Silverstone Resources to Be Acquired by Silver Wheaton Corp.

3/12/2009, 8:31 AM (Source: GlobeNewswire)
VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 12, 2009) -
Silverstone Resources Corp. ("Silverstone") (TSX VENTURE: SST) and
Silver Wheaton Corp. ("Silver Wheaton") (TSX: SLW)(NYSE: SLW) today
announced that they have entered into a definitive agreement 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 the 20-day volume-weighted average of Silver Wheaton's
common shares of C$8.58, the transaction value per Silverstone common
share is C$1.59, and the total transaction value is approximately
C$206 million. This represents 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 and officers along with Capstone Mining Corp.
("Capstone"), its largest shareholder (representing an aggregate of
30.5 million shares (24%) of Silverstone, fully diluted), have
entered into support agreements in respect of the transaction. Based
on a recommendation from a special committee of independent directors
of Silverstone (the "Special Committee") the unconflicted members of
Silverstone's board of directors have unanimously supported the
transaction and recommend the shareholders of Silverstone vote their
shares in favour of the offer.

Highlights of the Transaction

- Immediate premium for Silverstone shareholders

- Silverstone shareholders to have an ownership stake in the largest
silver streaming company in the world

- Exposure to Silver Wheaton's organic silver sales growth profile
with long life, low cost and high quality mines all located in
politically stable jurisdictions, including Goldcorp's world-class
Penasquito mine in Mexico which is now in production and is expected
to be Silver Wheaton's growth engine for years to come

- Significantly increased diversification by geography, counterparty
and primary metal

- Silverstone shareholders to participate in Silver Wheaton's
continued growth and potential re-rate of Silver Wheaton's valuation

- Significantly enhanced trading liquidity on both the Toronto and
New York Stock Exchange

"Silverstone welcomes this acquisition by Silver Wheaton as we
believe this transaction benefits Silverstone shareholders, allowing
them to participate in a larger, more diversified silver stream
company with access to greater amounts of capital and liquidity. As a
result of this transaction, Silverstone shareholders through the
combined Company, will benefit from Silver Wheaton's growth profile
including Goldcorp's world class Penasquito mine and unique position
as the largest silver stream company in the world," said Darren
Pylot, President and Chief Executive Officer of Silverstone.

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 310 million, on a pro forma basis.

Capstone and directors and officers of Silverstone, holding an
aggregate of 24% of the outstanding shares of Silverstone (fully
diluted, including special warrants), 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.

Advisors

Silverstone's financial advisor is Canaccord Adams and its legal
counsel is Blake, Cassels & Graydon LLP. Silver Wheaton's financial
advisor is Genuity Capital Markets and its legal counsel is Cassels
Brock & Blackwell LLP.

Fairness Opinion

The board of directors of Silverstone and the Special Committee have
received a fairness opinion from Scotia Capital Inc. 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 shares of Silverstone voted
with respect to 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.

About Silver Wheaton

Silver Wheaton is the largest public company with 100% of its
operating revenue from silver production. Silver Wheaton expects,
based upon its current agreements, to have annual silver sales of 15
to 17 million ounces in 2009, increasing to approximately 30 million
ounces in 2013, without any capital expenditures being required to
generate that growth.

Silver Wheaton has nine long term agreements to purchase silver
production from low-cost, well-managed and high-quality mining
operations, all located in politically safe jurisdictions. In 2008,
greater than 85% of silver sales were generated from its three core
assets - the Luismin, Yauliyacu and Zinkgruvan mines. Each of these
mines is a low-cost producer, has been in continuous production for
over 100 years and has survived through numerous commodity cycles.
Silver Wheaton's core asset base of silver from high quality mines
continues to grow with Goldcorp Inc.'s ("Goldcorp") Penasquito mine.
Soon to be Mexico's largest open pit mine, Penasquito commenced
production in 2008 and is expected to be Silver Wheaton's growth
engine for many years to come.

Luismin Mines

The Luismin mines consist of the San Dimas, Los Filos and San Martin
mines with the San Dimas mine, owned and operated by Goldcorp, being
the most significant of the three. San Dimas has been in continuous
operation for over 100 years and is a low cost producer of gold and
silver. The San Dimas gold-silver deposit is one of the most
significant precious metal deposits in Mexico with historical
production from the San Dimas district estimated at 655 million
ounces of silver and 9.33 million ounces of gold, affirming it as a
world class epithermal mining province. Silver sales from the Luismin
mines are forecast to be 5.7 to 6.2 million ounces in 2009 and the
potential exists to significantly increase future silver production
at the San Dimas mine as the mill has the capacity to increase
throughput by more than 50% over 2008 levels.

Yauliyacu Mine

Yauliyacu is a low-cost zinc/lead/silver mine located in Peru, owned
and operated by Glencore International, a private company and one of
the largest base metals traders in the world. The mine has been in
continuous production for more than 100 years and has the ability to
transition between high and low grade ore, giving them an enormous
competitive advantage in an environment of low base metals prices. In
2009, higher grade zinc and lead ore is expected to be processed,
which should result in an increase in silver deliveries to Silver
Wheaton. Silver sales from the Yauliyacu mine are forecast to be 2.9
to 3.5 million ounces in 2009.

Zinkgruvan Mine

The Zinkgruvan mine is owned and operated by Lundin Mining
Corporation and is located in Sweden. This zinc/lead/silver mine is
in the lowest cost quartile in its industry and has been in
continuous production for more than 150 years. Infrastructure
improvements in 2008 should increase 2009 production levels by
approximately 10% with a further increase expected in 2010 once a new
copper orebody is brought into production. Silver sales from the
Zinkgruvan mine are forecast to be 1.8 to 2.1 million ounces in 2009.

Penasquito Mine

The Penasquito mine, owned and operated by Goldcorp, is soon to be
Mexico's largest open pit polymetallic mine, and Silver Wheaton's
engine of growth. The heap leach operation began producing silver in
mid-2008 and the mill is forecast to begin production in mid-2009. In
April 2007, Silver Wheaton agreed to purchase 25% of all the silver
produced from the mine, over its entire life. Since completion of the
agreement, silver reserves have increased 82%, and attributable
silver production to Silver Wheaton's shareholders has increased 52%
or 48 million ounces of silver, with additional increases anticipated
in the near future. This does not take into account the vast
underground potential, only just beginning to be fully recognized,
and very likely to result in significant additional silver production
in the years ahead. Once at full production capacity, Silver Wheaton
is forecast to receive average annual silver deliveries of
approximately 8 million ounces from the Penasquito mine.

Other Assets

Silver Wheaton has several other high quality and long term silver
stream agreements, each offering significant upside potential. These
include European Goldfield's Stratoni Mine in Greece, Farallon
Resources Ltd.'s Campo Morado mine in Mexico, Mercator Minerals
Ltd.'s Mineral Park mine in the United States, Alexco Resource
Corp.'s Keno Hill project in Canada, and Aurcana Corporation's La
Negra mine in Mexico.

2009 and Five Year Silver Sales Forecast

Silver Wheaton estimates, based upon its current agreements, to have
annual silver sales of 15 to 17 million ounces in 2009, increasing to
approximately 30 million ounces by 2013. Mine-by-mine forecast 2009
silver sales are as follows:


----------------------------------------------------------
2009 Silver Sales Forecast
Mine ('000 ozs)
----------------------------------------------------------
Luismin(i) 5,700 - 6,200
----------------------------------------------------------
Yauliyacu 2,900 - 3,500
----------------------------------------------------------
Zinkgruvan 1,800 - 2,100
----------------------------------------------------------
Stratoni 1,600 - 1,700
----------------------------------------------------------
Penasquito - heap leach 800 - 1,000
----------------------------------------------------------
- mill 600 - 700
----------------------------------------------------------
Campo Morado, Mineral
Park, La Negra 1,600 - 1,800
----------------------------------------------------------
Total 15,000 - 17,000
----------------------------------------------------------
(i) includes the San Dimas, Los Filos and San Martin mines


As several mines continue to ramp up production throughout 2009,
silver sales are anticipated to be more heavily weighted towards the
second half of the year. Silver sales are forecast to be
approximately 3 million ounces in the first quarter of 2009.

About Silverstone

Silverstone's core assets consist of agreements to purchase silver
and gold from Capstone's Minto mine in Canada and silver from its
Cozamin mine in Mexico, as well silver from 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.

Conference Call

Silverstone will host a conference call on Thursday March 12, 2009 at
9:00am PST (12:00pm EST) to discuss this transaction. The conference
call may be accessed by dialing 1.866.365.1119 in North America or
1.416.849.7329 internationally. Please ask for the Silverstone
Resources Corp. conference call. The conference call will be archived
for later playback until March 19, 2009 and can be accessed by
dialing 1.866.501.5559 and the passcode is 21301063#.

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.

Contacts:
Silverstone Resources Corp.
Chris Tomanik
Investor Relations
1-866-684-8894
Email: ctomanik@silverstonecorp.com

Silverstone Resources Corp.
Mark Patchett
Investor Relations
1-866-684-8894
Email: mpatchett@silverstonecorp.com
Website: www.silverstonecorp.com.com


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