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Mergers News

Goldcorp to sell more silver to Silver Wheaton

(In U.S. dollars unless noted)

VANCOUVER, British Columbia , April 16 (Reuters) - Goldcorp Inc. G.TOGG.N has agreed to sell 25 percent of the silver produced at its Penasquito project in Mexico to Silver Wheaton Corp. SLW.TO for $485 million, both companies said on Monday.

The project, in Mexico’s Zacatecas state, is due to start production late next year, reaching full operation a year later.

Goldcorp, one of the world’s biggest gold producers, owns 49 percent of Silver Wheaton. Silver Wheaton already purchases all of the silver produced at Goldcorp’s mines in Mexico.

In addition to the $485 million payment, all of which will be funded by bank debt, Silver Wheaton will also pay Goldcorp an ongoing per-ounce operating fee of the lesser of $3.90, subject to annual inflationary adjustments, and the prevailing market price per ounce of silver.

“The addition of cash from this transaction with Silver Wheaton strengthens our already solid balance sheet and provides us tremendous flexibility in funding the construction of Penasquito and our other growth programs,” said Kevin McArthur, Goldcorp president and chief executive.

With this acquisition, Silver Wheaton expects to have annual silver sales of 22 million ounces in 2009, increasing to over 26 million ounces by 2012.

Based on a feasibility study completed in July 2006, the Penasquito Project has reserves representing 17 years of gold, silver, zinc and lead production, with peak annual silver delivery to Silver Wheaton of 8.5 million ounces.

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