UPDATE 3-Barrick to sell silver to Silver Wheaton

* Barrick sells 25 pct of Pascua-Lama output for $625 mln

* Silver Wheaton announces $250 mln financing deal

* Barrick shares ease 2.4 pct, Silver Wheaton up 0.8 pct (Adds comments from conference call, updates shares; in U.S. dollars unless noted)

By Euan Rocha

TORONTO, Sept 8 (Reuters) - Barrick Gold Corp (ABX.TO), the world's largest gold miner, has agreed to sell 25 percent of the silver production from its Pascua-Lama project in South America to Silver Wheaton Corp (SLW.TO), the Canadian companies said on Tuesday.

Barrick will receive $625 million over three years, as well as ongoing payments of $3.90 for each ounce of silver delivered under the agreement, which covers the life of the mining project, expected to be about 25 years.

For Silver Wheaton, which buys silver byproduct from other miners and resells it, the deal will provide it with 9 million ounces of silver production a year over the first five years of the mine, which will raise the company's output to 40 million ounces by 2013, the year Pascua-Lama begins production.

The deal "truly transforms Silver Wheaton, propelling us to a new level in terms of size and growth profile," Chief Executive Peter Barnes said on a conference call.

The company, which re-sold 16.5 million ounces last year, also announced a $250 million bought-deal equity sale, from which it will partly fund the silver stream acquisition.

Silver Wheaton is also acquiring all silver production -- about 2.4 million ounces annually -- from Barrick's Lagunas Norte, Pierina and Veladero mines until the completion of the Pascua-Lama project.

Lagunas Norte and Pierina are in Peru, while the Veladero mine is located just south of Pascua-Lama in Argentina.

Pascua-Lama, on the border of Chile and Argentina, is one of the richest deposits of precious metals in the world. It is expected to be one of the world's largest and lowest-cost gold mines, and is also one of the world's biggest silver deposits.

Barrick gave the project the go-ahead in May after Argentina and Chile settled a prolonged dispute over how the two countries would tax the deposit.

Silver Wheaton's shares rose 0.8 percent to C$12.75 on the Toronto Stock Exchange, while Barrick retreated 2.4 percent to C$42.45.

BOUGHT DEAL

Silver Wheaton, which is based in Vancouver, British Columbia, will fund the initial $212.5 million cash payment using $70 million in cash on hand, amounts borrowed under its $400 million credit facility, and the $250 million bought deal.

The payments in the following two years should be financed by operating cash flows, the company said.

"In essence, what this means is we still have $500 million of firepower to make the next acquisition without issuing any further equity," said Barnes.

The shares in the bought deal will be sold at $11.10 each, a 4.2 percent discount to the stock's closing price of $11.59 on the New York Stock Exchange on Friday.

($1=$1.08 Canadian) (Additional reporting by Cameron French; editing by Rob Wilson)