Silverstone Resources Corp.
TSX VENTURE : SST

Silverstone Resources Corp.

February 21, 2007 10:54 ET

Silverstone Signs Letter of Intent to Purchase All of the Silver Produced From the Cozamin Mine Over the Next 10 Years

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 21, 2007) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR RELEASE TO U.S. NEWSWIRE SERVICES.

Silverstone Resources Corp. ("Silverstone") (TSX VENTURE:SST) is pleased to announce that it has agreed to purchase 100% of the silver produced for the next 10 years from Capstone Mining Corp.'s ("Capstone") (TSX:CS) Cozamin mine located in Mexico.

Silverstone will pay an upfront payment of US$44 million comprised of US$20 million in cash and 19,350,000 in Silverstone special warrants ("the Special Warrants"), plus a deferred payment of US$4.00 per ounce delivered under the contract (subject to an inflationary adjustment after 3 years).

The Cozamin mine is a copper-zinc-lead and silver mine located in Zacatecas State, Mexico. Cozamin is expected to produce an average of 1.2 million ounces of silver per year during the term of the contract. A penalty of US$1.00 will be paid from Capstone Mexico to Silverstone for each ounce of silver less than 10 million ounces delivered at the end of the 10 year term.

Silverstone will have the right of first refusal on additional silver production by Capstone over the next 2 years.

Each Special Warrant may be exercised into a common share of Silverstone at a deemed price of $1.45 per common share for no additional consideration at any time provided that: (a) the common shares issued pursuant to such exercise would not result in Capstone owning, together with any other common shares under its ownership, control or direction, 20% or more of the issued and outstanding common shares after immediately giving effect to such issuance; or (b) the shareholders of Silverstone other than Capstone pass a resolution at a meeting of Silverstone's shareholders approving any exercise that would result in Capstone owning 20% or more of the issued and outstanding common shares of Silverstone.

In connection with the silver transaction, Silverstone also announces that it is proceeding with brokered and non-brokered private placements for gross proceeds of up to Cdn$26.1 million. Closing of the private placements will occur immediately after or concurrently with the closing of the silver transaction, which is anticipated to occur on or before March 28, 2007.

Silverstone has entered into an agreement with a syndicate of agents co-led by Pacific International Securities Ltd. and Salman Partners Inc. (the "Agents"), to raise up to Cdn$20.3 million by way of a commercially reasonable efforts private placement.

The agreement provides for the placement of up to 14,000,000 units (the "Units") priced at $1.45 per Unit, with each Unit consisting of one common share and one half of one common share purchase warrant (each whole such purchase warrant, a "Warrant"). Each Warrant will be exercisable into one additional common share of the Company at an exercise price of $2.10 per common share 2 years from the closing date. The Company has also granted the Agents an over-allotment option exercisable at any time prior to closing for up to an additional 3,500,000 Units. Capstone will pay the Agents a commission of 6% of the gross proceeds of the offering payable in cash or Units at the election of the Agents. In addition, the Agents will receive compensation options equal in number to 6% of the number of Units sold under the offering including any Units sold pursuant to the over-allotment option, which will entitle the Agents to purchase one common share at an exercise price of $1.70 for 2 years from closing (the "Compensation Options").

Silverstone will also complete a non-brokered private placement of up to 4,000,000 Units concurrent with the brokered offering. Finders' fees of 6% in cash or shares and 6% in Compensation Options, may be payable on all or a portion of the non-brokered private placement at the same terms described above, concurrent with the brokered offering.

Closing of the transaction is subject to execution of definitive agreements and receipt of all regulatory and Board approval as well as third party consents, including acceptance of the TSX Venture Exchange.

Mr. Hugh Willson, P.Geo., Vice-President, Exploration of Silverstone, who is a "qualified person" as defined under National Instrument 43-101, has reviewed and approved the contents of this news release. Silverstone has retained Peter Christopher and Associates to prepare an independent National Instrument 43-101 technical report on Cozamin and expects that such report will be available on www.sedar.com within 45 days.

The following tables set forth the estimated Mineral Resources for the Cozamin mine as reported by Capstone in the Technical Report on the Cozamin Project dated October 31, 2006. The full report is available on www.sedar.com.



Table 1: TOTAL MEASURED RESOURCES - COZAMIN MINE
--------------------------------------------------------------------------
Tonnes
Cut Off greater Cu Ag
Grade than Ag Cu Zn Pb Au (Million (Million
% Cu Cut Off (g/t) (%) (%) (%) (g/t) lbs)(i) oz)(i)
--------------------------------------------------------------------------
0.50 700,000 77.38 2.20 1.06 0.55 0.06 33.96 1.74
--------------------------------------------------------------------------
1.00 550,000 86.56 2.58 1.07 0.48 0.05 31.29 1.53
--------------------------------------------------------------------------
1.25 500,000 88.83 2.74 1.08 0.47 0.05 30.21 1.43
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Table 2: TOTAL INDICATED RESOURCES - COZAMIN MINE
--------------------------------------------------------------------------
Tonnes
Cut Off greater Cu Ag
Grade than Ag Cu Zn Pb Au (Million (Million
% Cu Cut Off (g/t) (%) (%) (%) (g/t) lbs)(i) oz)(i)
--------------------------------------------------------------------------
0.50 2,480,000 81.18 2.29 1.14 0.51 0.06 125.23 6.47
--------------------------------------------------------------------------
1.00 2,210,000 85.13 2.48 1.14 0.47 0.05 120.85 6.05
--------------------------------------------------------------------------
1.25 2,010,000 86.52 2.61 1.12 0.44 0.05 115.68 5.59
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Table 3: TOTAL MEASURED & INDICATED RESOURCES
--------------------------------------------------------------------------
Tonnes
Cut Off greater Cu Ag
Grade than Ag Cu Zn Pb Au (Million (Million
% Cu Cut Off (g/t) (%) (%) (%) (g/t) lbs)(i) oz)(i)
--------------------------------------------------------------------------
0.50 3,170,000 80.34 2.27 1.12 0.52 0.06 158.67 8.19
--------------------------------------------------------------------------
1.00 2,760,000 85.42 2.50 1.12 0.47 0.05 152.15 7.58
--------------------------------------------------------------------------
1.25 2,510,000 86.98 2.63 1.11 0.44 0.05 145.56 7.02
--------------------------------------------------------------------------


Table 4: TOTAL INFERRED RESOURCES (2)
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Tonnes
Cut Off greater Cu Ag
Grade than Ag Cu Zn Pb Au (Million (Million
% Cu Cut Off (g/t) (%) (%) (%) (g/t) lbs)(i) oz)(i)
--------------------------------------------------------------------------
0.50 3,520,000 75.28 2.04 1.30 0.29 0.06 158.34 8.52
--------------------------------------------------------------------------
1.00 3,090,000 79.07 2.22 1.29 0.27 0.06 151.26 7.86
--------------------------------------------------------------------------
1.25 2,770,000 80.52 2.34 1.27 0.26 0.06 142.92 7.17
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(1) The Mineral Resources for the Cozamin mine in the table above have
been estimated by Gary H. Giroux, P.Eng of Giroux Consultants Ltd.,
who is an independent qualified person under NI 43-101.
(2) Inferred resources have considerable uncertainty and it cannot be
assumed that all or any part of an inferred resource will be upgraded
to an indicated or measured resource. Once adequate drill spacing has
been established by Capstone's current exploration program, Capstone
expects to upgrade part of these inferred resources to measured and
indicated.


Capstone produced 161,000 ounces of silver in the first quarter of 2007 (see Capstone's January 15, 2007 news release for complete production and operating results). Historically Grupo Minero Bacis S.A. de C.V. operated the mine from 1997 to 1999 and processed 250,000 tonnes of ore grading 1.2% copper, 90 g/t silver, 0.5 g/t gold, 1.8% zinc and 0.6% lead.

ABOUT SILVERSTONE

Silverstone is a Canadian based mineral exploration company with an option to earn a 90% interest in 4 advanced silver-gold projects located in Mexico. More information is available online at: www.silverstonecorp.com.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

The TSX Venture Exchange has neither approved or disapproved of the contents herein.

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