Capstone Mining Corp.
TSX : CS

Capstone Mining Corp.

March 12, 2009 10:25 ET

Capstone Agrees to Support Silver Wheaton's Premium Offer for Silverstone

24.0 Million Shares and 2.7 Million Special Warrants to be Exchanged at Ratio of 0.185 Silver Wheaton Shares

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 12, 2009) - Capstone Mining Corp. (TSX:CS) today announced that it has entered into a voting agreement (the "Agreement") with Silver Wheaton Corp. (TSX:SLW) whereby Capstone has agreed to vote its shares in favour of the proposed plan of arrangement between Silverstone Resources Ltd. (TSX VENTURE:SST) and Silver Wheaton whereby Silver Wheaton will acquire all of Capstone's shares and special warrants in Silverstone at a ratio of 0.185 shares of Silver Wheaton per common share or special warrant of Silverstone held by Capstone.

"Silver Wheaton's offer for Silverstone represents a significant premium to Silverstone's recent share price and allows Capstone to exchange its approximately 26.8 million shares and special warrants into 4.95 million shares of Silver Wheaton," said Stephen Quin, President & COO of Capstone Mining. "The transaction gives Capstone exposure to a larger, more liquid investment in a broad spectrum of silver streams from world class projects across the world. Assuming a successful completion of the Arrangement, Capstone would retain its exposure to precious metal production through its holdings in Silver Wheaton, while increasing the financial flexibility of its holdings," he said. "Capstone looks forward to a strong and on-going business relationship with Silver Wheaton, and hopes to work with Silver Wheaton on other transactions in the future. We believe Silver Wheaton's size and financial capacity should enhance Capstone's ability to continue its growth strategy, working together on suitable development or production opportunities that have precious metal by-product streams."

Silver Wheaton Offer for Silverstone

As announced March 12, 2009, Silver Wheaton has made an offer to combine with Silverstone, by way of plan of arrangement (the "Arrangement"), by exchanging 0.185 of a Silver Wheaton share for each common share and special warrant of Silverstone. Capstone owns 24,042,340 common shares of Silverstone and 2,747,428 special warrants, which are convertible into common shares of Silverstone on a one-to-one basis at no additional charge, representing 26,789,768 shares of Silverstone in total, following conversion. Upon completion of the Arrangement, Capstone would own 4,956,107 shares of Silver Wheaton. Completion of the Arrangement is subject to certain conditions as set out in a joint press release between Silver Wheaton and Silverstone dated March 12, 2009.

The Agreement with Silver Wheaton was negotiated by the President and COO of Capstone and approved by a special committee of the board of directors of Capstone comprised solely of directors with no interest in Silverstone or Silver Wheaton, namely Colin Benner, Bruce McLeod and Stephen Quin. Haywood Securities Inc. acted as advisers to the special committee and DuMoulin Black LLP as legal counsel. Conflicted management and directors involved in Silverstone or Silver Wheaton recused themselves from all discussions in respect of the Agreement.

The Agreement commits Capstone to vote in favour of the Arrangement, to not solicit other offers for its Silverstone shares and to assist Silver Wheaton in completing the Arrangement. In the event Silverstone receives a superior proposal to the Arrangement that is accepted by Silverstone and Silver Wheaton does not match the superior proposal, the Agreement would terminate. Capstone is not receiving any additional consideration for entering into the Agreement.

For further information regarding the Arrangement, please see the Silver Wheaton and Silverstone announcement of March 12, 2009 and about Capstone, please see the contact information below.

Forward-Looking Statements

This document may contain "forward-looking statements" within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date of this document and Capstone Mining Corp. (hereinafter referred to as the "Company") do not intend, and do not assume any obligation, to update these forward-looking statements.

Forward-looking statements relate to future events or future performance and reflect management of the Company's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Accordingly, readers should not place undue reliance on forward looking statements.

The TSX does not accept any responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Capstone Mining Corp.
    Darren Pylot
    Vice Chairman & CEO
    (604) 684-8894 or 1-866-684-8894
    or
    Capstone Mining Corp.
    Stephen Quin
    President & COO
    (604) 684-8894 or 1-866-684-8894
    or
    Capstone Mining Corp.
    Chris Tomanik
    Investor Relations
    (604) 684-8894 or 1-866-684-8894
    or
    Capstone Mining Corp.
    Mark Patchett
    Investor Relations
    (604) 684-8894 or 1-866-684-8894
    Email: info@capstonemining.com
    Website: www.capstonemining.com