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NEWS: Silver Wheaton provides details of annual and special meeting of shareholders and files Form 40-F

Mar 31, 2015

Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX:SLW) (NYSE:SLW) announces that its Form 40-F report has been filed with the Securities and Exchange Commission and is available on EDGAR. The Company’s 2014 audited financial statements, along with its Form 40-F, are also available on the Company’s website at www.silverwheaton.com.

Shareholders may also receive a copy of Silver Wheaton’s audited financial statements, without charge, upon request to Silver Wheaton’s Investor Relations Department, Suite 3150, 666 Burrard St., Vancouver, British Columbia, Canada V6C 2X8 or to info@silverwheaton.com.

Annual and Special Meeting of Shareholders

Silver Wheaton will hold its Annual and Special Meeting of Shareholders in the Mackenzie Ballroom of the Fairmont Waterfront Hotel, 900 Canada Place Way, Vancouver, British Columbia, Canada, on Thursday May 21, 2015, at 1:00 p.m. Pacific Time.

A live audio webcast of the Annual Meeting of Shareholders will be available at www.silverwheaton.com and will also be archived for later access.

Full release

NEWS: Silver Wheaton Acquires Additional Gold Stream From Vale’s Salobo Mine

Mar 2, 2015

Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX:SLW) (NYSE:SLW) is pleased to announce that its wholly-owned subsidiary, Silver Wheaton (Caymans) Ltd. (“Silver Wheaton Caymans”), has agreed to acquire from a subsidiary of Vale S.A. (“Vale”) (NYSE:VALE) an amount of gold equal to 25% of the life of mine gold production from its Salobo mine, located in Brazil. This acquisition is in addition to the 25% of the Salobo gold production that Silver Wheaton acquired in 2013. The Company will pay Vale cash consideration of US$900 million for the increased gold stream. In addition, Silver Wheaton will make ongoing payments of the lesser of US$400 (subject to a 1% annual inflation adjustment commencing in 2017) and the prevailing market price for each ounce of gold delivered under the agreement. The original gold purchase agreement, dated February 28, 2013, has been amended to provide for the additional 25% stream.

TRANSACTION HIGHLIGHTS

  • Provides immediate production and cash flow
    • Silver Wheaton will receive an additional 25% of the gold production from Vale’s Salobo mine, entitling the Company to a total of 50% of the life-of-mine gold production from the mine.
    • This immediately increases Silver Wheaton’s production and cash flow profile by adding expected average gold production of 70,000 ounces per year for the first 10 years and 60,000 ounces per year over the first 30 years (5.0 million and 4.3 million silver equivalent ounces1, respectively).
    • Significant expansion and exploration potential exists at Salobo, which currently has an extensive reserve base and good depth potential.
    • Subsequent to the closing of this acquisition, Silver Wheaton’s estimated Proven and Probable gold reserves increase by 3.3 million ounces, Measured and Indicated gold resources increase by 0.8 million ounces, and Inferred gold resources increase by 0.4 million ounces.
    • Over the next five years, gold as a percentage of Silver Wheaton’s forecasted production is estimated to grow to over 40%.

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1 Silver equivalent production forecast assumes a gold/silver ratio of 72:1

  • Increases Silver Wheaton’s growth profile
    • Silver Wheaton is also pleased to announce its updated production guidance, which includes the additional stream from Salobo. In 2015, Silver Wheaton forecasts 43.5 million ounces of silver equivalent production1 (including 230,000 ounces of gold) growing to 51 million ounces of silver equivalent production1 (including 325,000 ounces of gold) in 2019.

 

“The Salobo mine is one of Silver Wheaton’s cornerstone assets and we are fortunate to have the opportunity to double our gold production from this high-quality mine,” said Randy Smallwood , Silver Wheaton’s President and Chief Executive Officer. “Since we founded our company ten years ago, we have had a clear vision of the characteristics of our ideal asset. To start, the asset is managed by a strong operating partner and is located in a low political-risk jurisdiction. Furthermore, it is primarily a base metal producer where precious metals represent only a relatively small portion of the mine’s overall economics. Vale’s Salobo mine possesses all of these characteristics, while also offering over 40 years of defined mine life as well as the potential for significant exploration and expansion upside. Salobo is certainly one of the best assets we have ever seen and one that readily lends itself to streaming.”

“With over 70% of global silver production sourced as by-product, we continue to believe that the silver market represents the largest market for streaming opportunities. However, Silver Wheaton has never been averse to strategically layering additional gold into the streaming mix when the right opportunity presents itself.”

TRANSACTION TERMS

Silver Wheaton Caymans has agreed to acquire from a subsidiary of Vale an additional 25% of the life of mine gold production from Vale’s Salobo mine. Production will accrue retroactively to Silver Wheaton Caymans as of January 1, 2015.

Silver Wheaton Caymans will pay Vale cash consideration of US$900 million for the increased gold stream. In addition, Silver Wheaton Caymans will make ongoing payments of the lesser of US$400 (subject to a 1% annual inflation adjustment commencing in 2017 for the Salobo stream) and the prevailing market price, for each ounce of gold delivered under the agreement. The terms of the existing gold stream on Salobo were modified so that the annual inflation adjustment that was scheduled to start in 2016 will now start coincident with this stream in 2017.

Vale is in the process of ramping up mill throughput at the Salobo mine to 24 million tonnes per annum (“Mtpa”). If throughput capacity is expanded within a predetermined period, Silver Wheaton Caymans will be required to make an additional payment to Vale, relative to the 50% stream, based on a set fee schedule that now ranges from US$88 million if throughput is expanded beyond 28 Mtpa by January 1, 2036, up to US$720 million if throughput is expanded beyond 40 Mtpa by January 1, 2018.

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1 Silver equivalent production forecast assumes a gold/silver ratio of 72:1

 

FINANCING THE ACQUISITION

To pay the initial upfront cash payment of US$900 million, Silver Wheaton intends to use cash on hand together with the net proceeds of an equity offering announced concurrently as of today’s date (the “Offering”). Silver Wheaton may also use amounts borrowed under its existing revolving credit facility.

ABOUT THE SALOBO MINE

According to Vale’s public filings, the Salobo mine, located in the Pará state of Brazil, is the largest copper deposit in Brazil. This low-cost copper-gold mine was commissioned in November 2012 with a design throughput capacity of 12 Mtpa and subsequently expanded to 24 Mtpa of mill capacity in mid-2014. The mine is well-positioned relative to infrastructure and is connected to the national power grid.

The Salobo mine has total estimated Mineral Reserves of 1.179 billion tonnes grading 0.35 g/t gold1, and, along with additional Mineral Resources, also has substantial exploration and expansion potential. The acquisition of an additional 25% life of mine gold stream adds an estimated 3.3 million ounces of Proven and Probable Mineral Reserves, 0.8 million ounces of Measured and Indicated Mineral Resources, and 0.4 million ounces of Inferred Mineral Resources attributable to Silver Wheaton. Total estimated attributable Mineral Reserves and Mineral Resources for the now 50% life of mine gold stream are detailed in the table below.

SILVER WHEATON ANNOUNCES NEW PRODUCTION GUIDANCE

Silver Wheaton is pleased to provide its updated one and five-year production guidance, which incorporates the additional 25% life of mine gold stream on the Salobo mine. In 2015, Silver Wheaton’s estimated attributable silver equivalent production is forecast to be 43.5 million silver equivalent ounces2, including 230,000 ounces of gold. In 2019, estimated annual attributable production is anticipated to increase over 40% compared to 2014 levels, growing to approximately 51 million silver equivalent ounces2, including 325,000 ounces of gold.

The additional ounces from Salobo to our production profile as well as the ramp-up of Hudbay Minerals Inc.’s (“Hudbay”) Constancia mine in 2015 more than offset the anticipated reduction in attributable production from other assets in Silver Wheaton’s current streaming portfolio. Hudbay’s Constancia mine is expected to meet the completion test well before 2016, resulting in gold production from the 777 mine attributable to Silver Wheaton dropping from 100% to 50% in 2017. In addition, the 10-year term contract on Capstone Mining’s Cozamin mine, acquired with Silver Wheaton’s 2009 acquisition of Silverstone, expires in April 2017. Finally, as Hudbay provides no formal production guidance for its Rosemont project, Silver Wheaton no longer includes any production from the Rosemont project in its production forecast for 2019. As a reminder, Silver Wheaton also does not include any production from Barrick Gold Corp.’s Pascua-Lama project in its guidance.

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1 Silver Wheaton has previously filed a technical report for the Salobo mine dated March 19, 2013, which is available on SEDAR at www.sedar.com. Silver Wheaton has updated certain technical disclosure on Salobo in this news release and in a preliminary short form prospectus filed today. For further details of the Salobo mineral reserves, see the tables appended to this news release.
2 Silver equivalent production forecast assumes a gold/silver ratio of 72:1

SILVER WHEATON ANNOUNCES 2014 PRODUCTION AND SALES VOLUME1

Silver Wheaton reports that attributable silver equivalent production for the year ended December 31, 2014, was 35.3 million ounces, compared to 35.8 million ounces in 2013, representing a decrease of 1.5%.

The Company reports silver equivalent sales volume for the year ended December 31, 2014, was 32.9 million ounces, compared to 30.0 million ounces in 2013, representing an increase of 9.8%.

SILVER WHEATON ANNOUNCES UPDATED RESERVES AND RESOURCES

As of December 31, 2014, and detailed in the tables at the end of this news release, Proven and Probable Mineral Reserves attributable to Silver Wheaton were 757.7 million ounces of silver compared to 781.3 million ounces reported by the Company in its management’s discussion and analysis for the quarter ended September 30, 2014, a decrease of 3%, and 9.27 million ounces of gold compared to 6.09 million ounces, an increase of 52%. On an attributable Measured and Indicated basis, silver resources were 549.5 million ounces compared to 569.4 million ounces reported by the Company in its management’s discussion and analysis for the quarter ended September 30, 2014, a decrease of 3%, and gold resources were 2.76 million ounces compared to 1.92 million ounces, an increase of 43%. On an attributable Inferred Resource basis, silver resources were 275.2 million ounces compared to 298.7 million reported by the Company in its management’s discussion and analysis for the quarter ended September 30, 2014, a decrease of 8%, and gold resources were 1.46 million ounces compared to 1.03 million ounces, an increase of 41%.

The tables at the end of this news release set forth the estimated mineral reserves and mineral resources (silver and/or gold only) for the 27 mining assets which are subject to the Company’s precious metal purchase agreements, adjusted where applicable to reflect the Company’s percentage entitlement to silver and/or gold produced from such assets, as of December 31, 2014, unless otherwise noted. The tables are based on information available to the Company as of the date of this news release, and therefore will not reflect updates, if any, after such date.

Mr. Neil Burns , Vice President of Technical Services, is a “qualified person” as such term is defined under National Instrument 43-101, and has reviewed and approved the technical disclosure in this news release including information on mineral reserves and mineral resources.

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1
Silver equivalent basis assumes a 61:1 Ag:Au ratio for 2013 and 67:1 Ag:Au ratio for 2014

CONFERENCE CALL

A conference call will be held on Monday, March 2, 2015, starting at 5:00pm (Eastern Time) to discuss this transaction. To participate in the live call please use one of the following methods:

Proven & Probable Reserves Attributable to Silver Wheaton  (1,2,3,8,18)
As of December 31,
2014 unless
otherwise noted (6)
Proven Probable Proven & Probable
Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained Process Recovery (7)
Mt g/t Moz Mt g/t Moz Mt g/t Moz
SILVER
Peñasquito (25%) (14)
Mill 84.1 33.3 90.0 52.7 25.0 42.4 136.7 30.1 132.4 53-65%
Heap Leach 10.9 31.7 11.1 11.5 25.0 9.2 22.4 28.3 20.4 22-28%
San Dimas (10, 14) 0.9 345.2 10.3 4.0 307.3 39.2 4.9 314.5 49.5 94%
Pascua-Lama (25%) (14) 8.0 69.8 17.9 73.2 64.1 150.8 81.2 64.7 168.7 82%
Lagunas Norte (11) 12.4 4.5 1.8 52.9 4.5 7.7 65.3 4.5 9.5 19%
Veladero (11) 5.5 14.8 2.6 90.5 14.8 43.2 96.0 14.8 45.8 6%
Yauliyacu (11, 12) 0.8 123.5 3.1 3.4 109.8 11.9 4.1 112.4 15.0 85%
777 (13) 4.9 24.7 3.9 5.7 24.7 4.5 10.6 24.7 8.4 64%
Neves-Corvo
Copper 4.9 38.8 6.1 20.5 36.1 23.8 25.4 36.6 29.9 35%
Zinc 10.4 73.1 24.4 10.2 66.9 22.0 20.6 70.0 46.4 20%
Rosemont (15) 279.5 4.1 37.0 325.8 4.1 43.1 605.3 4.1 80.1 76%
Constancia 506.0 3.1 50.3 114.0 2.9 10.8 620.0 3.1 61.1 71%
Zinkgruvan
Zinc 7.4 87.0 20.6 4.2 51.0 6.9 11.6 73.9 27.5 87%
Copper 3.3 35.0 3.7 0.1 35.0 0.1 3.4 35.0 3.8 78%
Stratoni 0.5 174.0 2.9 0.3 182.0 1.5 0.8 176.7 4.5 84%
Minto 3.8 5.9 0.7 5.7 5.7 1.0 9.5 5.7 1.8 78%
Cozamin (11)
Copper 2.8 43.8 4.0 2.8 43.8 4.0 72%
Los Filos 48.8 5.7 8.9 198.4 5.0 32.2 247.2 5.2 41.1 5%
Metates Royalty (20) 4.1 18.0 2.3 13.2 13.1 5.5 17.2 14.2 7.9 76%
TOTAL SILVER 297.8 459.9 757.7
GOLD
Salobo (50%) (16) 331.7 0.39 4.13 257.9 0.31 2.57 589.6 0.35 6.70 66%
Sudbury (70%) (11) 54.3 0.39 0.68 54.3 0.39 0.68 81%
777 (13) 3.5 1.81 0.21 4.1 1.81 0.24 7.7 1.81 0.45 73%
Constancia (50%) 253.0 0.05 0.42 57.0 0.07 0.14 310.0 0.06 0.56 61%
Minto 3.8 0.80 0.10 5.7 0.60 0.11 9.5 0.68 0.21 74%
Toroparu (10%) (17) 3.0 1.10 0.10 9.7 0.98 0.31 12.7 1.01 0.41 89%
Metates Royalty (20) 4.1 0.68 0.09 13.2 0.44 0.19 17.2 0.50 0.28 89%
TOTAL GOLD 5.04 4.23 9.27

 

 

Measured & Indicated Resources Attributable to Silver Wheaton (1,2,3,4,5,9,18)
As of December 31, 2014 unless otherwise
noted (6)
Measured Indicated Measured & Indicated
Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained
Mt g/t Moz Mt g/t Moz Mt g/t Moz
SILVER
Peñasquito (25%) (14)

Mill

34.4 26.1 28.9 91.7 21.5 63.5 126.2 22.8 92.4

Heap Leach

5.1 19.3 3.1 24.1 16.7 13.0 29.2 17.2 16.1
Pascua-Lama (25%) (14) 3.7 26.4 3.1 35.7 22.3 25.5 39.4 22.7 28.7
Yauliyacu (11, 12) 1.0 127.3 4.0 6.0 216.6 41.5 6.9 204.2 45.5
Neves-Corvo

Copper

5.8 48.5 9.0 25.7 50.8 42.0 31.5 50.3 51.0

Zinc

14.1 59.6 27.0 60.2 55.7 107.8 74.3 56.4 134.8
Rosemont (15) 38.5 3.0 3.7 197.7 2.7 17.1 236.2 2.7 20.8
Constancia 73.0 2.4 5.6 299.0 2.0 19.4 372.0 2.1 25.0
Zinkgruvan

Zinc

2.2 66.8 4.6 4.7 107.1 16.3 6.9 94.5 20.9

Copper

1.6 20.0 1.0 0.4 39.1 0.5 2.0 23.9 1.5
Aljustrel (19)

Zinc

1.3 65.6 2.7 20.5 60.3 39.7 21.8 60.7 42.4
Stratoni 0.2 200.4 1.5 0.2 213.3 1.4 0.4 206.4 2.9
Minto 7.5 3.6 0.9 32.3 3.4 3.5 39.8 3.4 4.3
Keno Hill (25%)

Underground

0.7 473.1 10.2 0.7 473.1 10.2

Elsa Tailings

0.6 119.0 2.4 0.6 119.0 2.4
Los Filos 11.4 11.0 4.0 112.3 7.4 26.9 123.7 7.8 30.9
Loma de La Plata (12.5%) 3.6 169.0 19.8 3.6 169.0 19.8
TOTAL SILVER 99.2 450.2 549.5
GOLD
Salobo (50%) (16) 24.6 0.47 0.37 97.7 0.37 1.16 122.2 0.39 1.53
Sudbury (70%) (11) 28.9 0.34 0.32 28.9 0.34 0.32
Constancia (50%) 36.5 0.05 0.06 149.5 0.04 0.18 186.0 0.04 0.23
Minto 7.5 0.42 0.10 32.3 0.32 0.33 39.8 0.34 0.43
Toroparu (10%) (17) 0.9 0.87 0.03 7.9 0.83 0.21 8.8 0.84 0.24
TOTAL GOLD 0.56 2.20 2.76

 

 

Inferred Resources Attributable to Silver Wheaton (1,2,3,4,5,9,18)
As of December 31,
2014 unless otherwise
noted (6)
Inferred
Tonnage Grade Contained
Mt g/t Moz
SILVER
Peñasquito (25%) (14)

Mill

4.4 19.5 2.7

Heap Leach

6.1 13.7 2.7
San Dimas (10, 14) 7.3 309.5 73.0
Pascua-Lama (25%) (14) 4.9 20.1 3.2
Yauliyacu (11, 12) 5.0 178.7 28.7
777 (13) 0.8 30.6 0.8
Neves-Corvo

Copper

25.1 43.5 35.1

Zinc

21.4 48.9 33.6
Rosemont (15) 104.5 3.3 11.1
Constancia 200.0 1.9 12.0
Zinkgruvan

Zinc

6.1 75.0 14.7

Copper

0.5 34.0 0.6
Aljustrel (19)

Zinc

8.7 50.4 14.0
Stratoni 0.5 169.0 2.7
Minto 16.2 3.2 1.7
Keno Hill (25%)

Underground

0.2 349.8 2.4
Los Filos 175.9 6.3 35.7
Loma de La Plata (12.5%) 0.2 76.0 0.4
Metates Royalty (20) 1.0 9.7 0.3
TOTAL SILVER 275.2
GOLD
Salobo (50%) (16) 74.0 0.31 0.74
Sudbury (70%) (11) 5.5 0.67 0.12
777 (13) 0.4 1.77 0.02
Constancia (50%) 100.0 0.03 0.10
Minto 16.2 0.30 0.16
Toroparu (10%) (17) 13.0 0.74 0.31
Metates Royalty (20) 1.0 0.38 0.01
TOTAL GOLD 1.46

 

Notes:

1. All Mineral Reserves and Mineral Resources have been calculated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum – CIM Standards on Mineral Resources and Mineral Reserves and National Instrument 43-101 – Standards for Disclosure form Mineral Projects (“NI 43-101), or the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.
2. Mineral Reserves and Mineral Resources are reported above in millions of metric tonnes (“Mt”), grams per metric tonne (“g/t”) and millions of ounces (“Moz”).
3. Individual qualified persons (“QPs”), as defined by the NI 43-101, for the technical information contained in this document (including the Mineral Reserve and Mineral Resource estimates) for the following operations are as follows:
a. Salobo mine – Christopher Jacobs, CEng MIMMM (Vice President and Mining Economist), James Turner, CEng MIMMM (Senior Mineral Process Engineer), Barnard Foo, P. Eng., M. Eng, MBA (Senior Mining Engineer) and Jason Ché Osmond, FGS, C.Geol, EurGeol (Senior Geologist) all of whom are employees of Micon International Ltd.
b. All other operations and development projects: the Company’s QPs Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); Samuel Mah, M.A.Sc., P.Eng. (Senior Director, Project Evaluations), both employees of the Company (the “Company’s QPs”).
4. The Mineral Resources reported in the above tables are exclusive of Mineral Reserves.  The Minto mine, Neves-Corvo mine, Zinkgruvan mine, Stratoni mine and Toroparu project report Mineral Resources inclusive of Mineral Reserves.  The Company’s QPs have made the exclusive Mineral Resource estimates for these mines based on average mine recoveries and dilution.
5. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
6. Other than as detailed below, Mineral Reserves and Mineral Resources are reported as of December 31, 2014 based on information available to the Company as of the date of this document, and therefore will not reflect updates, if any, after such date.
a. Mineral Resources and Mineral Reserves for the San Dimas, Pascua-Lama, 777, Constancia and Minto mines are reported as of December 31, 2013.
b. Mineral Resources and Mineral Reserves for the Toroparu project are reported as of March 31, 2013.
c. Mineral Resources and Mineral Reserves for the Neves-Corvo and Zinkgruvan mines are reported as of June 30, 2014.
d. Mineral Reserves for the Cozamin mine are reported as of June 30, 2014.
e. Mineral Resources and Mineral Reserves for the Rosemont project are reported as of August 28, 2012.
f. Mineral Resources for the Constancia project (including the Pampacancha deposit) are reported as of September 30, 2013.
g. Mineral Resources for Aljustrel’s Feitais and Moinho mines are reported as of November 30, 2010. Mineral Resources for the Estaçao project are reported as of December 31, 2007.
h. Mineral Resources for Keno Hill’s Elsa Tailings project are reported as of April 22, 2010, Lucky Queen project as of July 27, 2011, Onek and Bermingham projects as of October 15, 2014, Flame and Moth project as of January 30, 2013, Bellekeno mine Inferred Mineral Resources as of September 30, 2012 and Bellekeno mine Indicated Mineral Resources as of September 30, 2013.
i. Mineral Resources for the Loma de La Plata project are reported as of May 20, 2009.
j. Mineral Resources for Metates are reported as of February 16, 2012 and Mineral Reserves as of March 18, 2013.
7. Process recoveries are the average percentage of silver or gold in a saleable product (doré or concentrate) recovered from mined ore at the applicable site process plants as reported by the operators.
8. Mineral Reserves are estimated using appropriate process recovery rates and the following commodity prices:
a. Peñasquito mine – $1,300 per ounce gold, $22.00 per ounce silver, $0.90 per pound lead and $0.90 per pound zinc.
b. San Dimas mine – 2.7 grams per tonne gold equivalent cut-off assuming $1,250 per gold ounce and $20.00 per ounce silver.
c. Pascua-Lama project – $1,100 per ounce gold, $21.00 per ounce silver and $3.00 per pound copper.
d. Lagunas Norte and Veladero mines – $1,100 per ounce gold and $17.00 per ounce silver.
e. Yauliyacu mine – $20.00 per ounce silver, $3.29 per pound copper, $1.02 per pound lead and zinc.
f. 777 mine – $1,250 per ounce gold, $25.00 per ounce silver, $3.00 per pound copper and $1.06 per pound zinc.
g. Neves-Corvo mine – 1.6% copper cut-off for the copper Reserve and 4.8% zinc equivalent cut-off for all the zinc Reserves, both assuming $2.50 per pound copper, $1.00 per pound lead and zinc
h. Rosemont project – $4.90 per ton NSR cut-off assuming $20.00 per ounce silver, $2.50 per pound copper and $15.00 per pound molybdenum.
i. Constancia project – $1,250 per gold ounce, $25.00 per ounce silver, $3.00 per pound copper and $14.00 per pound molybdenum.
j. Zinkgruvan mine – 3.98% zinc equivalent cut-off for the zinc Reserve and 1.5% copper cut-off for the copper Reserve, both assuming $2.50 per pound copper and $1.00 per pound lead and zinc.
k. Stratoni mine – 18.02% zinc equivalent assuming $16.50 per ounce silver, $3.00 per pound copper, $0.95 per pound lead and zinc.
l. Minto mine – 0.5% copper cut-off for Open Pit and $64.40 per tonne NSR cut-off for Underground assuming $300 per ounce gold, $3.90 per ounce silver and $2.50 per pound copper.
m. Cozamin mine – $42.50 per tonne NSR cut-off assuming $20.00 per ounce silver, $2.50 per pound copper, $0.85 per pound lead and $0.80 per pound zinc.
n. Los Filos mine – $1,300 per ounce gold and $22.00 per ounce silver.
o. Salobo mine – 0.253% copper equivalent cut-off assuming $1,250 per ounce gold and $3.45 per pound copper.
p. Sudbury mines – $1,250 per ounce gold, $22.00 per ounce silver, $10.43 per pound nickel, $3.45 per pound copper, $1,800 per ounce platinum, $1,000 per ounce palladium and $13.00 per pound cobalt.
q. Toroparu project – 0.38 grams per tonne gold cut-off assuming $1,070 per ounce gold for fresh rock and 0.35 grams per tonne gold cut-off assuming $970 per ounce gold for saprolite.
r. Metates royalty – 0.35 grams per tonne gold equivalent cut-off assuming $1,200 per ounce gold and $24.00 per ounce silver.
9. Mineral Resources are estimated using appropriate recovery rates and the following commodity prices:
a. Peñasquito mine – $1,500 per ounce gold, $24.00 per ounce silver, $1.00 per pound lead and $1.00 per pound zinc.
b. San Dimas mine – 0.20 grams per tonne gold equivalent assuming $1,300 per ounce gold and $20.00 per ounce silver.
c. Pascua-Lama project – $1,500 per ounce gold, $24.00 per ounce silver and $3.50 per pound copper.
d. Yauliyacu mine – $20.00 per ounce silver, $3.29 per pound copper and $1.02 per pound lead and zinc.
e. 777 mine – $1,250 per ounce gold, $25.00 per ounce silver, $3.00 per pound copper and $1.06 per pound zinc.
f. Neves-Corvo mine – 1.0% copper cut-off for the copper Resource and 3.0% zinc cut-off for the zinc Resource, both assuming $2.50 per pound copper and $1.00 per pound lead and zinc.
g. Rosemont project – 0.30% copper equivalent cut-off for Mixed and 0.15% copper equivalent for Sulfide assuming $20.00 per ounce silver, $2.50 per pound copper and $15.00 per pound molybdenum.
h. Constancia project – 0.12% copper cut-off for Constancia and 0.10% copper cut-off for Pampacancha.
i. Zinkgruvan mine – 3.8% zinc equivalent cut-off for the zinc Resource and 1.0% copper cut-off for the copper Resource, both assuming $2.50 per pound copper and $1.00 per pound lead and zinc
j. Aljustrel mine – 4.5% zinc cut-off for Feitais and Moinho mines zinc Resources and 4.0% zinc cut-off for Estação zinc Resources.
k. Stratoni mine – Cut-off is geological due to the sharpness of the mineralized contacts and the high grade nature of the mineralization
l. Minto mine – 0.5% copper cut-off.
m. Keno Hill mines:
i. Bellekeno mine – $185 per tonne NSR cut-off assuming $22.50 per ounce silver, $0.85 per pound lead and $0.95 per pound zinc.
ii. Flame and Moth project – $185 per tonne NSR cut-off assuming $1,400 per ounce gold, $24.00 per ounce silver, $0.85 per pound lead and $0.95 per pound zinc.
iii. Bermingham project – $185 per tonne NSR cut-off assuming $1,250 per ounce gold, $20.00 per ounce silver, $0.90 per pound lead and $0.95 per pound zinc.
iv. Lucky Queen project – $185 per tonne NSR cut-off assuming $1,100 per ounce gold, $18.50 per ounce silver, $0.90 per pound lead and $0.95 per pound zinc.
v. Onek project – $185 per tonne NSR cut-off assuming $1,250 per ounce gold, $20.00 per ounce silver, $0.90 per pound lead and $0.95 per pound zinc.
vi. Elsa Tailings project – 50 grams per tonne silver cut-off.
n. Los Filos mine – $1,500 per ounce gold and $24.00 per ounce silver.
o. Loma de La Plata project – 50 gram per tonne silver equivalent cut-off assuming $12.50 per ounce silver and $0.50 per pound lead.
p. Salobo mine – 0.296% copper equivalent assuming $1,500 per ounce gold $3.70 per pound copper.
q. Sudbury mines – $1,250 per ounce gold, $22.00 per ounce silver, $10.43 per pound nickel, $3.45 per pound copper, $1,800 per ounce platinum, $1,000 per ounce palladium and $13.00 per pound cobalt.
r. Toroparu project – 0.30 grams per tonne gold cut-off assuming $1,350 per ounce gold.
s. Metates royalty – 0.35 grams per tonne gold equivalent cut-off assuming $1,200 per ounce gold and $24.00 per ounce silver.
10. The San Dimas silver purchase agreement provides that Primero will deliver to the Company a per annum amount equal to the first 6.0 million ounces of payable silver produced at the San Dimas mine and 50% of any excess, for the life of the mine.
11. The Company’s attributable Mineral Resources and Mineral Reserves for the Lagunas Norte, Veladero, Cozamin and Yauliyacu silver interests, in addition to the Sudbury and 777 gold interests, have been constrained to the production expected for the various contracts.
12. The Company’s Yauliyacu silver purchase agreement (March 2006) with Glencore provides for the delivery of up to 4.75 million ounces of silver per year for 20 years.  In the event that silver sold and delivered to Silver Wheaton in any year totals less than 4.75 million ounces, the amount sold and delivered to Silver Wheaton in subsequent years will be increased to make up for any cumulative shortfall, to the extent production permits.  Depending upon production levels it is possible that the Company’s current attributable tonnage may not be mined before the agreement expires.
13. The 777 precious metals purchase agreement provides that Hudbay will deliver 100% of the payable silver for the life of the mine and 100% of the payable gold until completion of the Constancia project, after which the gold stream will reduce to 50%.  The gold figures in this table represent the attributable 777 mine Mineral Resources and Mineral Reserves constrained to the production expected for the 777 precious metals purchase agreement.
14. The scientific and technical information in these tables regarding the Peñasquito and San Dimas mines and the Pascua-Lama project was sourced by the Company from the following SEDAR (www.sedar.com) filed documents:
a. Peñasquito – Goldcorp Management’s Discussion and Analysis (MD&A) dated February 19, 2015;
b. San Dimas – Primero annual information form filed on March 31, 2014; and
c. Pascua-Lama – Barrick Gold Corp.’s MD&A dated February 19, 2015.
The Company QP’s have approved the disclosure of scientific and technical information in respect of the Peñasquito and San Dimas mines and the Pascua-Lama project in these tables.
15. The Rosemont mine Mineral Resources and Mineral Reserves do not include the SX/EW leach material since this process does not recover silver.
16. The Company has filed a technical report for the Salobo mine, which is available on SEDAR at www.sedar.com.
17. The Company’s agreement with Sandspring is an early deposit structure whereby the Company will have the option not to proceed with the 10% gold stream on the Toroparu project following the delivery of a bankable definitive feasibility study.
18. Silver and gold are produced as by-product metal at all operations with the exception of silver at the Keno Hill mines and Loma de La Plata project and gold at the Toroparu project; therefore, the economic cut-off applied to the reporting of silver and gold Mineral Resources and Mineral Reserves will be influenced by changes in the commodity prices of other metals at the time.
19. Silver Wheaton has agreed to waive its rights to silver contained in copper concentrate at the Aljustrel mine.
20. Effective August 7, 2014 the Company entered into an agreement for a 1.5% net smelter returns royalty on Chesapeake Gold Corp’s (Chesapeake) Metates property, located in Mexico.  As part of the agreement, Chesapeake will have the right at any time for a period of five years to repurchase two-thirds of the royalty, with the Company retaining a 0.5% royalty interest.

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NEWS: Silver Wheaton announces US$800 million bought deal financing

Mar 2, 2015

Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX:SLW) (NYSE:SLW) is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by Scotiabank, pursuant to which they have agreed to purchase, on a bought deal basis, 38,930,000 common shares of Silver Wheaton at a price of US$20.55 per share (the “Offering”), for aggregate gross proceeds to Silver Wheaton of approximately US$800 million. In addition, Silver Wheaton has agreed to grant to the underwriters an option to purchase up to an additional 5,839,500 common shares at a price of US$20.55 per share, on the same terms and conditions as the Offering, exercisable at any time, in whole or in part, until the date that is 30 days following the closing of the Offering. In the event that the option is exercised in its entirety, the aggregate gross proceeds of the Offering to Silver Wheaton will be approximately US$920 million.

The net proceeds of the Offering will be used to fund the Company’s acquisition of an additional 25% gold stream from Vale S.A.’s (“Vale”) Salobo Mine, located in Brazil (as announced March 2, 2015).

The common shares to be issued under the Offering will be offered by way of a short form prospectus in all of the provinces of Canada and will be offered in the United States pursuant to a registration statement filed under the Canada/U.S. multi-jurisdictional disclosure system. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission but has not yet become effective. The securities may not be sold nor may offers to buy be accepted in the United States prior to the time the registration statement becomes effective. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the common shares in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.

The Offering is scheduled to close on or about March 17, 2015, and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange, the New York Stock Exchange and the securities regulatory authorities.

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NEWS: Silver Wheaton Announces Amendment to Credit Facility

Feb 27, 2015

Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX:SLW) (NYSE:SLW) is pleased to announce that it has amended and restated its revolving credit facility dated February 28, 2013 (the “Revolving Facility”). The Company has increased the available credit from US$1 billion to US$2 billion and has extended the term by 2 years, with the facility now maturing on February 27, 2020. Silver Wheaton used proceeds drawn from this amended Revolving Facility together with cash on hand to repay the $1 billion of debt previously outstanding under its non-revolving term loan and terminated this loan. Upon closing, the Company had $685 million drawn under the amended Revolving Facility.

In addition, certain covenants were amended in order to replace the minimum total net worth and maximum net debt to EBITDA covenants with minimum net debt to total net worth and minimum interest coverage tests. The interest rate applicable to any drawings under the amended Revolving Facility remains unchanged.

“This amended Revolving Facility provides Silver Wheaton with enhanced flexibility to execute on its growth strategy in an efficient and cost-effective manner. We greatly appreciate the continued strong support provided by the syndicate of banks underlying this new facility,” said Gary Brown, Silver Wheaton’s Senior Vice President and Chief Financial Officer.

The Bank of Nova Scotia and Bank of Montreal acted as Co-Lead Arrangers, Joint Bookrunners, and Lenders for the amended Revolving Facility. Canadian Imperial Bank of Commerce, Royal Bank of Canada and The Toronto-Dominion Bank acted as Co-Documentation Agents and Lenders. HSBC Bank Canada, Bank of Tokyo-Mitsubishi (UFJ) (Canada) and Export Development Canada acted as Senior Managers and Lenders, and Bank of America, N.A., Canada Branch, Mizuho Bank, Ltd., and National Bank of Canada acted as Lenders.

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NEWS: First Majestic Announces Financial Results for Q4 and Year End 2014

Feb 23, 2015

FIRST MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX) (the “Company” or “First Majestic”) is pleased to announce the consolidated financial results for the Company’s fourth quarter and year ended December 31, 2014. The full version of the financial statements and the management discussion and analysis can be viewed on the Company’s web site at www.firstmajestic.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

Q4 HIGHLIGHTS

  • Silver equivalent production of 4.2 million ounces, representing a 24% increase compared Q4 2013.
  • Silver production of 3.1 million ounces, representing a 12% increase compared to Q4 2013.
  • All-in Sustaining costs of $14.43 per payable silver ounce, representing a significant 27% reduction compared to the prior quarter.
  • Revenues after smelting and refining costs amounted to $72.5 million, representing a 23% increase compared to Q4 2013.
  • Adjusted net earnings (non-GAAP) normalized for non-cash items was $4.2 million or $0.04 per share.
  • Cash flow from operations of $21.1 million or $0.18 per share (non-GAAP).
  • Non-cash impairment charge of $102.0 million related to certain non-current assets at specific mines resulting in a net loss of $64.6 million in Q4 2014.

2014 HIGHLIGHTS

  • Silver equivalent production of 15.3 million ounces, representing a 19% increase compared to 2013.
  • Silver production of 11.7 million ounces, representing a 10% increase compared to 2013.
  • All-in Sustaining costs of $17.71 per payable silver ounce and expected to trend substantially lower for 2015.
  • Revenues were $245.5 million representing a 2% decrease compared to 2013 despite a 19% decline in average realized silver price.
  • Adjusted net earnings were $7.9 million or $0.07 per share for the year.
  • Cash flow from operations of $74.4 million or $0.63 per share.
  • General and Administrative costs of $19.4 million, representing a 22% decrease compared to 2013.
  • Ended the year with cash and cash equivalents of $40.3 million, down from $54.8 million in 2013.

“In 2014, First Majestic delivered another year of record production totaling 15.3 million silver equivalent ounces representing a 19% increase from 2013,” said Keith Neumeyer, President and CEO of First Majestic. “Our Q4 financial results demonstrate that our cost savings plan launched in 2013 is having a positive impact on operating cash flows as well as significantly reducing our all-in sustaining costs. The mines have shown tremendous operational improvements over the past year. In particular, Del Toro has become a shining star in our portfolio following the successful reconfiguration of the mill in the second and third quarter and the connection to the National power grid in late September 2014. San Martin is breaking production records following its recent expansion as mining grades and plant recoveries have exceeded expectations. For 2015, our focus will be to continue to attack costs at every level of the business by leaving no stone unturned and deliver to our shareholders another solid year of operational improvements.”

2014 ANNUAL AND FOURTH QUARTER HIGHLIGHTS

  1. The Company reports non-GAAP measures which include cash costs per ounce, all-in sustaining cost per ounce, total production cost per ounce, total production cost per tonne, average realized silver price per ounce, working capital, adjusted EPS and cash flow per share. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions.
  2. The Company reports additional GAAP measures which include mine operating earnings and operating cash flows before movements in working capital and income taxes. These additional financial measures are intended to provide additional information and do not have a standardized meaning prescribed by IFRS.


FINANCIAL RESULTS

The Company generated revenues of $72.5 million in the fourth quarter of 2014, an increase of $13.5 million or 23% compared to $59.0 million in the fourth quarter of 2013. The increase in revenue was primarily due to the sale of approximately 934,000 ounces of silver that were previously held as inventory at the end of the third quarter. Revenues for the full year 2014 were $245.5 million, a decrease of $5.8 million compared to 2013, as record production in 2014 resulted in a 21% increase in payable equivalent silver ounces sold but offset by a 19% decrease in average realized silver price per ounce compared to 2013.

Mine operating earnings were $5.8 million in the fourth quarter of 2014 compared to $14.3 million in the fourth quarter of 2013. The Company recognized mine operating earnings of $30.2 million in 2014, a decrease of 67% compared to $92.3 million in 2013. The decrease in mine operating earnings was primarily attributed to a 19% decline in average realized silver price per ounce during the year, higher production cost during the ramp up of the Del Toro mine, and $17.1 million increase in depletion, depreciation and amortization expense primarily due to 123% increase in production from the new Del Toro mine.

Net loss after taxes for the fourth quarter and year end 2014 was $64.6 million and $61.4 million respectively, compared to net loss after taxes of $81.2 million and $38.2 million in the comparative periods of 2013. Net loss in the current period was attributed to non-cash impairment charges totalling $102.0 million consisting of $58.7 million at La Guitarra, $21.7 million at San Martin and $21.6 million at Del Toro, before taxation effects.

In the fourth quarter, operating cash flows before movements in working capital and income taxes were $21.1 million ($0.18 per share), compared to $20.4 million ($0.17 per share) in the fourth quarter of 2013. The increase in cash flow per share was primarily attributed to higher production, offset by a decrease in mine operating earnings which were affected by a 21% decline in average realized silver prices compared to the prior quarter. For the full year 2014, operating cash flows decreased 46% from $137.3 million ($1.17 per share) in 2013 to $74.4 million ($0.63 per share) in 2014 primarily due to lower margins as a result of a 19% decrease in average annual realized silver prices.

The Company ended 2014 with a healthy $40.3 million in cash and cash equivalents compared to $54.8 million at the end of 2013. The Company is currently in open discussions with various financial partners to reduce or extend payments on certain current liabilities in order to strengthen the working capital position. Based on the Company’s current operating plan, the Company believes it has sufficient financial resources, combined with cash flows from operations, to meet its ongoing requirements.

OPERATIONAL RESULTS

The Company achieved another quarterly production record totaling 3,074,567 ounces of silver and 4,247,527 of silver equivalent ounces. This compares to 2,746,598 ounces of silver and 3,421,161 of silver equivalent ounces in the fourth quarter of 2013, representing an increase of 12% and 24%, respectively. The increase in production was primarily attributed to the ramp up of the Del Toro mine and the mill expansion at San Martin; offset by a decrease in production at La Encantada due to less tonnage milled relating to the processing of only fresh mined ore versus a blend with old tailings.

Annual production in 2014 reached a record of 15,257,958 of silver equivalent ounces, in line with the Company’s previous guidance of 14.8 million to 15.6 million ounces of silver equivalents. On a year over year basis, annual production increased 19% compared to 12,791,527 silver equivalent ounces produced in 2013. Silver production also increased 10% to 11,748,721 ounces compared to 10,641,465 ounces of silver in 2013. Higher production for the year was primarily attributed to the ramp up of the Del Toro Silver Mine, which increased silver equivalent production by 90% compared to the prior year. In addition, the San Martin Silver Mine, which completed the expansion of its plant milling capacity in 2014, increased its silver equivalent ounces by 55% compared to the prior year.

Del Toro, the Company’s newest silver mine, achieved record quarterly production of 817,754 silver ounces and 1,264,751 silver equivalent ounces, an increase of 65% and 77%, respectively, compared to the previous quarter. The mine had a challenging year as it encountered numerous operational issues during ramp up such as metallurgical issues with transitional ores, a delay in connecting the new power line, and higher production costs due to lower than expected production. With the decision to process all ore through the flotation plant to improve economics, cost cutting measures and successful completion of the power line at the end of September, Del Toro is back on track and is estimated to produce 3.7 to 4.2 million equivalent silver ounces including 2.6 to 2.9 million silver ounces in 2015 at a cash cost per ounce of $9.39 to $9.96 per ounce.

At San Martin, the Company completed its mill expansion in 2014 and achieved milling throughput of 1,051 tpd during the fourth quarter of 2014. As a result of improvements in throughput, head grade and recoveries, San Martin achieved a record production of 2,118,261 equivalent ounces in 2014, a 55% increase from the 1,370,890 equivalent ounces in the prior year.

COSTS AND CAPITAL EXPENDITURES

Consolidated cash costs per ounce in the fourth quarter were $8.51 compared to $9.66 in the fourth quarter of 2013. The decrease in cash cost per ounce compared to the prior year was primarily attributed to economies of scale from higher production at the Del Toro and San Martin mines. For the full year, cash costs increased slightly to $9.58 per ounce compared to $9.35 per ounce in 2013, or 5% higher than annual guidance. The increase in cash costs was primarily due to higher production costs at La Encantada due to the increased extraction rate of high-grade underground mine ore versus the mining costs associated with reprocessing low-grade old tailings in the prior year. Also, additional diesel and generator rental costs were incurred in the first nine months of the year at Del Toro due to delays in the connection of the 115 kV power line and higher than expected smelting and refining costs due to penalty costs for impurities as the mill refined its metallurgical process.

All-in Sustaining costs (AISC) for the fourth quarter and full year 2014 were $14.43 and $17.71 per ounce, respectively. Quarter over quarter, consolidated AISC decreased to $14.43 per payable silver ounce, representing a significant 27% reduction compared to $19.89 per ounce in the third quarter of 2014. This major improvement is a result of economies of scale attributed to production improvements from Del Toro, San Martin and La Guitarra mines. In addition, the Company has started to see cost savings materialized from the new power line at Del Toro and ongoing re-negotiation with suppliers and contractors plus continued lay-offs.

The following table is an AISC summary of the quarter over quarter improvement by mine and full year 2014:

Del Toro has shown significant improvements compared to the previous quarter. During the fourth quarter, Del Toro’s AISC was reduced significantly to $10.16 per ounce, representing a dramatic decrease of 60% compared to the prior quarter, as the mine realized consistent and efficient energy fully sourced from the new 115 kV power line. This has resulted in lower costs, higher production and improved economics with the decommissioning of portable diesel power generation units. In addition, the use of new reagents and implementation of the new regrinding circuit has dramatically improved metallurgical recoveries for both silver and lead.

Capital expenditures in the fourth quarter were $24.4 million, primarily consisting of $9.8 million at La Encantada, $7.1 million at Del Toro, $2.9 million at La Parrilla, $2.9 million at La Guitarra and $1.1 million at San Martin. Compared to the previous quarter, capital expenditures decreased 18% due to cost cutting measures.

Throughout 2014, the Company’s total capital expenditures were $113.5 million which consisted of mine development, exploration, construction and expansion projects and acquisitions of new mining equipment. As previously announced, the Company plans to invest a total of $75.6 million in 2015 on sustaining and expansionary capital. The 2015 annual budget implies an estimated 33% reduction in total capital expenditures following the completion of numerous capital intensive growth projects in 2014.

2015 GUIDANCE

In 2015, First Majestic aims to maintain its status as one of silver industry’s purest and highest margin producers. The focus of the Company will be on operational efficiency and cash flow generation to ensure profitability in a low silver price environment. Based on the fourth quarter results and managements improved outlook, the Company is projecting its 2015 AISC to be within a range of $13.96 to $15.48 per ounce, or $13.50 to $14.96 per ounce after excluding non-cash items such as share-based payments and accretion of reclamation costs. Annual silver production is expected to increase to a new record range of 11.8 million to 13.2 million ounces (or 15.3 million to 17.1 million silver equivalent ounces), due to the following:

  • Del Toro is expected to reach 3.7 to 4.2 million silver equivalent ounces with improvements to optimize throughput and metallurgical recoveries, compared to 3.7 million silver equivalent ounces in 2014;
  • An upgrade and expansion of the crushing and grinding area at La Encantada is expected to increase operations to 3,000 tpd and production to 4.0 to 4.5 million silver equivalent ounces; and
  • At La Guitarra, the underground development of the El Coloso area is expected to result in higher silver grades to be extracted and processed in 2015.

The following is a summary of the Company’s 2015 outlook by producing mines:

*Metal average price assumptions for calculating equivalents: Silver $17.00/oz, Gold $1,200/oz, Lead $0.95/lb, Zinc $1.02/lb

CONFERENCE CALL AND WEBCAST

A conference call and webcast will be held Wednesday, February 25, 2015 at 11:00 a.m. PST (2:00 p.m. EST) to review and discuss the financial results. To participate in the conference call, please dial the following:

Toll Free Canada & USA: 1-800-319-4610
Outside of Canada & USA: 1-604-638-5340
Toll Free Germany: 0800 180 1954
Toll Free UK: 0808 101 2791

Participants should dial in 10 minutes prior to the conference.

Click on WEBCAST on the First Majestic homepage as a simultaneous audio webcast of the conference call will be posted at www.firstmajestic.com.

First Majestic is a mining company focused on silver production in México and is aggressively pursuing the development of its existing mineral property assets and the pursuit through acquisition of additional mineral assets which contribute to the Company achieving its corporate growth objectives.

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