Minco Silver and Sterling Mining Co (IM, May 2008) have signed a letter of agreement whereby Minco Silver will acquire 100% of the issued and outstanding shares of Sterling. The transaction will result in Minco Silver controlling two worldclass silver deposits including the Fuwan Silver property in China and the Sunshine Mine in Idaho, USA.

Under the terms of the transaction, Minco Silver has offered 0.51 of a share for each one Sterling share which equates to an offer of $1.58 per Sterling share based on Minco Silver’s July 21, 2008 closing price. The offer values Sterling at $62.3 million. Upon completion of the transaction, the combined company will have approximately 52 million common shares issued and outstanding, plus options and warrants. Minco Silver shareholders will own 61% and former Sterling shareholders will own 39% of the combined company.

Minco Silver has extended a $15 million line of credit to Sterling, of which $5 million is to be funded immediately, bearing 10% annual interest compounded monthly, to be used for continued operations at the Sunshine mine. A management committee has been established to supervise the day-to-day operations of Sterling during the transaction period. It is comprised of seven members, four from Minco Silver and three from Sterling.

The combination will bring significant benefits to each of the companies. The Boards of Directors of each company have supported the proposed combination and management of the two companies believe that the transaction will provide the shareholders of each company an opportunity to participate in the future growth of a larger and more established company with a broader range of prospects, a more diversified asset base, and a management team that has a proven ability to execute.

Upon completion of the Transaction, the combined company will have:

• Two world-class silver deposits containing 418 Moz of silver resources
• Potential annual silver production in excess of 10 Moz by 2011
• Solid platform for profitable growth and increased shareholder value
• Reduced risk profile.

Minco Silver’s Chairman and CEO, Dr. Ken Cai, commented: “The combination of these companies will bring together two worldclass silver deposits with significant exploration upside. The integrated board and management team is well positioned to build one of the world’s leading primary silver producing companies through synergies in China and North America. Further, this consolidation should appeal to a broader investor audience and greater market liquidity.”

Sterling’s Interim President, Ken Berscht, added: “This merger represent the culmination of the strategic review process announced on June 4 and completed with the assistance and advice of our financial advisor TD Securities. It provides the financial resources to fund the immediate requirements of Sterling and ensures that the Sunshine mine will be a significant contributor going forward. We are excited about the premium offer and the opportunity for Sterling shareholders to participate in the new silver focused entity.”

Minco Silver is a TSX listed company focusing on the acquisition and development of silver dominant projects. It has a 100% interest in the worldclass Fuwan silver deposit, situated along the northeast margin of the highly prospective Fuwan Silver Belt. Minco Silver is the exclusive vehicle for pursuing silver opportunities in China pursuant to a strategic alliance agreement between Minco Gold and Silver Standard Resources.

Sterling Mining controls the Sunshine mine, which restarted initial production in December 2007, and related exploration lands in the prolific Silver Valley of northern Idaho. Sterling Mining also holds several silver properties in Mexico, including the Barones Tailings Project in the Zacatecas Silver District.

 The transaction is subject to completion of confirmatory due diligence, definitive documentation, regulatory approvals, and obtaining shareholder approval at a special meeting of the shareholders of Sterling. The letter agreement includes a commitment by Sterling to not solicit alternative transactions to the transaction. A break fee of $2 million is payable to Minco Silver under certain conditions. The transaction is expected to close by December, 2008.

Subject to regulatory approval, Minco Silver will pay at closing a finders’ fee of 50,000 common shares to an arms-length third party related to the transaction.