Silver Wheaton Corp. (TSX:SLW) has closed its $190 million merger with fellow Vancouver-based company Silverstone Resources Corp. (TSX-V:SST).
The deal consolidates the silver streaming industry in B.C, which buys silver from producers at a fixed price and usually includes an upfront payment. It also strengthens Silver Wheaton's status as the world's largest silver-streaming company.
The deal will add three sources of silver to Silver Wheaton's portfolio: Capstone Mining's Minto mine in the Yukon, its Cozamin mine in Mexico and Lundin Mining's Neves-Corvo mine in Portugal. The deal will increase Silver Wheaton's annual silver production by 2.3 million ounces and boost its gold production by 31,000 ounces.
The deal was be completed through a plan of arrangement, under which Silver Wheaton acquired each outstanding Silverstone share in exchange for 0.185 Silver Wheaton common share. The deal valued Silverstone at $1.47 per share, which represented a 40% premium based on the 20-day volume-weighted average of both companies.
Silverstone's shares will be delisted from the TSX Venture Exchange at the end of the close of trading May 25.
Earlier in May, Silver Wheaton reported a 23% drop in first-quarter silver sales for the period ending March 31. Net earnings fell 46% to $15.1 million from $27.9 million.
Its first-quarter results were affected primarily by the 31% decline in the average selling price of silver to $11.90 from $17.36 in 2008's first quarter. Total per-ounce production costs also rose slightly to $3.97 from $3.94.
To compensate for the decline, the company increased silver sales by 12% and trimmed roughly $2.5 million from its corporate operations cost.
Silver Wheaton's share price range during the past week: between $10 and $10.80; 52-week high: $16; 52-week low: $3.07.