Silver Wheaton will pay an upfront
cash payment ranging in value from US$135 million to US$165 million to
acquire 45% of the payable silver, or US$240 million to US$320 million to
acquire 90% of the payable silver, produced for the life-of-mine.
The upfront
payment will be made on a drawdown basis to fund construction of the mine as
construction milestones are achieved. Silver Wheaton will not be
required to pay any further ongoing per ounce payments for silver delivered
from Rosemont and is not required to fund or contribute to ongoing capital
expenditures. Augusta will provide a completion guarantee with certain
minimum production criteria by a certain date.
The
transaction is subject to (a) Augusta receiving all necessary permits to
construct and operate a mine in accordance with their August 2007 Rosemont
Feasibility Study (the "Feasibility Study"), (b) Augusta having
entered into committed arrangements for sufficient financing to construct and
operate the mine, and (c) execution by the parties of definitive agreements
on or before June 30, 2008 as well as receipt of any required regulatory
approvals and third-party consents.
The Rosemont
Project is a copper-molybdenum-silver-gold porphyry deposit located in Pima
County, Arizona. Based on a positive Feasibility Study released in August
2007, Augusta approved the project for development as a 75,000 tpd low cost
open pit mine with a sulfide concentrator and SX/EW plant to treat sulfide
and oxide mineral reserves. The proposed Rosemont mine is expected to
produce annually an average of 220 million pounds of copper, 4.5 million
pounds of molybdenum, 2.7 million ounces of silver and 15 thousand ounces of
gold over the mine life, currently expected to be a minimum of 18
years.
Current
proven and probable reserves at Rosemont contain 61.6 million ounces of
silver, measured and indicated resources contain a further 4.9 million ounces
and inferred resources contain 9.3 million ounces (see the reserve and
resource table below). The silver purchase contract will also encompass
all of the prospective exploration targets near the Rosemont Project
including the Narrangansett Zone which has been the focus of recent successful
exploration by Augusta as reported in their October 23rd and
December 5th , 2007 news releases.
"We are
very pleased to have entered into this transaction with Augusta, which
provides long-term growth potential for Silver Wheaton, without project permitting
or financing risk", said Peter Barnes, President and Chief Executive
Officer of Silver Wheaton. "This adds to our unrivalled growth
prospects over the next few years, with a proven model which gives Silver
Wheaton maximum upside to the silver price, and also eliminates the major
operating risk in the industry today, being increasing operating and capital
costs."
The tax
structuring and decision on the percentage of silver to be sold is expected
to be finalized by March 31, 2008, and the transaction is expected to close
in the second quarter of 2008.
The silver
reserves and resources at Rosemont are as follows:
Rosemont Project
Sulfide Reserves and Resources (1,2,3,4,5)
|
Category
|
Tonnage
(million tons)
|
Silver Grade
(ounces per ton)
|
Contained Silver
(million ounces)
|
|
|
|
|
|
|
Reserves
(Sulfide Only)
|
Proven
|
126.1
|
0.14
|
17.7
|
|
Probable
|
366.6
|
0.12
|
44.0
|
|
Proven + Probable
|
492.7
|
0.12
|
61.6
|
|
|
|
|
|
|
Resources
(Sulfide Only)
|
Measured
|
120.4
|
0.15
|
17.5
|
|
Indicated
|
422.7
|
0.12
|
49.0
|
|
Measured + Indicated
|
543.1
|
0.12
|
66.5
|
|
Inferred
|
163.0
|
0.06
|
9.3
|
|
Notes:
1.
Mineral Reserves and Mineral Resources for the Rosemont Project
have been calculated as of August 28, 2007 in accordance with the standards
of the Canadian Institute of Mining, Metallurgy and Petroleum and National
Instrument 43-101.
2.
Measured and Indicated Mineral Resources are inclusive of
Mineral Reserves.
3.
Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability.
4.
The Qualified Person for the Mineral Reserve and Mineral
Resource estimate at the Rosemont Project as defined by National Instrument
43-101 is Dr. Conrad Huss, P.E., of M3 Engineering & Technology
Corporation of Tucson, Arizona.
5.
Sulfide Mineral Reserves and Mineral Resources are estimated
using appropriate recovery rates and a NSR cutoff greater than or equal to
$3.29/ton.
Conference
Call
A conference
call will be held Thursday, December 20, 2007 at 11:00 am (Eastern Time) to
discuss this transaction. To participate in the live call use one of
the following methods:
Dial toll
free from Canada or the US
1-866-300-4047
Dial from outside Canada or the
US 1-416-641-6117
Live
webcast www.silverwheaton.com
Participants
should dial in five to ten minutes before the call.
The
conference call will be recorded and you can listen to an archive of the call
by one of the following methods:
Dial toll
free from Canada or the US
1-800-408-3053
Dial from outside Canada or the
US 1-416-695-5800
Pass code 3246937
Archived
webcast www.silverwheaton.com
Mr. Randy
Smallwood, P.Eng., Executive Vice President of 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
is the largest public mining company with 100% of its operating revenue from
silver production. Silver Wheaton's 2008 silver sales are expected to
approximate 15 million ounces, increasing to 25 million ounces in 2010.
Silver Wheaton is unhedged and well positioned for further growth.
Cautionary
Note Regarding Forward Looking Statements
This news release contains "forward-looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and applicable Canadian securities legislation.
Forward-looking statements include, but are not limited to, statements
with respect to the expected future silver sales by Silver Wheaton and
Augusta and the amount of estimated future production from Silver Wheaton's
current and expected silver streams, including the Rosemont Project. Generally,
these forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects" or
"does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not
anticipate", "will be" or "believes", or variations
of such words and phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will be
taken", "occur" or "be achieved". Forward-looking
statements are subject to known and unknown risks, uncertainties and other
factors that may cause the actual results, level of activity, performance or
achievements of Silver Wheaton or Augusta to be materially different from those
expressed or implied by such forward-looking statements, including but not
limited to: permitting, financing and/or construction risks associated with
the Rosemont Project, cost overruns, unforeseen litigation and/or regulatory
matters adversely affecting the Rosemont Project, the absence of control over
the Rosemont Project and other mining operations from which Silver Wheaton
purchases silver and risks related to these mining operations, including
risks related to international operations, actual results of current
exploration activities, actual results of current reclamation activities,
conclusions of economic evaluations, changes in project parameters as plans
continue to be refined, as well as those factors discussed in the section
entitled "Description of the Business - Risk Factors" in Silver
Wheaton's annual information form for the year ended December 31, 2006
incorporated by reference into Silver Wheaton's Form 40-F on file with the
U.S. Securities and Exchange Commission in Washington, D.C. Although
Silver Wheaton has attempted to identify important factors that could cause
actual results to differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements. Silver Wheaton does not undertake to update any
forward-looking statements that are incorporated by reference herein, except
in accordance with applicable securities laws.
CAUTIONARY
NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED AND INDICATED
RESOURCES
This news
release uses the terms "Measured", "Indicated" and
"Inferred" Resources. U.S. investors are advised that while
such terms are recognized and required by Canadian regulations, the
Securities and Exchange Commission does not recognize them. U.S.
investors are cautioned not to assume that all or any part of Measured,
Indicated or Inferred Resources will ever be converted into reserves.
For further
information, please contact:
David Awram
Director, Investor Relations
Silver Wheaton Corp.
Tel: 1-800-380-8687
Email: info@silverwheaton.com
Website: www.silverwheaton.com
|