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VANCOUVER - Silver Wheaton Corp. (TSX:SLW) has agreed to buy 75 per cent of the production from Farallon Resources Ltd.'s (TSX:FAN) Campo Morado property in Mexico for about US$80 million.

Under the deal announced Tuesday, Silver Wheaton will pay Farallon US$3.90 per ounce or the prevailing market price per ounce of silver delivered.

The up-front payment will be made on a draw-down basis to fund ongoing capital expenditures at the Campo Morado zinc-gold-silver-lead property.

The deal will give Silver Wheaton 800,000 ounces per year, company president and chief executive Peter Barnes said Tuesday, from a project that has low political risk and "rich exploration potential."

"We are very excited about this deal, we think this asset has huge potential to continue to grow," Barnes said during a conference call.

Barnes said Silver Wheaton will not need to raise money to do the deal, but is talking to its banks about increasing its credit facility by another $100 million to help it with possible future deals.

"As long as we keep on doing deals this size, I think we can do several more before we think about equity-related financing," Barnes said.

Last month, Silver Wheaton confirmed it will buy 45 per cent of silver produced at Augusta Resource Corp.'s (TSX:AZC) Rosemont Copper Project in Arizona for an up-front cash payment of US$165 million.

The deal with Farallon is subject to a one per cent annual adjustment starting in year four after production commences.

Production from the first deposit at Campo Morado is expected to begin in the third quarter of 2008.

The Campo Morado property is located 160 kilometres southwest of Mexico City and hosts one of the largest volcanogenic massive sulphide systems in Mexico.

Farallon said a portion of the funds from Silver Wheaton will be used to complete construction and as startup working capital for the G-9 sulphide deposit at Campo Morado.

"We are now fully funded to production at G-9, which coupled with recent exploration successes, positions the company to deliver on both of its corporate objectives: to advance G-9 to production and to find another G-9," Farallon president and CEO Dick Whittington said.

On Tuesday, shares in Silver Wheaton closed down six cents at $13.93 on the Toronto Stock Exchange, while Farallon shares were up six cents at 80 cents.

Silver Wheaton was spun off in 2004 by Wheaton River Minerals, which then merged with Goldcorp in early 2005.

Last month, Silver Wheaton lowered its production forecast for 2008 by six per cent to between 13 and 15 million ounces, citing possible "hiccups" at its Luismin and Penasquito properties.

Silver Wheaton has also signed a deal for a share annual silver production from the Penasquito zinc-gold-silver-lead mine being developed by Goldcorp Inc. (TSX:G) when it comes into production later this year or in 2009.

It also has an agreement to buy all of the silver produced by Goldcorp's Luismin mining operations, which has been recently mining lower than reserve grade ore.