Silverstone Resources Corp. ("Silverstone") (TSX VENTURE: SST) is
pleased to announce that it has agreed to acquire 100% of the
life-of-mine payable gold and silver production from Sherwood
Copper Corporation's ("Sherwood") Minto mine located in the Yukon,
Canada effective December 1, 2008. With this acquisition, together
with Silverstone's existing contributing silver contracts,
Silverstone is expected to sell in excess of 4.5 million silver
equivalent ounces(1) in 2009.
Sherwood's Minto mine is a base metal mine (copper-gold-silver)
located in the Yukon, Canada. The Minto mine reached commercial
production in October 2007, increased mill throughput 50% by
mid-April, 2008 and plans to process higher grades and to further
increase mill throughput by early 2009. The mill at Minto is
forecast to produce more than 30,000 ounces of payable gold and
more than 300,000 ounces of payable silver in 2009, or
approximately 2.4 million silver equivalent ounces(1).
Silverstone will purchase all of the gold and silver production
from the Minto mine and, in exchange, Sherwood will receive an
up-front payment from Silverstone of US$37.5 million, plus a
further payment of the lesser of (a) US$300 per ounce of gold and
US$3.90 per ounce of silver (subject to a 1% inflationary
adjustment after 3 years and each year thereafter) and (b) the
prevailing market price on the London Metal Exchange for each ounce
delivered. US$12.5 million of the up-front payment will be advanced
immediately and the balance within 14 days of the date of the
letter of intent, subject to certain conditions. 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 will be entitled to purchase only 50% of
the amount in excess of those thresholds. Kutcho Copper, Sherwood's
wholly owned subsidiary that owns the Kutcho
copper-zinc-silver-gold project in British Columbia, has also
granted Silverstone a right of first refusal to purchase any gold
and/or silver streams from the Kutcho project, should Kutcho Copper
elect to sell such, on terms and conditions to be agreed by mutual
consent.
In order to fund the US$37.5 million cash payment, in addition
to US$28 million in cash on hand, Silverstone will draw on its
US$15 million revolving line of credit through Scotia Capital.
"This transaction with Sherwood will more than double
Silverstone's silver equivalent ounces in 2009. We are very pleased
to have acquired this gold and silver production from the high
grade Minto copper mine, which has the ability to add additional
gold and silver ounces through its significant exploration
potential. With this acquisition, Silverstone is able to continue
to increase its growth profile at terms consistent with its
previous acquisitions. We are fortunate to be able to utilize our
existing cash, minimal leverage and no dilution to our
shareholders," said Darren Pylot Silverstone's President and Chief
Executive Officer.
Closing of the transaction is subject to certain conditions to
be met by both companies and receipt of all regulatory approvals
including acceptance by the TSX Venture exchange.
An advisory fee of US$375,000 is payable upon completion of the
transaction. This fee can be paid in cash or common shares or any
portion thereof at Silverstone's election.
The following tables set forth the estimated Proven and Probable
Mineral Reserves and the Mineral Resources for the Minto mine as of
June 17, 2008 based on drilling to the end of 2007. All reports
referenced are available on www.sedar.com.
Current Proven and Probable Mineral Reserves for the Minto mine
are tabulated below:
Minto Mine Proven and Probable Mineral Reserves (see notes 1,2)
--------------------------------------------------------------------------
Contained Contained Silver
Ounces Ounces Equivalent
Reserves Tonnes Copper Gold Silver Gold Silver Ounces(1)
Category (M) % g/t g/t (000's) (000's) (000's)
--------------------------------------------------------------------------
Proven(2) 8.22 2.01 0.77 7.98 203.6 2,110 16,362
--------------------------------------------------------------------------
Probable(2) 0.91 1.24 0.46 5.40 13.3 159 1,090
--------------------------------------------------------------------------
Proven +
Probable(2) 9.13 1.93 0.74 7.73 216.9 2,267 17,452
--------------------------------------------------------------------------
(1) Silver equivalent ounces are calculated by using a ratio of 1 ounce of
gold is equivalent to 70 ounces of silver.
(2) Reserves are calculated using a 0.62% Cu cutoff.
Mineral reserves were calculated by MintoEx geology and engineering staff
under the supervision of Dan Russell, P. Eng., Manager of Mining at the
Minto Mine, who is the Qualified Person under National Instrument 43-101
responsible for the mineral reserve estimate, as detailed in Sherwood
Copper's June 17, 2008 news release.
The measured, indicated and inferred mineral resources are
tabulated below, and are inclusive of the proven and probable
reserves:
Minto Mine Mineral Resources (see notes 1,2)
--------------------------------------------------------------------------
Contained Contained Silver
Ounces Ounces Equivalent
Resource Tonnes Copper Gold Silver Gold Silver Ounces(1)
Category (M) % g/t g/t (000's)(3) (000's)(3) (000's)(3)
--------------------------------------------------------------------------
Measured(2) 11.46 1.78 0.66 6.85 240 2,520 19,320
--------------------------------------------------------------------------
Indicated(2) 7.83 0.91 0.29 3.24 70 820 5,720
--------------------------------------------------------------------------
Measured +
Indicated(2) 19.28 1.42 0.51 5.38 320 3,340 25,740
--------------------------------------------------------------------------
Inferred(2) 15.07 0.89 0.25 2.61 120 1,260 9,660
--------------------------------------------------------------------------
(1) Silver equivalent ounces are calculated by using a ratio of 1 ounce of
gold is equivalent to 70 ounces of silver.
(2) Resources are reported using a 0.5% Cu cutoff.
(3) Rounded to nearest ten thousand
The mineral resources discussed in this new release were estimated by Lions
Gate Geological Consulting Inc. (LGGC). Ali Shahkar P.Eng. and Susan Lomas,
P. Geol. of LGGC are the Qualified Persons under National Instrument 43-101
responsible for the estimates and has reviewed the information in this
release in respect of mineral resource estimates. See Sherwood Copper's
news release dated June 17, 2008 for additional information in respect of
the resource estimates.
CONFERENCE CALL
Silverstone will host a conference call today - Friday, November
7, 2008 - at 9:30am Pacific Time (12:30pm Eastern Time) to discuss
this acquisition. The conference call may be accessed by dialing
1.866.497.3339 in North America or 1.416.849.7332 Internationally.
Please ask for the Silverstone conference call. The conference call
will be archived for later playback until November 14, 2008 and can
be accessed by dialing 1.866.501.5559 and the pass code is
21288862#.
Mr. Hugh Willson, P.Geo., Vice-President, Exploration of
Silverstone, who is a "qualified person" under National Instrument
43-101, has reviewed and approved the technical aspects of this
news release. Silverstone will have an independent National
Instrument 43-101 technical report prepared on the Minto mine
within 45 days.
ABOUT SILVERSTONE
Silverstone is a silver and gold mining company with 100% of its
revenue from precious metal production. Silverstone expects to have
2008 silver sales of approximately 2.0 million ounces and
increasing to 4.5 million ounces silver equivalent(1) in 2009. More
information is available online at: www.silverstonecorp.com.
This press release contains "forward-looking information" that
is based on Silverstone's current expectations, estimates,
forecasts and projections. This forward-looking information
includes, among other things, statements with respect to
Silverstone's mineral discoveries, plans, outlook and business
strategy. The words "may", "would", "could", "should", "will",
"likely", "expect," "anticipate," "intend", "estimate", "plan",
"forecast", "project" and "believe" or other similar words and
phrases are intended to identify forward-looking information.
Forward-looking information is subject to known and unknown
risks, uncertainties and other factors that may cause Silverstone's
actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking information. Such factors include, but are not
limited to: projected sales or production rates; uncertainties
related to drilling results; the ability to raise sufficient
capital to fund exploration; changes in economic conditions or
financial markets; changes in prices for costs; litigation,
legislative, environmental and other judicial, regulatory,
political and competitive developments; technological or
operational difficulties or inability to obtain permits encountered
in connection with exploration activities; and labor relations
matters.
This list is not exhaustive of the factors that may affect our
forward-looking information. These and other factors should be
considered carefully and readers should not place undue reliance on
such forward-looking information. Silverstone disclaims any
intention or obligation to update or revise forward-looking
information, whether as a result of new information, future events
or otherwise.
The TSX Venture Exchange has neither approved or disapproved of
the contents herein.
Contacts: Silverstone Resources Corp. Chris Tomanik (604)
637-8151 Email: ctomanik@silverstonecorp.com Silverstone Resources
Corp. Mark Patchett (604) 637-8151 (604) 688-2180 (FAX) Email:
mpatchett@silverstonecorp.com Website: www.silverstonecorp.com
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