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Press Release: Silver Wheaton reports record second quarter earnings

VANCOUVER, Aug. 11 /CNW/ – Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX, NYSE:SLW) is pleased to announce its unaudited results for the second quarter ended June 30, 2010.

SECOND QUARTER HIGHLIGHTS

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- Net earnings increased by almost 200% to a record US$53.3 million (US$0.16 per share), compared with US$18.4 million (US$0.07 per share) in 2009.

- Operating cash flows increased by more than 150% to US$67.0 million (US$0.20 per share)(1), compared with US$26.5 million (US$0.09 per share)(1) in 2009.

- Attributable silver equivalent production of 5.7 million ounces (5.3 million ounces of silver and 5,800 ounces of gold), representing an increase of 33% over the comparable period in 2009.

- Record silver equivalent sales of 5.1 million ounces (4.6 million ounces of silver and 7,600 ounces of gold), representing an increase of 74% over the comparable period in 2009.

- Total cash costs(1) of US$4.03 per silver equivalent ounce, compared with US$3.99 per ounce in 2009.

- Cash operating margin(1) increased by 44% to US$14.45 per silver equivalent ounce, compared with US$10.05 per ounce in 2009.

- Production at Goldcorp Inc.’s world-class gold-silver-lead-zinc Penasquito mine continued to ramp up on or ahead of schedule, with the second sulphide processing line achieving mechanical completion ahead of its previously expected third quarter completion date. Penasquito’s Line 1 is regularly operating at a designed daily throughput of 50,000 tonnes, and Line 2 is now in the commissioning phase and ramping up to add another 50,000 tonnes per day of capacity. Upon completion of the high pressure grinding circuit, Penasquito is anticipated to ramp up to full production capacity of 130,000 tonnes per day by early 2011. Annual production attributable to Silver Wheaton from the mine is expected to average approximately 7 million ounces of silver over the estimated 22 year mine life.

- Barrick Gold Corp.’s world-class gold-silver Pascua-Lama project remains on track to enter production in the first quarter of 2013. Detailed engineering and procurement is nearing completion with many major items now purchased. Once in production, Pascua Lama is forecast to be one of the largest and lowest cost gold mines in the world with average annual production attributable to Silver Wheaton, in its first five years, of approximately 9 million ounces of silver. Pascua-Lama is a long-life asset with an expected mine life in excess of 25 years.

- Acquired, by way of a private placement financing, 1.8 million units of Ventana Gold Corp. for total consideration of C$20.7 million (US $19.8 million). As part of this transaction, Silver Wheaton has been granted a right of first refusal over any silver streams relating to Ventana’s Colombian properties, including the highly prospective La Bodega project, which has the potential to host a world-class gold deposit with significant silver by product credits.

- Subsequent to quarter end, Goldcorp completed the sale of the San Dimas mine to Primero Mining Corp. (“Primero”). In conjunction with the sale, Silver Wheaton agreed to amend its silver purchase agreement relating to the mine. The term of the silver purchase agreement, which was set to expire in 2029, has been extended to life of mine. During the first four years following closing of the transaction, Primero will deliver to Silver Wheaton a per annum amount equal to the first 3.5 million ounces of payable silver produced at San Dimas and 50% of any excess, plus Silver Wheaton will receive an additional 1.5 million ounces of silver per annum to be delivered by Goldcorp. Beginning in the fifth year after closing, Primero will deliver to the Company a per annum amount equal to the first 6 million ounces of payable silver produced at San Dimas and 50% of any excess. Goldcorp will continue to guarantee the delivery by Primero of all silver produced and owing to the Company until 2029, and a payment of US$0.50 per ounce for any shortfall below 215 million cumulative silver ounces delivered to Silver Wheaton by the end of 2031. Primero has provided Silver Wheaton with a right of first refusal on any metal stream or similar transaction it enters into.

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(1) Refer to discussion on non-GAAP measures at the end of this press release.

“Another very solid quarter resulted in record sales and earnings,” said Peter Barnes, Chief Executive Officer of Silver Wheaton. “With Goldcorp’s Penasquito mine in Mexico, the first of our cornerstone assets, continuing to ramp up silver production ahead of schedule, we look forward to an even stronger second half to the year and maintain our annual attributable silver equivalent production guidance of 23.5 million ounces. In the face of continued global economic uncertainty, the price of silver performed very well in the quarter, leading to record cash operating margins of US$14.45 per ounce, and clearly demonstrating the advantages of Silver Wheaton’s business model of low fixed operating costs.”

“Two transactions, both having potential to further increase Silver Wheaton’s industry leading production growth profile, were also completed in the quarter. First, in connection with Goldcorp’s sale of its San Dimas mine to Primero Mining, an emerging mid-tier gold producer, Silver Wheaton agreed to amend its silver purchase agreement to the benefit of both parties. The final agreement provides Silver Wheaton with a Goldcorp guarantee, extends the agreement from a fixed term to life-of-mine and, most importantly, incentivizes Primero Mining to increase silver production at this high-quality, low-cost, mine.”

“Second, Silver Wheaton acquired a right of first refusal over any silver streams relating to Ventana Gold Corp.’s Colombian properties, including its flagship high-grade gold-silver La Bodega project, one of the most exciting gold discoveries in the last decade. As Ventana continues to advance this potential world-class project closer to production and evaluates project financing options, we anticipate working towards completing a silver streaming agreement.”

This earnings release should be read in conjunction with Silver Wheaton’s unaudited MD&A and Financial Statements, which are available on the Company’s website at www.silverwheaton.com and have been posted on SEDAR at www.sedar.com.

A conference call will be held Thursday, August 12, 2010, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call use one of the following methods:

    <<
    Dial toll free from Canada or the US:             1-888-231-8191
    Dial from outside Canada or the US:               1-647-427-7450
    Pass code:                                        80637046
    Live audio webcast:                               www.silverwheaton.com

    Participants should dial in five to ten minutes before the call.

    The conference call will be recorded and you can listen to an archive of
    the call by one of the following methods:

    Dial toll free from Canada or the US:             1-800-642-1687
    Dial from outside Canada or the US:               1-416-849-0833
    Pass code:                                        80637046
    Archived audio webcast:                           www.silverwheaton.com
    >>

About Silver Wheaton

Silver Wheaton is the largest silver streaming company in the world. Forecast 2010 production, based upon its current agreements, is 22.2 million ounces of silver and 20,000 ounces of gold, for total production of 23.5 million silver equivalent ounces. By 2013, annual production is anticipated to increase significantly to approximately 38 million ounces of silver and 59,000 ounces of gold, for total production of over 40 million silver equivalent ounces. This growth is driven by the Company’s portfolio of world-class assets, including silver streams on Goldcorp’s Penasquito mine and Barrick’s Pascua-Lama project.

Silver Wheaton has included, throughout this document, certain non-GAAP performance measures, including total cash costs of silver and gold on a sales basis, as well as operating cash flows per share and cash operating margin. These non-GAAP measures do not have any standardized meaning prescribed by GAAP, nor are they necessarily comparable with similar measures presented by other companies. Cash costs are presented as they represent an industry standard method of comparing certain costs on a per unit basis. Cash operating margin is defined as the realized selling price less total cash cost per silver equivalent ounce. The Company believes that certain investors use this information to evaluate the Company’s performance. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. During the three months ended June 30, 2010, the Company’s total cash costs, which were equivalent to the Company’s cost of sales in accordance with GAAP, were US$3.97 per ounce of silver and US$300 per ounce of gold (three months ended June 30, 2009 – US$3.97 per ounce of silver and US$300 per ounce of gold).

Source: Company website, you can find all the numbers here as well.

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