FOR IMMEDIATE
RELEASE
TSX: SLW March 12,
2009
NYSE: SLW
Silver Wheaton TO
ACQUIRE SILVERSTONE RESOURCES CORP., SOLIDIFYING ITS POSITION AS THE
LARGEST SILVER Streaming COMPANY
Vancouver,
British Columbia - Silver Wheaton Corp. ("Silver Wheaton")
(TSX, NYSE: SLW) today announced that they have entered into a definitive
agreement with Silverstone Resources Corp. ("Silverstone")
(TSX-V: SST) pursuant to which Silver Wheaton will acquire by way of a plan
of arrangement all of the outstanding common shares of Silverstone in
exchange for 0.185 common shares of Silver Wheaton for each common share
of Silverstone.
Based
on today's closing price of Silver Wheaton's common shares of C$7.94, the
transaction value per Silverstone common share is C$1.47, and the total
transaction value is approximately C$190 million on a fully diluted
basis. This represents a premium of 18% on today's closing prices and a
premium of 40% based on the 20-day volume-weighted average of both
companies' common shares on the TSX for Silver Wheaton and the TSX
Venture for Silverstone. Silverstone's board of directors, along
with Capstone Mining Corp. ("Capstone"), its largest
shareholder (representing an aggregate of 30.5 million shares (24%) of
Silverstone), have entered into support agreements in respect of the
transaction. Silverstone's board of directors has unanimously supported
the transaction and recommends the shareholders of Silverstone vote their
shares in favour of the offer.
Highlights of the Transaction
�
Accretive for Silver Wheaton
shareholders on all key metrics
�
Consolidates the silver streaming
industry, solidifying Silver Wheaton's status as the largest silver
streaming company in the world
�
Enhances Silver Wheaton's immediate
production and cash flow profile by adding 2009 annualized production of
approximately 2.3 million ounces of silver and 31,000 ounces of gold
(approximately 4.5 million silver equivalent ounces)
�
Further diversifies our portfolio of
silver stream agreements by counterparty, geography and primary
commodity, by adding three silver streams from low-cost copper
mines in politically stable regions
�
Adds future growth potential
"This
acquisition successfully consolidates the silver streaming industry and
adds current production from low-cost, high-quality mines in politically
stable jurisdictions," said Peter Barnes, President and Chief
Executive Officer of Silver Wheaton. "Silverstone's core
assets, the Minto, Cozamin and Neves-Corvo mines, have proven to be
operationally strong and offer Silver Wheaton an immediate and
significant increase in silver sales and cash flows, with good future
upside potential. The acquisition will further strengthen our already
solid balance sheet and provides an added level of flexibility in
pursuing future accretive silver stream opportunities. Additionally,
the acquisition establishes a relationship with another strong base
metals operator focused on growth, Capstone Mining. Capstone has a
first rate management team, evidenced by their strong operating record
and the creation of shareholder value at both the Minto and Cozamin
mines, and we look forward to developing this partnership further."
About
Silverstone
Silverstone's
core assets consist of silver stream agreements with Capstone's Minto
mine in Canada and its Cozamin mine in Mexico, as well as Lundin Mining
Corporation's ("Lundin Mining") Neves-Corvo mine in Portugal.
Minto Mine
Capstone
owns the high grade Minto copper-gold-silver mine in Yukon, Canada, which
was built on budget and ahead of schedule in 2007. The Minto mine is one
of the highest-grade open pit copper mines in the world, and is a low
cost producer. Since commencing production in 2007, the Minto mine has
undergone two successful expansions, more than doubling production
levels. With a significant growth in resources since 2007, Capstone
plans to complete a pre-feasibility study by the end of 2009 targeting an
additional mill expansion of approximately 50%. The Minto mine
is forecast to produce approximately 290,000 ounces of silver and 31,000
ounces of gold in 2009.
Silverstone
has the right to purchase all of the silver and gold production from the
Minto mine for the lesser of US$3.90 per ounce of silver and US$300 per
ounce of gold (subject to an annual 1% inflationary adjustment after 3
years) or the prevailing market price per ounce of silver or gold
delivered. If production from the Minto mine exceeds 50,000 ounces of
gold per year in the first two years of the agreement, or 30,000 ounces
of gold per year thereafter, Silverstone is entitled to purchase only 50%
of the amount in excess of those thresholds.
Cozamin
Mine
Capstone
owns the high grade, low-cost, underground Cozamin
copper-silver-lead-zinc mine located in Zacatecas State, Mexico. The
mine has undergone two expansions since its commissioning in 2006, tripling
production levels. Exploration success has led to significant
resource increases over the last few years and excellent potential exists
to continue this expansion. Cozamin is forecast to produce
approximately 1.5 million ounces of silver in 2009.
Silverstone
has the right to purchase 100% of the silver production from the Cozamin
mine until 2017 for the lesser of US$4.00 per ounce of silver (subject to
an annual 1% inflationary adjustment after 3 years) or the prevailing
market price per ounce of silver delivered.
Neves-Corvo
Mine
Lundin
Mining owns the high grade underground Neves-Corvo copper-zinc-silver
mine located in Portugal, which has been in continuous production since
1989. The copper mill has a throughput capacity of 2.2 million
tonnes per annum and Lundin Mining has recently converted the smaller
zinc circuit to handle additional copper ores. Neves-Corvo is
forecast to produce approximately 500,000 ounces of silver in 2009.
Silverstone
has the right to purchase 100% of the life of mine silver production from
the Neves Corvo mine for the lesser of US$3.90 per ounce of silver
(subject to an annual 1% inflationary adjustment after 3 years) or the
prevailing market price per ounce of silver delivered.
Other
Assets
Silverstone
also owns other assets which offer long-term growth potential.
Adjacent to the Neves-Corvo copper deposits is the world-class
Lombador zinc-lead-silver deposit, which Lundin Mining is currently
advancing to a feasibility study, with a goal of commencing production in
2012. This would lead to increased silver production from the
Neves-Corvo mine. Also located in Portugal, Silverstone has a silver
stream agreement with MTO Holdings' zinc-lead-silver Aljustrel mine,
which is currently under care and maintenance until base metal prices
improve.
Silverstone
holds a convertible debenture with Aquiline Resources, convertible into
an agreement to purchase 12.5% of the life of mine silver production from
a portion of the Navidad project in Argentina. In addition,
Silverstone holds a right of first refusal to purchase any silver or gold
streams from Capstone's high-grade Kutcho copper-zinc project in Canada,
which is advancing towards production.
Transaction
The transaction will be carried out by way of statutory plan of
arrangement whereby Silver Wheaton will acquire all of the
issued and outstanding shares
of Silverstone, and Silverstone will become a
wholly-owned subsidiary of Silver Wheaton. Full details
of the offer will be included in the Management Information
Circular to be filed with the regulatory authorities and mailed
to Silverstone shareholders in accordance with applicable
securities laws.
Under
the transaction, Silver Wheaton will acquire all of the issued
and outstanding shares of Silverstone in consideration for the
issue of Silver Wheaton shares on the basis
of 0.185 of a Silver Wheaton share
for each Silverstone share. The number of
Silver Wheaton shares received upon exercise, and the exercise price, of
Silverstone's outstanding options and warrants, will be adjusted
proportionately to reflect the share exchange ratio. On a pro forma fully diluted basis Silver
Wheaton will be held by approximately 93% of existing Silver Wheaton
shareholders and 7% by existing Silverstone shareholders. The total
number of Silver Wheaton common shares outstanding will be approximately
311 million, on a pro forma basis.
Capstone,
along with the directors and officers of Silverstone, hold an aggregate
of 24% of the outstanding shares (fully diluted) of Silverstone and have
agreed to support and vote in favour of the transaction.
The definitive agreement entered into in connection with the
transaction includes a commitment by Silverstone not to solicit
alternative transactions to the proposed transaction. If the acquisition agreement is terminated in
certain circumstances, Silverstone has agreed to pay Silver Wheaton a
termination fee of C$6� million. Each party has also been provided
with certain other rights, representations and warranties and covenants
customary for a transaction of this nature and Silver Wheaton has the
right to match competing offers made to Silverstone.
The board of directors of
Silverstone have received a fairness opinion from Scotia Capital Markets
in respect of the transaction and are recommending Silverstone
shareholders vote in favour of the transaction. Silverstone expects
to mail the Management Information Circular in April 2009. The
transaction is subject to the approval of not less
than 66 2/3% of the outstanding shares of Silverstone being
voted in favour of the transaction at a meeting of Silverstone
shareholders and certain customary conditions, including receipt of
all necessary court and regulatory approvals and third party
consents. The transaction is expected to close by the end of
May 2009.
Silver
Wheaton's financial advisor is Genuity Capital Markets and
its legal counsel is Cassels Brock & Blackwell
LLP. Silverstone's financial advisors are Canaccord
Adams and its legal counsel is Blake Cassels & Graydon LLP.
Conference Call
A
conference call along with an interactive presentation will be held
Thursday, March 12, 2009 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:
1-866-226-1792
Dial from
outside Canada or the
US:
1-416-340-2216
Dial toll free
from parts of
Europe:
800-9559-6849
Live
audio webcast:
www.silverwheaton.com
Participants
should dial in five to ten minutes before the call. A copy of the
presentation can be found on Silver Wheaton's homepage at www.silverwheaton.com or accessed via the live
webcast.
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:
2160343#
Archived
audio webcast:
www.silverwheaton.com
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 future price of silver,
the estimation of mineral reserves and resources, the realization of
mineral reserve estimates, the timing and amount of estimated future
production, costs of production, reserve determination and reserve
conversion rates. 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", 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". Assumptions upon which
such forward looking statements are based include that Silver Wheaton and
Silverstone will be able to satisfy the conditions in the definitive
agreement, that the due diligence investigations of each party will not
identify any materially adverse facts or circumstances, that the required
approvals will be obtained from the shareholders of each of Silver Wheaton
and Silverstone, that all third party regulatory and governmental
approvals to the transactions will be obtained and all other conditions
to completion of the transaction will be satisfied or waived. Many
of these assumptions are based on factors and events that are not within
the control of Silver Wheaton and Silverstone and there is no assurance
they will prove to be correct. 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 and Silverstone to be materially different
from those expressed or implied by such forward-looking statements,
including but not limited to: risks related to the integration of acquisitions,
the absence of control over mining operations from which Silver Wheaton
and Silverstone purchase silver and gold 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, 2007 incorporated by reference into
Silver Wheaton's Form 40-F on file with the U.S. Securities and Exchange
Commission in Washington, D.C. and although Silver Wheaton and
Silverstone have 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 and
Silverstone do not undertake to update any forward-looking statements
that are incorporated by reference herein, except in accordance with
applicable securities laws.
For further
information, please contact:
Brad
Kopp
Director,
Investor Relations
Silver Wheaton
Corp.
Tel: 1-800-380-8687
Email: info@silverwheaton.com
Website: www.silverwheaton.com
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