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Message: 100% of the life-of-mine payable gold and silver production sold
| November 7, 2008 | |
| Silverstone Purchases Life of Mine Gold and Silver From Sherwood Copper Corporation's Minto Mine | |
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VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 7, 2008) - 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)
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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)
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Proven(2) 8.22 2.01 0.77 7.98 203.6 2,110 16,362
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Probable(2) 0.91 1.24 0.46 5.40 13.3 159 1,090
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Proven +
Probable(2) 9.13 1.93 0.74 7.73 216.9 2,267 17,452
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(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.
Minto Mine Mineral Resources (see notes 1,2)
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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)
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Measured(2) 11.46 1.78 0.66 6.85 240 2,520 19,320
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Indicated(2) 7.83 0.91 0.29 3.24 70 820 5,720
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Measured +
Indicated(2) 19.28 1.42 0.51 5.38 320 3,340 25,740
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Inferred(2) 15.07 0.89 0.25 2.61 120 1,260 9,660
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(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.
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