Silver Wheaton Acquires 25% of Life of Mine Silver Production From Barrick’s Pascua-Lama Project

By Prne, Gaea News Network
Monday, September 7, 2009

VANCOUVER, Canada -

- Also Acquires Current Silver Production From Three Additional Barrick Mines, Providing Immediate Cash Flow

Silver Wheaton Corp. (”Silver Wheaton” or the “Company”) (TSX, NYSE:SLW) is pleased to announce that it has agreed to acquire from Barrick Gold Corporation (”Barrick”) 25% of the life of mine silver production from its Pascua-Lama project, as well as 100% of the silver production from its Lagunas Norte, Pierina and Veladero mines until the end of 2013. Silver Wheaton will pay Barrick total cash consideration of US$625 million over three years, as well as ongoing payments of the lesser of US$3.90 (subject to an annual inflation adjustment) and the prevailing market price, for each ounce of silver delivered under the agreement.

Transaction Highlights - Provides Immediate Cash Flow - Silver Wheaton will receive 100% of the silver production from three of Barrick’s currently producing mines, effective September 1, 2009, until the end of 2013; - This immediately enhances Silver Wheaton’s production and cash flow profile, by adding average annualized silver production of approximately 2.4 million ounces until Pascua-Lama commences production. - Significantly Increases Long Term Growth Profile - Silver Wheaton will receive 25% of the life of mine silver production from Barrick’s Pascua-Lama project, expected to be one of the largest and lowest cost gold mines in the world; - Pascua-Lama is a key Barrick growth asset and is the third largest silver deposit in the world, with an estimated mine life of over 25 years; - Silver Wheaton’s 25% share of the estimated average annual silver production for the first five years (2013 to 2017) is 9 million ounces, boosting overall silver sales by 30% to approximately 40 million ounces per annum; - Barrick has provided a completion guarantee, requiring them to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015. If Barrick does not meet completion by December 31, 2013, Silver Wheaton will continue to receive silver production in 2014 and 2015 from the currently producing mines, until Barrick satisfies the requirements of the completion guarantee.

“This is a transformational acquisition that propels Silver Wheaton to the next level in terms of size and growth profile,” said Peter Barnes, President and Chief Executive Officer of Silver Wheaton. “We are extremely excited to be partnering with Barrick, the world’s largest gold mining company, on what is expected to be one of the biggest and lowest cost gold mines in the world. Coupled with our interest in Goldcorp’s world-class Penasquito mine in Mexico, which is currently ramping up production on schedule, Silver Wheaton now has a significant stake in three of the top five silver deposits in the world, of which Penasquito and Pascua-Lama are cornerstone growth assets not just for Silver Wheaton, but also for our operating partners.”

“This acquisition confirms Silver Wheaton as the largest of all royalty and metals streaming companies in the world, with an unparalleled growth profile. It is very accretive on all key metrics, increasing attributable silver reserves by 43% and cash flow by 35%, once Pascua-Lama is in production. The acquisition is structured so that Silver Wheaton receives immediate cash flow, even prior to Pascua-Lama being in production, maintaining our strong balance sheet and preserving our ability to continue growing the Company in an accretive manner for shareholders.”

“We are very proud that, since we created this business model just five years ago, we have demonstrated an unrivalled record of high quality acquisitions, and now have a significant stake in nine of the top 35 silver deposits in the world.”

Transaction Terms

To acquire 25% of the life of mine silver production from Barrick’s Pascua-Lama project, as well as 100% of the silver production from its Lagunas Norte, Pierina and Veladero mines until the end of 2013, Silver Wheaton will make total upfront cash payments of US$625 million over three years, of which US$212.5 million is payable on closing and three further payments of US$137.5 million are due on the first, second and third anniversaries. Silver Wheaton will also make ongoing payments of the lesser of US$3.90 (subject to a one percent annual adjustment starting in the fourth year after the achievement of specific operating targets) and the prevailing market price, for each ounce of silver delivered under the agreement. Silver Wheaton will not share in any ongoing capital or exploration expenditures at the various mines.

Barrick has provided Silver Wheaton with a completion guarantee, requiring them to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015. During 2014 and 2015, Silver Wheaton will be entitled to the silver production from the currently producing mines to the extent of any production shortfall at Pascua-Lama, until Barrick satisfies the completion guarantee. If Barrick fails to satisfy the requirements of the completion guarantee, the agreement may be terminated by Silver Wheaton. In such an event, Silver Wheaton would be entitled to the return of the upfront cash consideration of US$625 million less a credit for silver delivered up to the date of that event.

Barrick has granted Silver Wheaton a five year right of first refusal on any further metal stream sales in connection with Pascua-Lama, where more than 50% of the value is from silver.

The transaction is expected to close September 22, 2009. Silver Wheaton’s financial advisor is Genuity Capital Markets and its legal counsel is Cassels Brock & Blackwell LLP.

Financing the acquisition

To pay the initial upfront cash payment of US$212.5 million, Silver Wheaton intends to use cash on hand (US$70 million) and for the balance may use amounts borrowed under its revolving credit facility or the proceeds of offerings of securities issued in the public and/or private equity capital markets. Remaining upfront cash payments of US$137.5 million per annum, for the next three years, are expected to be financed by operating cash flows with no debt drawdown anticipated.

About Pascua-Lama

Pascua-Lama straddles the border of Chile and Argentina and is one of the largest silver deposits in the world. It hosts 718 million ounces of silver in proven and probable reserves, with additional measured and indicated silver resources of 88 million ounces. As reported in a Barrick press release dated May 7, 2009, expected average annual silver production in the first full five years is approximately 35 million ounces. Anticipated total cash costs over this period are US$20-$50 per ounce of gold which would make Pascua-Lama one of the lowest cost gold mines in the world. Pascua-Lama is a long-life asset with an expected mine life in excess of 25 years. Key construction permits and environmental approvals have been received and construction is underway. Commissioning of the mine is expected in late 2012 with production commencing in early 2013.

A Transformational Year - 2009 Year-to-Date Highlights

- Acquired Silverstone Resources Corp., solidifying our position as

the largest silver streaming company in the world.

- Acquired 100% of the silver production from Barrick’s

currently producing Lagunas Norte, Pierina and Veladero mines until the

end of 2013, providing immediate cash flow, and 25% of the life of mine

silver production from Barrick’s Pascua-Lama project, adding

significant long term growth and another cornerstone asset to Silver

Wheaton’s silver stream portfolio.

- The Penasquito mine, soon to be one of the world’s largest open

pitmines and another one of Silver Wheaton’s cornerstone assets,

is currently ramping up production on schedule. Silver Wheaton

receives 25% of the life of mine silver production from Penasquito,

which is expected to be the Company’s main driver of growth for the

next several years.

- As a result of the Barrick and Silverstone acquisitions this year: -

2010-2012 average annual silver equivalent sales are forecast to

increase by 26%, from approximately 25 to 31 million ounces, while

2013-2017 average annual silver equivalent sales are forecast to

increase by 50%, from approximately 26 to 40 million ounces;

- Attributable silver reserves have doubled while attributable measured

and indicated silver resources have increased by greater than 50%.

- Silver Wheaton is the largest and fastest growing of all of the

royalty and metals streaming companies in the world:

- Unparalleled growth profile versus its peers with greater than250% five

year sales growth forecast from 2008 levels;

- Significant stake in three of the top five silver deposits in the world

and in nine of the top 35.

- Significant debt reduction resulting in a very strong

Financial position:

- Long term debt has been reduced by approximately US$235 million and

the Company continues to have access to a US$400 million undrawn

revolving credit facility.

- Well positioned to pursue additional accretive acquisitions.

Conference Call

A conference call will be held on Tuesday, September 8, 2009, starting at 12:00 pm (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: +1-888-231-8191 Dial from outside Canada or the US: +1-647-427-7450 Pass code: 29363920

Live audio 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: +1-800-642-1687 Dial from outside Canada or the US: +1-706-645-9291 Pass code: 29363920

Archived audio webcast:www.silverwheaton.com

About Silver Wheaton

Silver Wheaton is the largest silver streaming company in the world. Including the Barrick transaction, forecast 2009 sales are 16 to 18 million ounces of silver and 17,000 ounces of gold, for total sales of 17 to 19 million silver equivalent ounces, growing to approximately 39 million ounces of silver and 20,000 ounces of gold, for total sales of approximately 40 million silver equivalent ounces, by 2013.

Silver Wheaton’s updated attributable silver reserves and resources can be found at: files.newswire.ca/819/AttributabletoSLW.pdf

Mr. Randy V.J. Smallwood, P.Eng., Silver Wheaton’s Executive Vice President of Corporate Development, who is a “qualified person” as such term is defined under National Instrument 43-101, has reviewed and approved the information on mineral reserves and mineral resources disclosed in this news release.

Cautionary Note Regarding Forward Looking-Statements

The information contained herein 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 statements 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 to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: fluctuations in the price of silver, the absence of control over mining operations from which Silver Wheaton purchases silver and risks related to these mining operations, including risks related to fluctuations in the price of the primary commodities mined at such operations, changes in laws and regulations including taxation policies, actual results of mining and exploration activities, changes in project parameters as plans continue to be refined, timing of funding the upfront cash payments, both the initial payment and the following three annual payments payable to Barrick in connection with the silver purchase agreement, and completion of construction of the Pascua-Lama project, as well as those factors discussed in the section entitled “Description of the Business - Risk Factors” in Silver Wheaton’s Annual Information Form available on SEDAR at www.sedar.com and in Silver Wheaton’s Form 40-F on file with the U.S. Securities and Exchange Commission in Washington, D.C.. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to the continued operation of the mining operations from which Silver Wheaton purchases silver, no material adverse change in the market price of commodities, that the mining operations will operate in accordance with their public statements and achieve their stated production outcomes, and such other assumptions and factors as set out herein. 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 Language Regarding Reserves and Resources

Readers should refer to the Annual Information Form of Silver Wheaton for the year ended December 31, 2008 and other continuous disclosure documents filed by Silver Wheaton since January 1, 2009 available on SEDAR at www.sedar.com, for further information on Mineral Reserves and Mineral Resources, which is subject to the qualifications and notes set forth therein as well as for additional information relating to Silver Wheaton more generally. Mineral Resources which are not Mineral Reserves, do not have demonstrated economic viability.

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources: The information contained herein uses the terms “Measured”, “Indicated” and “Inferred” Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them and expressly prohibits U.S. registered companies from including such terms in their filings with the SEC. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. United States investors are urged to consider closely the disclosure in Silver Wheaton’s Form 40-F, a copy of which may be obtained from Silver Wheaton or from www.sec.gov/edgar.shtml.

For further information: Brad Kopp, Director, Investor Relations, Silver Wheaton Corp., Tel: +1-800-380-8687, Email: info@silverwheaton.com; Website: www.silverwheaton.com

Source: Silver Wheaton Corp.

For further information: Brad Kopp, Director, Investor Relations, Silver Wheaton Corp., Tel: +1-800-380-8687, Email: info at silverwheaton.com

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