Silver Wheaton Buying Mercator Silver

Silver Wheaton said it will make an upfront cash payment of $42 million for the silver, which will come from the Mineral Park Mine. After the upfront payment, Silver Wheaton also will pay a fixed price as the silver is delivered.

Mercator expects that before July it will begin producing "concentrate," and that within about nine months concentrate production will reach 50,000 tons per day.

Payable silver production is expected to average approximately 600,000 ounces per year over the first 21 years of operations.

Silver Wheaton's expected to sell about 15 million ounces of silver in 2008, increasing to 25 million ounces in 2010.

Shares of Silver Wheaton fell $1.40, or 7.3 percent, to $17.97 in afternoon trading.