Vancouver-based silver reseller Silver Wheaton has signed an agreement to buy the entire silver production from Mercator Minerals' Mineral Park copper/molybdenum/silver mine, in Arizona.

Silver Wheaton will pay Mercator $42-million in cash up front for the rights to the life-of-mine silver production from Mineral Park, and will pay $3,90/oz for the metal, or the prevailing market price if it falls below that level.

Mineral Park is expected to operate for 25 years, with payable silver production of about 600 000 oz/y, Silver Wheaton said on Monday.

Silver Wheaton buys silver from producers on a long-term basis, at predetermined prices, and then sells the metal at the current spot price.

Silver, like gold, has gained significantly in value over the last months, and is currently trading above the psychological $20/oz mark.

Last year, Silver Wheaton agreed to buy silver from the Penasquito mine, in Mexico and Hellas Gold's Stratoni project in Greece.

It also signed an agreement to buy silver from Augusta Resource's Rosemont project, in the US.

"We are proud to be partnered with another successful US based copper producer from which we expect to begin receiving delivery of silver this year," Silver Wheaton president and CEO Peter Barnes said on Monday.

The Mineral Park mine currently produces copper from SX/EW leach operations, but construction is well under way on a flotation operation that will produce copper-silver and molybdenum concentrates.

Mercator expects that concentrate production will commence before July 2008 from a 25 000 t/d operation, with production increasing to 50 000 t/d approximately nine months later, Silver Wheaton said.

Mercator has agreed to provide a completion guarantee, specifying a minimum production level by a certain date.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.