---



---

Managements Discussion
  and Analysis of Results of Operations and Financial Condition for the Year Ended
  December 31, 2012

This Managements Discussion and Analysis (MD&A) should
be read in conjunction with Silver Wheaton Corp.s (Silver Wheaton or the
Company) consolidated financial statements for the year ended December 31,
2012 and related notes thereto which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB). This MD&A contains
forward looking statements that are subject to risk factors set out in the
cautionary note contained on page 44 of this MD&A. All figures are presented
in United States dollars unless otherwise noted. This MD&A has been prepared
as of March 21, 2013.

Highlights

- Record attributable silver equivalent production for the three months and
  year ended December 31, 2012 of 8.5 million ounces (7.0 million ounces of
  silver and 26,400 ounces of gold) and 29.6 million ounces (26.9 million ounces
  of silver and 50,000 ounces of gold), respectively, representing an increase
  of 22% and 17% over the comparable periods in 2011.
- Record silver equivalent sales for the three months and year ended December
  31, 2012 of 9.1 million ounces (7.3 million ounces of silver and 33,000 ounces
  of gold) and 27.3 million ounces (24.8 million ounces of silver and 46,100
  ounces of gold), respectively, representing an increase of 53% and 30% over
  the comparable periods in 2011.
- Record revenue for the three months and year ended December 31, 2012 of
  $287.2 million and $849.6 million, respectively, compared with $191.9 million
  and $730.0 million for the comparable periods in 2011, representing an
  increase of 50% and 16%.
- Record net earnings for the three months and year ended December 31, 2012
  of $177.7 million ($0.50 per share) and $586.0 million ($1.66 per share),
  respectively, compared with $144.7 million ($0.41 per share) and $550.0
  million ($1.56 per share) for the comparable periods in 2011, representing an
  increase of 23% and 7%.
- Record operating cash flows for the three months and year ended December
  31, 2012 of $254.0 million ($0.72 per share1) and $719.4 million ($2.03 per
  share1), respectively, compared with $163.7 million ($0.46 per share1) and
  $626.4 million ($1.77 per share1) for the comparable periods in 2011,
  representing an increase of 55% and 15%.
- Based on operating cash flows generated by the Company during the three
  months ended December 31, 2012, a dividend of $0.14 per common share has been
  approved for shareholders of record on April 2, 2013.
- Average cash costs2 for the three months and year ended December 31, 2012
  of $4.70 and $4.30 per silver equivalent ounce, respectively, representing an
  increase of 16% and 5% over the comparable periods in 2011.
- Cash operating margin3 for the three months and year ended December 31,
  2012 of $26.76 and $26.79 per silver equivalent ounce, respectively,
  representing a decrease of 5% and 12% relative to the comparable periods in
  2011.
- As at December 31, 2012, approximately 3.8 million payable silver
  equivalent ounces attributable to the Company have been produced at the
  various mines and will be recognized in future sales as they are delivered to
  the Company under the terms of their contracts. This represents a decrease of
  1.4 million payable silver equivalent ounces during the three month period
  ended December 31, 2012.

|1 | Refer to discussion on non-IFRS measure (i) on page 25 of
    this MD&A.  
|- | --------------------------------------------------------------------------
|2 | Refer to discussion on non-IFRS measure (ii) on page 26
    of this MD&A. 
|3 | Refer to discussion on non-IFRS measure (iii) on page 27
    of this MD&A.

SILVER WHEATON 2012 ANNUAL REPORT[1]

---

- As per Barrick Gold Corporations (Barrick) year end 2012 MD&A,
  Barrick finalized the cost estimate and schedule for its world-class
  gold-silver Pascua-Lama project during the fourth quarter. Expected total mine
  construction capital remains unchanged in the range of $8.0 to $8.5 billion,
  and includes a contingency of 15% to 20% of remaining capital. First gold
  production continues to be targeted for the second half of 2014.
- On September 28, 2012, the Company announced that it had closed the
  previously announced purchase from HudBay Minerals Inc. ("Hudbay") of 100% of
  the life of mine silver production from its currently producing 777 mine
  ("777"), 100% of the life of mine silver production from its Constancia
  project ("Constancia"), as well as 100% of gold production from the 777 mine
  until Constancia satisfies a completion test, or the end of 2016, whichever is
  later. At that point, Silver Wheaton's share of gold production from 777 will
  be reduced to 50% for the remainder of the mine life.
- On February 28, 2013, the Company announced that it had entered into a
  definitive agreement to acquire from Vale S.A. ("Vale") an amount of gold
  equal to 25% of the life of mine gold production from its Brazilian Salobo
  mine, as well as 70% of the gold production, for a 20 year term, from certain
  of its Canadian Sudbury mines.
- On March 19, 2013, the Company announced that its attributable silver and
  gold reserves had increased to 851.4 million ounces and 4.96 million ounces,
  respectively, as a result of organic and acquisition growth, inclusive of the
  acquisition of gold streams from Vales Salobo and Sudbury mines. Based on
  reserve estimates as at December 31, 20121, following the Vale
  transaction, silver equivalent2reserves attributable to Silver
  Wheaton have grown to 1.12 billion ounces.
- On February 28, 2013, the Company entered into two new credit facilities,
  comprised of (i) a $1 billion revolving credit facility having a 5 year term;
  and (ii) a $1.5 billion bridge financing facility having a 1 year term, as
  more fully described in the Subsequent Events section of this MD&A. These
  facilities replaced the pre-existing $400 million revolving credit facility.

|1 | Mineral reserves are reported as of December 31, 2012,
      other than as disclosed in footnote 6 to the Attributable Reserves and
    Resources tables on page 42 of this MD&A.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | Attributable gold reserves have been converted to a
      silver equivalent basis on the ratio of
53.3:1.                                                                        

SILVER WHEATON 2012 ANNUAL REPORT[2]

---

Overview

Silver Wheaton Corp. is a mining company which generates its
revenue primarily from the sale of silver and gold. The Company is listed on the
New York Stock Exchange and the Toronto Stock Exchange and trades under the
symbol SLW. In addition, the Company has share purchase warrants that are listed
on the Toronto Stock Exchange and trade under the symbol SLW.WT.U.

To date, the Company has entered into 20 long-term purchase
agreements associated with silver and/or gold (precious metal purchase
agreements), relating to 23 different mining assets, whereby Silver Wheaton
acquires silver and gold production from the counterparties for a per ounce cash
payment at or below the prevailing market price. Attributable silver and gold as
referred to in this MD&A and financial statements is the silver and gold
production to which Silver Wheaton is entitled pursuant to the various purchase
agreements. During the year ended December 31, 2012, the per ounce price paid by
the Company for silver and gold under the agreements averaged $4.06 and $362,
respectively. The primary drivers of the Companys financial results are the
volume of silver and gold production at the various mines and the price of
silver and gold realized by Silver Wheaton upon sale.

Outlook

Silver Wheaton is the largest precious metals streaming company
in the world. Based upon its current agreements, forecast 2013 attributable
production is approximately 33.5 million silver equivalent ounces, including
145,000 ounces of gold. By 2017, annual attributable production is anticipated
to increase significantly to approximately 53 million silver equivalent ounces,
including 180,000 ounces of gold. This growth is driven by the Companys
portfolio of low-cost and long-life assets, including the recently acquired gold
streams on Vales Salobo and Sudbury mines in addition to silver streams on
Barricks Pascua-Lama project and Hudbays Constancia project.

The $778 million of cash and cash equivalents as at December
  31, 2012 combined with the liquidity provided by the $2.5 billion of new credit
  facilities positions the Company well to fund all outstanding commitments as
  well as providing flexibility to acquire additional accretive precious metal
  stream interests.

SILVER WHEATON 2012 ANNUAL REPORT[3]

---

Silver and Gold Interests

The following table summarizes the silver and gold interests
currently owned by the Company:

|Silver and GoldInterests | MineOwner        | Location ofMine | UpfrontConsideration1 | AttributableProduction to bePurchased | Term ofAgreement | Date ofContract
|------------------------ | ---------------- | --------------- | --------------------- | ------------------------------------- | ---------------- | ---------------
|Silver                   | Gold            
|San Dimas                | Primero 2        | Mexico          | $   189,799 3         | 100% 2                                | -                | Life of Mine   
|Zinkgruvan               | Lundin           | Sweden          | $     77,866          | 100%                                  | -                | Life of Mine   
|Yauliyacu                | Glencore         | Peru            | $   285,000           | 100% 4                                | -                | 20 years       
|Peñasquito               | Goldcorp         | Mexico          | $   485,000           | 25%                                   | -                | Life of Mine   
|Minto                    | Capstone         | Canada          | $    54,805 5         | 100%                                  | 100% 6           | Life of Mine   
|Cozamin                  | Capstone         | Mexico          | $    41,959 5         | 100%                                  | -                | 10 years       
|777                      | Hudbay           | Canada          | $   455,100           | 100%                                  | 100%/50% 7       | Life of Mine   
|Salobo                   | Vale             | Brazil          | $ 1,330,000 8         | -                                     | 25%              | Life of Mine   
|Sudbury                  | Vale             | Canada          | $   623,572 9         | -                                     | 70%              | 20 years       
|Barrick                  |                  |                 | $   625,000           |                                       |                  |                
|Pascua-Lama              | Barrick          | Chile/Argentina |                       | 25%                                   | -                | Life of Mine   
|Lagunas Norte            | Barrick          | Peru            |                       | 100%                                  | -                | 4 years 10     
|Pierina                  | Barrick          | Peru            |                       | 100%                                  | -                | 4 years 10     
|Veladero                 | Barrick          | Argentina       |                       | 100% 11                               | -                | 4 years 10     
|Other                    |                  |                 | $  839,203            |                                       |                  |                
|Los Filos                | Goldcorp         | Mexico          | $     4,463 3         | 100%                                  | -                | 25 years       
|Stratoni                 | Eldorado Gold 12 | Greece          | $   57,500            | 100%                                  | -                | Life of Mine   
|Neves-Corvo              | Lundin           | Portugal        | $   35,350 5          | 100%                                  | -                | 50 years       
|Aljustrel                | I'M SGPS         | Portugal        | $     2,451 5         | 100%                                  | -                | 50 years       
|Mineral Park             | Mercator         | United States   | $   42,000            | 100%                                  | -                | Life of Mine   
|Campo Morado             | Nyrstar NV       | Mexico          | $   79,250            | 75%                                   | -                | Life of Mine   
|Keno Hill                | Alexco           | Canada          | $    50,000           | 25%                                   | -                | Life of Mine   
|Rosemont                 | Augusta          | United States   | $ 230,000 13          | 100%                                  | 100%             | Life of Mine   
|Loma de La Plata         | Pan American     | Argentina       | $   43,289 14         | 12.5%                                 | -                | Life of Mine   
|Constancia               | Hudbay           | Peru            | $ 294,900 16          | 100%                                  | -                | Life of Mine   

|1)  | Expressed in United States dollars, rounded to the
      nearest thousand; excludes closing costs and capitalized interest, where
    applicable.                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2)  | Until August 6, 2014, 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. After August 6, 2014, Primero will deliver a
      per annum amount to Silver Wheaton equal to the first 6 million ounces of
    payable silver produced at San Dimas and 50% of any excess.
|3)  | As more fully described in the San Dimas section on page
      5 of this MD&A, on August 6, 2010, Goldcorp completed the sale of the
      San Dimas mine, which was part of the Luismin mining operations
      (Luismin), to Primero. The original cost of Luismin was allocated to San
      Dimas and Los Filos based on the estimated fair values of these silver
    interests as at August 6, 2010.                                                                                                                
|4)  | To a maximum of 4.75 million ounces per annum. In the
      event that silver sold and delivered to Silver Wheaton in any year totals
      less than 4.75 million ounces, the amount sold and delivered to Silver
      Wheaton in subsequent years will be increased to make up for any
    cumulative shortfall, to the extent production permits.                                                                                                                                                                       
|5)  | Comprised of the value allocated to the silver and gold
      interests upon the Companys acquisition of Silverstone Resources Corp.,
      which was closed on May 21, 2009 (the Silverstone
Acquisition).                                                                                                                                                                                                                                                                                                              
|6)  | The Company is entitled to acquire 100% of the first
    30,000 ounces of gold produced per annum and 50% thereafter.                                                                                                                                                                                                                                                                                                                                                                                                       
|7)  | Silver Wheaton is entitled to acquire 100% of the life of
      mine gold production from Hudbays 777 mine until Hudbays Constancia
      project satisfies a completion test, or the end of 2016, whichever is
      later. At that point, Silver Wheatons share of gold production from 777
    will be reduced to 50% for the life of the mine.                                                                                                                                                                       
|8)  | Does not include the contingent liability related to the
      Salobo mine expansion (see the Other Contractual Obligations and
    Contingencies section of this MD&A).                                                                                                                                                                                                                                                                                                                                                    
|9)  | Comprised of a $570 million upfront cash payment plus
      warrants to purchase 10 million shares of Silver Wheaton common stock at a
    strike price of $65, with a term of 10 years.                                                                                                                                                                                                                                                                                                                                    
|10) | Barrick will deliver to Silver Wheaton silver production
      from the currently producing mines until December 31, 2013. In addition,
      during 2014 and 2015, Silver Wheaton will be entitled to all or a portion
      of the silver production from these mines to the extent of any production
      shortfall at Pascua-Lama relative to the completion guarantee provided by
      Barrick, until such time as the completion guarantee is
  satisfied.                                                          
|11) | Silver Wheaton's attributable silver production is
      subject to a maximum of 8% of the silver contained in the ore mined at
    Veladero during the period.                                                                                                                                                                                                                                                                                                                                                             
|12) | 95% owned by Eldorado Gold Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|13) | Currently reflected as a contingent obligation, payable
      on an installment basis to partially fund construction of the Rosemont
      mine once certain milestones are achieved, including the receipt of key
      permits and securing the necessary financing to complete construction of
    the mine.                                                                                                                                                                                                             
|14) | Comprised of $10.9 million allocated to the silver
      interest upon the Silverstone Acquisition in addition to a contingent
      liability of $32.4 million, payable upon the satisfaction of certain
      conditions, including Pan American receiving all necessary permits to
      proceed with the mine construction.                                                                                                                                                                                             
|15) | Definitive terms of the agreement are in the process of
      being finalized.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|16) | Comprised of $44.9 million which was paid on the closing
      date, with a further payment of $125 million to be made once $500 million
      in capital expenditures have been incurred at Constancia, and a final
      payment of $125 million to be made once $1 billion in capital expenditures
      have been incurred.                                                                                                                                                                                             

SILVER WHEATON 2012 ANNUAL REPORT[4]

---

San Dimas

On October 15, 2004, the Company entered into an agreement with
Goldcorp Inc. (Goldcorp) to acquire an amount equal to 100% of the silver
produced by Goldcorps Luismin mining operations in Mexico (owned at the date of
the transaction) for a period of 25 years. The Luismin mining operations
consisted primarily of the San Dimas and the Los Filos mines.

On August 6, 2010, Goldcorp completed the sale of the San Dimas
mine to Primero Mining Corp. (Primero). In conjunction with the sale, Silver
Wheaton amended its silver purchase agreement relating to the mine. The term of
the agreement, as it relates to San Dimas, was extended to the life of mine.
During the first four years following the 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 a per annum amount to Silver Wheaton 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. Primero has provided Silver Wheaton with a
right of first refusal on any metal stream or similar transaction it enters
into. During the year ended December 31, 2012, San Dimas produced approximately
1.5 million ounces of payable silver in excess of the 3.5 million ounce
threshold, of which Silver Wheaton received 50%.

On October 15, 2012, Primero announced a mine and mill
expansion of San Dimas. Primero has elected a staged approach to the full
expansion and has approved the expenditure of a total of $14.4 million to expand
the San Dimas mine and mill from 2,000 tonnes per day currently to 2,500 tonnes
per day. Construction of the mine and mill expansion began in October 2012, with
an estimated completion during the first quarter of 2014. A further plant
expansion to 3,000 tonnes per day continues to be assessed and is dependent on
future exploration success by Primero.

As of December 31, 2012, the Company has received approximately
50.8 million ounces of silver related to San Dimas under the agreement,
generating cumulative operating cash flows of approximately $678 million. As at
June 30, 2012, the San Dimas mine had proven and probable silver reserves of
35.2 million ounces and inferred silver resources of 66.3 million ounces (as
described in the Attributable Reserves and Resources section of this MD&A).

Zinkgruvan

On December 8, 2004, the Company entered into an agreement with
Lundin Mining Corporation (Lundin) to acquire 100% of the silver produced by
Lundins Zinkgruvan mining operations in Sweden for the life of mine.

As of December 31, 2012, the Company has received approximately
14.2 million ounces of silver related to the Zinkgruvan mine under the
agreement, generating cumulative operating cash flows of approximately $208
million. As at June 30, 2012, the Zinkgruvan mine had proven and probable silver
reserves of 34.1 million ounces, measured and indicated silver resources of 19.0
million ounces and inferred silver resources of 12.0 million ounces (as
described in the Attributable Reserves and Resources section of this MD&A).

Yauliyacu

On March 23, 2006, the Company entered into an agreement with
Glencore International AG (Glencore) to acquire an amount equal to 100% of the
silver produced from Glencores Yauliyacu mining operations in Peru, up to a
maximum of 4.75 million ounces per year, for a period of 20 years. In the event
that silver sold and delivered to Silver Wheaton in any year totals less than
4.75 million ounces, the amount sold and delivered to Silver Wheaton in
subsequent years will be increased to make up for any cumulative shortfall, to
the extent production permits. The cumulative shortfall as at March 23, 2012,
representing the six year anniversary, was 13.0 million ounces. During the term
of the agreement, Silver Wheaton has a right of first refusal on any future
sales of silver streams from the Yauliyacu mine and a right of first offer on
future sales of silver streams from any other mine owned by Glencore at the time
of the initial transaction.

Since mid-2009, concentrate shipments from the Yauliyacu mine
  have been affected by the shut-down of the Doe Run Peru La Oroya smelter, historically
  the largest buyer of the silver bearing concentrate produced at the mine. Since
  that time, alternative arrangements have been made by Glencore. As at December
  31, 2012, approximately 0.6 million ounces of cumulative payable silver equivalent
  ounces have been produced at Yauliyacu but not yet delivered to the Company,
  representing a decrease of 0.6 million payable silver equivalent ounces during
  the three month period ended December 31, 2012.

SILVER WHEATON 2012 ANNUAL REPORT[5]

---

As of December 31, 2012, the Company has received approximately
17.9 million ounces of silver related to the Yauliyacu mine under the agreement,
generating cumulative operating cash flows of approximately $266 million. As at
December 31, 2012, the Yauliyacu mine had proven and probable silver reserves of
12.7 million ounces and measured and indicated silver resources of 39.7 million
ounces (as described in the Attributable Reserves and Resources section of this
MD&A).

Peñasquito

On July 24, 2007, the Company entered into an agreement with
Goldcorp to acquire an amount equal to 25% of the silver produced from
Goldcorps Peñasquito mining operations in Mexico for the life of mine.

As stated in Goldcorps January 7, 2013 press release, the
Peñasquito mine achieved throughput of 98,800 tonnes per day during the fourth
quarter of 2012, which is expected to increase to 105,000 tonnes per day in 2013
as Goldcorp brings additional water wells into production within the Cedros
Basin in addition to new dewatering wells within the Chile Colorado pit. A water
and tailings study to develop a comprehensive long-term water strategy for the
Peñasquito district is underway and Goldcorp expects this study to be completed
during the first half of 2013.

As at December 31, 2012, approximately 1.3 million ounces of
cumulative payable silver equivalent ounces have been produced at Peñasquito but
not yet delivered to the Company, representing a decrease of 0.3 million payable
silver equivalent ounces during the three month period ended December 31,
2012.

As of December 31, 2012, the Company has received approximately
14.0 million ounces of silver related to the Peñasquito mine under the
agreement, generating cumulative operating cash flows of approximately $350
million. As at December 31, 2012, the Companys 25% share of the Peñasquito
proven and probable silver reserves was 227.9 million ounces, measured and
indicated silver resources was 63.1 million ounces and inferred silver resources
was 9.9 million ounces (as described in the Attributable Reserves and Resources
section of this MD&A).

Minto

On May 21, 2009, the Company completed the acquisition of
Silverstone Resources Corp. (the Silverstone Acquisition). As part of the
Silverstone Acquisition, the Company acquired a precious metals purchase
agreement with Capstone Mining Corp. (Capstone) to acquire 100% of the silver
and gold produced (subject to certain thresholds) from Capstones Minto mine in
Canada for the life of mine. The Company is entitled to acquire 100% of all the
silver produced and 100% of the first 30,000 ounces of gold produced per annum
and 50% thereafter. The silver production, sales and related costs associated
with this agreement are reflected in this MD&A and financial statements as
part of Other mines.

As of December 31, 2012, the Company has received approximately
0.6 million ounces of silver and 79,000 ounces of gold related to the Minto mine
under the agreement, generating cumulative operating cash flows of approximately
$98 million. As at December 31, 2011, Minto had proven and probable reserves of
1.8 million ounces of silver and 220,000 ounces of gold, measured and indicated
resources of 3.9 million ounces of silver and 380,000 ounces of gold and
inferred resources of 0.8 million ounces of silver and 70,000 ounces of gold (as
described in the Attributable Reserves and Resources section of this MD&A).

Cozamin

As part of the Silverstone Acquisition, the Company acquired a
silver purchase agreement with Capstone to acquire 100% of the silver produced
from Capstones Cozamin mine in Mexico for a period of 10 years, commencing on
April 4, 2007.

As of December 31, 2012, the Company has received approximately
  5.1 million ounces of silver related to the Cozamin mine under the agreement,
  generating cumulative operating cash flows of approximately $116 million. As
  at December 31, 2011, the Company's share of the Cozamin proven and probable
  silver reserves was 9.8 million ounces (as described in the Attributable Reserves
  and Resources section of this MD&A).

SILVER WHEATON 2012 ANNUAL REPORT[6]

---

Barrick

On September 8, 2009, the Company entered into an agreement
with Barrick to acquire an amount equal to 25% of the life of mine silver
production from its Pascua-Lama project which is located in Chile and Argentina,
as well as 100% of the silver production from its Lagunas Norte mine and Pierina
mine, which are both located in Peru, and its Veladero1mine which is
located in Argentina (collectively referred to as the Barrick mines) until the
end of 2013.

Barrick has provided Silver Wheaton with a completion
guarantee, requiring Barrick to complete Pascua-Lama to at least 75% of design
capacity by December 31, 2015. During 2014 and 2015, Silver Wheaton will be
entitled to the silver production from the currently producing mines to the
extent of any production shortfall at Pascua-Lama, until Barrick satisfies the
completion guarantee. If the requirements of the completion guarantee have not
been satisfied by December 31, 2015, the agreement may be terminated by Silver
Wheaton. In such an event, Silver Wheaton will be entitled to the return of the
upfront cash consideration of $625 million less a credit for silver delivered up
to the date of that event.

As per Barricks year end 2012 MD&A, during the fourth
quarter of 2012 Barrick finalized the cost estimate and schedule for its
Pascua-Lama project. The total pre-production capital budget of $8.0 to $8.5
billion, of which $4.2 billion has been spent as at December 31, 2012, remains
unchanged and includes a contingency of 15% to 20% of the remaining capital
costs. As of December 31, 2012 construction was approximately 40% complete with
first gold production continuing to be targeted for the second half of 2014. The
four kilometer long tunnel which conveys the ore from Chile to Argentina was
approximately 70% complete. Construction of the primary crusher in Chile
commenced in January 2013 and in Argentina, construction of the process plant
facility advanced with approximately 60 percent of structural steel erected.
Once in production, Pascua-Lama is forecast to be one of the largest and lowest
cost gold mines in the world with an expected mine life in excess of 25 years.
In its first full five years of operation, Silver Wheatons silver production
attributable to Pascua-Lama is expected to average 9 million ounces
annually.

As of December 31, 2012, the Company has received approximately
8.9 million ounces of silver related to the Barrick mines under the agreement,
generating cumulative operating cash flows of approximately $211 million. As at
December 31, 2012, the Companys 25% share of the Pascua-Lama proven and
probable silver reserves was 169.1 million ounces, measured and indicated silver
resources was 46.3 million ounces and inferred silver resources was 4.0 million
ounces (as described in the Attributable Reserves and Resources section of this
MD&A). In addition, the Companys estimated share of the proven and probable
silver reserves contained in the Lagunas Norte, Pierina, and Veladero mines is
33.9 million ounces.

Update on Matters Relating to Project Development

| | i.  | Argentine Glacier Legislation and Constitutional
      Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | In November 2010, a federal glacier protection law came
      into force that bans new mining exploration and exploitation activities on
      glaciers and in the peri-glacial environment, and subjects ongoing
      mining activities to an environmental audit. If such an audit identifies
      significant impacts on glaciers and the peri-glacial environment, the
      relevant authority is empowered to take action, which, according to the
      legislation, could include the suspension or relocation of the activity.
      In the case of the Veladero mine and the Pascua-Lama project, the
      competent authority is the Province of San Juan. In late January 2013, the
      Province of San Juan announced that it had completed the required
      environmental audit, which concluded that Veladero and Pascua-Lama do not
      impact glaciers or peri-glaciers.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | On July 3, 2012, the Supreme Court of Argentina
      overturned temporary injunctions granted by the Federal Court in San Juan
      suspending the application of the federal law in the Province and in
      particular to Veladero and Pascua-Lama. The Supreme Court has not yet
      ruled on the constitutionality of the law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ii. | Pascua-Lama Constitutional Protection
    Actions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | In September and October, 2012, two constitutional rights
      protection actions were filed in the Court of Appeals of Copiapo, Chile by
      representatives of indigenous communities and certain other individuals
      against Compania Minera Nevada (CMN), Barricks Chilean subsidiary that
      holds the Chilean portion of the Pascua-Lama project, and the
      Environmental Evaluation Commission (EEC) of the III Region of Atacama,
      Chile, the regulatory body with oversight authority over the Pascua-Lama
      project.                                                                                                                                                                                                                                                                                                                                          

|1 | Silver Wheaton's attributable silver production is
      subject to a maximum of 8% of the silver contained in the ore mined at
      Veladero during the period.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

SILVER WHEATON 2012 ANNUAL REPORT[7]

---

| |      | The plaintiffs in the actions allege, among other
      matters, that the construction of the Pascua-Lama project affects their
      constitutional rights to life and to live in an environment free of
      contamination. The relief sought in the actions is the suspension of the
      construction of the Pascua-Lama project in Chile until all environmental
      obligations are fulfilled. Both cases have been admitted for review by the
      Court, with the first action proceeding toward a hearing. Barrick has
      stated that the outcome of the regulatory process related to these actions
      is uncertain but that it intends to vigorously defend itself against these
      actions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | iii. | Dust Related Health and Safety Concerns                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      | As per Barricks year-end 2012 MD&A, during the
      fourth quarter of 2012, after observing increased dust in the open pit
      area, exacerbated by stronger than normal winds, Barrick voluntarily
      halted pre-stripping activities at the Pascua-Lama project in order to
      implement additional dust mitigation and control measures. Regulatory
      authorities in Chile subsequently issued an order to suspend pre-stripping
      activities until dust-related health and safety concerns are addressed.
      Barrick has stated that the Pascua-Lama project is strengthening dust
      mitigation and control measures, including enhanced tunnel ventilation,
      revised blasting fragmentation, use of more robust protective equipment
      and a robust dust monitoring system. Barrick has also indicated that
      further restrictions may be placed on the Pascua-Lama project due to the
      need to repair and improve certain aspects of the water management system
      in Chile, and that pre-stripping is unlikely to recommence until matters
      related to dust and water management are resolved. Barrick has stated that
      to date, the suspension of pre-stripping has not altered Barricks target
      of first production in the second half of 2014. However, the outcomes of
      the regulatory processes related to dust and water management, and of the
      constitutional rights protection actions (see above) is uncertain and
      Barrick has stated that they will continue to assess the potential for
      impacts on the timing of first production.

777

On August 8, 2012, the Company entered into an agreement with
Hudbay to acquire an amount equal to 100% of the life of mine silver and gold
production from its currently producing 777 mine, located in Canada. Silver
Wheatons share of gold production at 777 will remain at 100% until the later of
the end of 2016 or the satisfaction of a completion test relating to Hudbays
Constancia project, after which it will be reduced to 50% for the remainder of
the mine life. Silver Wheaton made an upfront cash payment of $455.1 million on
the closing date of September 28, 2012 and, in addition, will make ongoing
payments of the lesser of $5.90 per ounce of silver and $400 per ounce of gold
(both subject to an inflationary adjustment of 1% beginning in the fourth year)
or the prevailing market price per ounce of silver and gold delivered. Hudbay
has granted Silver Wheaton a right of first refusal on any future streaming
agreement, royalty agreement, or similar transaction related to the production
of silver or gold from 777. The silver production, sales and related costs
associated with this agreement are reflected in this MD&A and financial
statements as part of Other mines.

As of December 31, 2012, the Company has received approximately
0.3 million ounces of silver and 28,000 ounces of gold related to the 777 mine
under the agreement, generating cumulative operating cash flows of approximately
$49 million. As at December 31, 2011, the Company's share of 777's proven and
probable reserves was 10.9 million ounces of silver and 600,000 ounces of gold
and inferred resources was 1.5 million ounces of silver and 40,000 ounces of
gold (as described in the Attributable Reserves and Resources section of this
MD&A).

Salobo

On February 28, 2013, the Company entered into an agreement to
acquire from Vale an amount of gold equal to 25% of the life of mine gold
production from its currently producing Salobo mine, located in Brazil. Silver
Wheaton made a total upfront cash payment of $1.33 billion on March 12, 2013
and, in addition, will make ongoing payments of the lesser of $400 per ounce of
gold (subject to an inflationary adjustment of 1% beginning in the fourth year)
or the prevailing market price per ounce of gold delivered.

Vale is in the process of expanding the mill throughput
capacity at the Salobo mine to 24 million tonnes per annum (Mtpa) from its
current 12 Mtpa. If the expansion to 24 Mtpa is not completed by December 31,
2016, Silver Wheaton would be entitled to a gross up (a temporary increased
percentage of gold production) based on the pro-rata achievement of the target
production. If throughput capacity is expanded above 28 Mtpa within a
predetermined period, Silver Wheaton will be required to make an additional
payment to Vale based on a set fee schedule ranging from $67 million up to $400
million, dependent on the timing and scale of any expansion.

As at December 31, 2012, the Company's 25% share of the Salobo
  proven and probable gold reserves was 3.4 million ounces, measured and indicated
  gold resources was 770,000 ounces and inferred gold resources was 370,000 ounces
  (as described in the Attributable Reserves and Resources section of this MD&A).

SILVER WHEATON 2012 ANNUAL REPORT[8]

---

Sudbury

On February 28, 2013, the Company entered into an agreement to
acquire from Vale an amount of gold equal to 70% of the gold production from
certain of its currently producing Sudbury mines located in Canada, including
the Coleman mine, Copper Cliff mine, Garson mine, Stobie mine, Creighton mine,
Totten mine and the Victor project (the Sudbury mines) for a period of 20
years. Silver Wheaton made a total upfront cash payment on March 12, 2013 of
$570 million plus warrants to purchase 10 million shares of Silver Wheaton
common stock at a strike price of $65, with a term of 10 years. In addition,
Silver Wheaton will make ongoing payments of the lesser of $400 per ounce of
gold or the prevailing market price per ounce of gold delivered.

As at December 31, 2011, the Company's 70% share of the Sudbury
mines proven and probable gold reserves was 750,000 ounces, measured and
indicated gold resources was 250,000 ounces and inferred gold resources was
400,000 ounces (as described in the Attributable Reserves and Resources section
of this MD&A).

Other

Other silver and gold interests consist of the following:

| | i.    | As part of the agreement with Goldcorp to acquire silver
      from the Luismin mining operations, on October 15, 2004, the Company
      entered into an agreement with Goldcorp to acquire 100% of the silver
      production from its Los Filos mine in Mexico for a period of 25 years,
      commencing October 15, 2004. In addition, pursuant to Goldcorps sale of
      the San Dimas mine, Goldcorp is obligated to deliver to Silver Wheaton 1.5
      million ounces of silver per year until August 6, 2014, which is reflected
      in this MD&A and financial statements as part of the silver production
      and sales relating to San Dimas;
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ii.   | On April 23, 2007, the Company entered into an agreement
      with European Goldfields Limited, which was acquired by Eldorado Gold
      Corporation (Eldorado Gold) on February 24, 2012, to acquire 100% of the
      life of mine silver production from its 95% owned Stratoni mine in
      Greece;                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | iii.  | As part of the Silverstone Acquisition, the Company
      acquired an agreement with Lundin to acquire 100% of the silver production
      from its Neves-Corvo mine in Portugal for a period of 50 years, commencing
      June 5, 2007;                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | iv.   | As part of the Silverstone Acquisition, the Company
      acquired an agreement with IM SGPS to acquire 100% of the silver
      production from its Aljustrel mine in Portugal for a period of 50 years,
      commencing June 5, 2007;                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | v.    | On March 17, 2008, the Company entered into an agreement
      with Mercator Minerals Ltd.1(Mercator) to acquire an amount
      equal to 100% of the life of mine silver production from its Mineral Park
      mine in the United States;                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | vi.   | On May 13, 2008, the Company entered into an agreement
      with Farallon Mining Ltd., which was acquired by Nyrstar NV on January 5,
      2011, to acquire an amount equal to 75% of the life of mine silver
      production from its Campo Morado mine in Mexico;                                                                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | vii.  | On October 2, 2008, the Company entered into an agreement
      with Alexco Resource Corp. (Alexco) to acquire an amount equal to 25% of
      the life of mine silver production from its Keno Hill silver district in
      Canada, including the currently producing Bellekeno mine;                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | viii. | On February 11, 2010, the Company entered into an
      agreement with Augusta Resource Corporation (Augusta) to acquire an
      amount equal to 100% of the life of mine silver and gold production from
      the Rosemont Copper project in the United States. The Company is committed
      to pay Augusta total upfront cash payments of $230 million, payable on an
      installment basis to partially fund construction of the Rosemont mine once
      certain milestones are achieved, including the receipt of key permits and
      securing the necessary financing to complete construction of the
    mine;                                  

|1 | The Company has entered into a non-binding letter of
      intent with Mercator to amend the Mineral Park silver purchase agreement.
      Once signed, Mercator will have the right to exercise an option at any
      time until August 31, 2014 to defer delivery of up to 50% of the required
      silver deliveries for one year. All deferred silver will be delivered in
      equal installments over 18 months after the one year deferral period.
      Mercator will compensate Silver Wheaton for any shortfall arising from a
      decrease in the silver spot price at the time of the original delivery
      date until the date of actual delivery, including a 12% annualized
      interest rate. The amendment will also grant Silver Wheaton a right of
      first refusal on any future precious metals streams relating to the El
      Creston project.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SILVER WHEATON 2012 ANNUAL REPORT[9]

---

| | ix. | As part of the Silverstone Acquisition, the Company
      acquired an agreement with Aquiline Resources Inc., which was acquired by
      Pan American Silver Corp. (Pan American) on December 22, 2009, to
      acquire an amount equal to 12.5% of the life of mine silver production
      from the Loma de La Plata zone of the Navidad project in Argentina, the
      definitive terms of which are in the process of being finalized. The
      Company is committed to pay Pan American total upfront cash payments of
      $32.4 million following the satisfaction of certain conditions, including
      Pan American receiving all necessary permits to proceed with the mine
      construction; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | x.  | On August 8, 2012, the Company entered into an agreement
      with Hudbay to acquire an amount equal to 100% of the life of mine silver
      production from the Constancia project in Peru. Silver Wheaton will pay
      Hudbay total cash consideration of $294.9 million, of which $44.9 million
      was paid on the closing date of September 28, 2012, with two further
      payments of $125 million to be made once capital expenditures of $500
      million and $1 billion have been incurred at Constancia. In addition,
      Silver Wheaton will make ongoing payments of the lesser of $5.90 per ounce
      of silver (subject to an inflationary adjustment of 1% beginning in the
      fourth year) or the prevailing market price per ounce of silver delivered.
      If the Constancia processing plant fails to achieve at least 90% of
      expected throughput and recovery by December 31, 2020, Silver Wheaton
      would be entitled to a proportionate return of the $250 million upfront
      cash consideration relating to Constancia. Hudbay has granted Silver
      Wheaton a right of first refusal on any future streaming agreement,
      royalty agreement, or similar transaction related to the production of
      silver from Constancia.

As of December 31, 2012, the Company has received approximately
15.0 million ounces of silver under these agreements, generating cumulative
operating cash flows of approximately $300 million.

As at December 31, 20121, unless otherwise noted,
these silver and gold interests had proven and probable silver reserves of 316.0
million ounces, measured and indicated silver resources of 357.2 million ounces
and inferred silver resources of 200.1 million ounces (as described in the
Attributable Reserves and Resources section of this MD&A).

Long-Term Investments

The Company will, from time to time, invest in securities of
publicly listed mining companies for strategic purposes. The Company held the
following investments as at December 31, 2012:

|                   |   | December 31 |  |   | December 31 | 
|------------------ | - | ----------- |  | - | ----------- | 
|(in thousands)     |   | 2012        |  |   | 2011        | 
|Common shares held | $ | 118,683     |  | $ | 149,039     | 
|Warrants held      |   | 2,694       |  |   | 2,582       | 
|                   | $ | 121,377     |  | $ | 151,621     | 

|1 | Mineral reserves and mineral resources are reported as of
      December 31, 2012, other than as disclosed in footnote 6 to the
      Attributable Reserves and Resources tables on page 42 of this MD&A.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SILVER WHEATON 2012 ANNUAL REPORT[10]

---

Common Shares Held

|               |   |                  |  |   | Three Months                 |   |   |                   |   |   |             | 
|-------------- | - | ---------------- |  | - | ---------------------------- | - | - | ----------------- | - | - | ----------- | 
|               |   |                  |  |   | Ended                        |   |   | Year Ended        |   |   | Year Ended  | 
|               |   | Dec 31 2012      |  |   | Dec 31 2012                  |   |   | Dec 31 2012       |   |   | Dec 31 2012 | 
|               |   |                  |  |   |                              |   |   |                   |   |   |             | 
|               |   |                  |  |   | Fair Value Adjustment Losses |   |   | Realized Gain     |  
|(in thousands) |   | Fair
      Value |  |   | Included
      in OCI        |   |   | on
      Disposal |  
|Bear Creek     | $ | 44,130           |  | $ | (5,896                       | ) | $ | (2,041            | ) | $ | -           | 
|Revett         |   | 14,824           |  |   | (4,092                       | ) |   | (9,747            | ) |   | -           | 
|Sabina         |   | 31,164           |  |   | (7,848                       | ) |   | (13,013           | ) |   | -           | 
|Other          |   | 28,565           |  |   | (10,239                      | ) |   | (6,333            | ) |   | -           | 
|               | $ | 118,683          |  | $ | (28,075                      | ) | $ | (31,134           | ) | $ | -           | 

|               |   |                   |  |   | Three Months                |   |   |                   |   |   |                   | 
|-------------- | - | ----------------- |  | - | --------------------------- | - | - | ----------------- | - | - | ----------------- | 
|               |   |                   |  |   | Ended                       |   |   | Year Ended        |   |   | Year Ended        | 
|               |   | Dec
      31 2011 |  |   | Dec
      31 2011           |   |   | Dec
      31 2011 |   |   | Dec
      31 2011 | 
|               |   |                   |  |   |                             |   |   |                   |   |   |                   | 
|               |   |                   |  |   | Fair Value Adjustment Gains |   |   | Realized Gain on  |  
|(in thousands) |   | Fair
      Value  |  |   | (Losses) Included in OCI    |   |   | Disposal          |  
|Bear Creek     | $ | 46,171            |  | $ | (4,389                      | ) | $ | (80,524           | ) | $ | -                 | 
|Revett         |   | 23,793            |  |   | 4,092                       |   |   | (1,043            | ) |   | -                 | 
|Sabina         |   | 44,177            |  |   | 11,067                      |   |   | (21,817           | ) |   | -                 | 
|Other          |   | 34,898            |  |   | (78                         | ) |   | (15,730           | ) |   | 4,532             | 
|               | $ | 149,039           |  | $ | 10,692                      |   | $ | (119,114          | ) | $ | 4,532             | 

Warrants Held

|               |   |                   |  |   | Three Months                         |   |   |                   |   |   |                   | 
|-------------- | - | ----------------- |  | - | ------------------------------------ | - | - | ----------------- | - | - | ----------------- | 
|               |   |                   |  |   | Ended                                |   |   | Year Ended        |   |   | Year Ended        | 
|               |   | Dec
      31 2012 |  |   | Dec
      31 2012                    |   |   | Dec
      31 2012 |   |   | Dec
      31 2012 | 
|               |   |                   |  |   |                                      |   |   |                   |   |   |                   | 
|               |   |                   |  |   | Fair Value Adjustment (Losses)       |   |   | Realized Loss on  |  
|(in thousands) |   | Fair
      Value  |  |   | Gains
      Included in Net Earnings |   |   | Disposal          |  
|Revett         | $ | -                 |  | $ | -                                    |   | $ | (357              | ) | $ | -                 | 
|Other          |   | 2,694             |  |   | (1,441                               | ) |   | 853               |   |   | -                 | 
|               | $ | 2,694             |  | $ | (1,441                               | ) | $ | 496               |   | $ | -                 | 

SILVER WHEATON 2012 ANNUAL REPORT[11]

---

|               |   |                   |  |   | Three Months                |  |   |                   |   |   |                   |  
|-------------- | - | ----------------- |  | - | --------------------------- |  | - | ----------------- | - | - | ----------------- | -
|               |   |                   |  |   | Ended                       |  |   | Year Ended        |   |   | Year Ended        |  
|               |   | Dec
      31 2011 |  |   | Dec
      31 2011           |  |   | Dec
      31 2011 |   |   | Dec
      31 2011 |  
|               |   |                   |  |   |                             |  |   |                   |   |   |                   |  
|               |   |                   |  |   | Fair Value Adjustment Gains |  |   |                   |  
|               |   |                   |  |   | (Losses) Included in        |  |   | Realized Loss     |  
|(in thousands) |   | Fair
      Value  |  |   | Net
      Earnings          |  |   | on Disposal       |  
|               |   |                   |  |   |                             |  |   |                   |   |   |                   |  
|Revett         | $ | 741               |  | $ | 188                         |  | $ | (55               | ) | $ | -                 |  
|Other          |   | 1,841             |  |   | 74                          |  |   | (3,063            | ) |   | (16               | )
|               |   |                   |  |   |                             |  |   |                   |   |   |                   |  
|               | $ | 2,582             |  | $ | 262                         |  | $ | (3,118            | ) | $ | (16               | )

The Companys long-term investments in common shares (LTIs)
are held for long-term strategic purposes and not for trading purposes. As such,
the Company has elected to reflect any fair value adjustments as a component of
other comprehensive income (OCI).

While long-term investments in warrants are also held for
long-term strategic purposes, they meet the definition of a derivative and
therefore are classified as financial assets with fair value adjustments being
recorded as a component of net earnings under the classification Other (Income)
Expense. Warrants that do not have a quoted market price have been valued using
a Black-Scholes option pricing model.

By holding these long-term investments, the Company is
inherently exposed to various risk factors including currency risk, market price
risk and liquidity risk.

During the three months and year ended December 31, 2012, the
value of the Companys LTIs decreased by $28.1 million and $31.1 million,
respectively. As a result of this decrease, the deferred tax liability
attributable to the LTIs was reduced and the Company recorded a deferred income
tax recovery in OCI of $1.8 million and $2.5 million for the three months and
year ended December 31, 2012, respectively. The reduction in the deferred tax
liability attributable to the LTIs resulted in the reversal of previously
recognized deferred income tax assets which increased the deferred income tax
expense reflected in net earnings.

Bear Creek

At December 31, 2012, Silver Wheaton owned approximately 13.3
million (December 31, 2011  13.3 million) common shares of Bear Creek Mining
Corporation (Bear Creek), representing approximately 14% (December 31, 2011 
14%) of the outstanding shares of Bear Creek. At December 31, 2012, the fair
value of the Companys investment in Bear Creek was $44.1 million (December 31,
2011 - $46.2 million).

During the year ended December 31, 2011, the value of the
Companys investment in Bear Creek declined by approximately $80.5 million. The
value of this investment was adversely affected by an action by the Peruvian
government relating to Bear Creeks title over the mineral concessions covering
the Santa Ana project. While the Santa Ana project remains an important asset
for Bear Creek, Silver Wheatons strategic focus related to its investment in
Bear Creek is the Corani project, which is proceeding towards permitting.

Revett

At December 31, 2012, Silver Wheaton owned 5.3 million common
  shares (December 31, 2011  5.0 million common shares and common share
  purchase warrants exercisable to acquire an additional 0.3 million common shares)
  of Revett Minerals Inc. (Revett), representing approximately 15%
  (December 31, 2011  16%) of the outstanding shares of Revett. During the
  year ended December 31, 2012, the Company acquired 0.3 million common shares
  of Revett from the exercise of 0.3 million Revett warrants for total consideration
  of $0.4 million. At December 31, 2012, the fair value of the Companys
  investment in Revett was $14.8 million (December 31, 2011 - $24.5 million).

SILVER WHEATON 2012 ANNUAL REPORT[12]

---

Sabina

At December 31, 2012, Silver Wheaton owned 11.7 million (December 31, 2011 -  11.7 million) common shares of Sabina Gold & Silver Corp. ("Sabina"), representing approximately 7% (December 31, 2011 -  7%) of the outstanding
shares of Sabina. At December 31, 2012, the fair value of the Company's investment in Sabina was $31.2 million (December 31, 2011 - $44.2 million).

Other

At December 31, 2012, Silver Wheaton owned common shares and common share purchase warrants of several other publicly traded mineral exploration, development and mining companies. As Silver Wheaton's investment represents less than 10% of the
outstanding shares of each of the respective companies and is not considered material to Silver Wheaton's overall financial position, these investments have been reflected in this MD&A and financial statements as part of Other long-term
investments.

During the year ended December 31, 2011, the Company acquired, by way of private placement, 10 million common shares of Wildcat Silver Corporation for total consideration of Cdn$13.0 million ($13.7 million). In addition, Silver Wheaton sold
its investment of 1.8 million common shares of Ventana Gold Corp. ("Ventana") for proceeds of Cdn$23.5 million ($24.3 million) after the successful acquisition of Ventana by AUX Canada, resulting in a realized gain of $4.5
million.

At December 31, 2012, the fair value of the Other long-term
  investments was $31.3 million (December 31, 2011 - $36.7 million).

SILVER WHEATON 2012 ANNUAL REPORT[13]

---

Summarized Financial Results

|                                                                                                 |   | Years Ended December 31 | 
|------------------------------------------------------------------------------------------------ | - | ----------------------- | 
|                                                                                                 |   | 2012                    | 
|Silver equivalent production1                                                                    |   |                         | 
|Attributable silver ounces
      produced (000s)                                                |   | 26,894                  | 
|Attributable gold ounces
      produced                                                          |   | 50,039                  | 
|Attributable silver equivalent
      ounces produced (000s) 1                                   |   | 29,571                  | 
|Silver equivalent sales1                                                                         |   |                         | 
|Silver ounces sold (000s)                                                                       |   | 24,850                  | 
|Gold ounces sold                                                                                 |   | 46,094                  | 
|Silver equivalent ounces
      sold (000s) 1                                                    |   | 27,328                  | 
|Average realized price ($'s per ounce)                                                           |   |                         | 
|Average realized silver price                                                                    | $ | 31.03                   | 
|Average realized gold price                                                                      | $ | 1,701                   | 
|Average realized silver equivalent
      price 1                                                 | $ | 31.09                   | 
|Average cash cost ($'s per ounce)2                                                               |   |                         | 
|Average silver cash cost                                                                         | $ | 4.06                    | 
|Average gold cash cost                                                                           | $ | 362                     | 
|Average silver equivalent cash cost 1                                                            | $ | 4.30                    | 
|Total revenue($000's)                                                                            | $ | 849,560                 | 
|Net earnings($000's)                                                                             | $ | 586,036                 | 
|Add back - loss on
      fair value adjustment of Canadian dollar share purchase warrants issued |   | -                       | 
|Adjusted net earnings3($000's)                                                                   | $ | 586,036                 | 
|Earnings per share                                                                               |   |                         | 
|Basic                                                                                            | $ | 1.66                    | 
|Diluted                                                                                          | $ | 1.65                    | 
|Adjusted earnings per share3                                                                     |   |                         | 
|Basic                                                                                            | $ | 1.66                    | 
|Diluted                                                                                          | $ | 1.65                    | 
|Cash flow from
      operations($000's)                                                          | $ | 719,404                 | 
|Dividends                                                                                        |   |                         | 
|Dividends paid ($000's)                                                                          | $ | 123,852                 | 
|Dividends paid per share                                                                         | $ | 0.35                    | 
|Total assets($000's)                                                                             | $ | 3,189,337               | 
|Total non-current
      financial liabilities($000s)                                            | $ | 23,555                  | 
|Shareholders' equity($000's)                                                                     | $ | 3,107,074               | 

|1) | Gold ounces produced and sold are converted to a silver
      equivalent basis on the ratio of the average silver price received to the
      average gold price received during the period from the assets that produce
    both gold and silver.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Refer to discussion on non-IFRS measure (ii) on page 26
    of this MD&A.                                                                                                                                                                         
|3) | Refer to discussion on non-IFRS measure (iv) on page 27
    of this MD&A.                                                                                                                                                                         

SILVER WHEATON 2012 ANNUAL REPORT[14]

---

Summary of Ounces Produced and
  Sold

|                                                                                  |  |       |  |  | 2012  |  |  |       |  |  |       |  |  | 2011  |  |  |       | 
|--------------------------------------------------------------------------------- |  | ----- |  |  | ----- |  |  | ----- |  |  | ----- |  |  | ----- |  |  | ----- | 
|(in thousands)                                                                    |  | Q4    |  |  | Q3    |  |  | Q2    |  |  | Q1    |  |  | Q4    |  |  | Q3    | 
|Silver ounces produced1                                                           |  |       |  |  |       |  |  |       |  |  |       |  |  |       |  |  |       | 
|San Dimas2                                                                        |  | 1,694 |  |  | 1,288 |  |  | 1,231 |  |  | 1,692 |  |  | 1,578 |  |  | 1,251 | 
|Zinkgruvan                                                                        |  | 566   |  |  | 621   |  |  | 673   |  |  | 642   |  |  | 390   |  |  | 379   | 
|Yauliyacu                                                                         |  | 616   |  |  | 640   |  |  | 606   |  |  | 550   |  |  | 583   |  |  | 608   | 
|Peñasquito                                                                        |  | 1,445 |  |  | 1,940 |  |  | 1,822 |  |  | 1,365 |  |  | 1,633 |  |  | 1,162 | 
|Cozamin                                                                           |  | 372   |  |  | 370   |  |  | 429   |  |  | 405   |  |  | 433   |  |  | 395   | 
|Barrick3                                                                          |  | 934   |  |  | 627   |  |  | 468   |  |  | 667   |  |  | 723   |  |  | 794   | 
|Other4                                                                            |  | 1,407 |  |  | 1,260 |  |  | 1,276 |  |  | 1,288 |  |  | 1,389 |  |  | 1,272 | 
|                                                                                  |  | 7,034 |  |  | 6,746 |  |  | 6,505 |  |  | 6,609 |  |  | 6,729 |  |  | 5,861 | 
|Silver equivalent ounces ofgold produced5                                         |  |       |  |  |       |  |  |       |  |  |       |  |  |       |  |  |       | 
|Minto                                                                             |  | 373   |  |  | 337   |  |  | 189   |  |  | 107   |  |  | 202   |  |  | 257   | 
|777                                                                               |  | 1,059 |  |  | 6126  |  |  | -     |  |  | -     |  |  | -     |  |  | -     | 
|Silver equivalent ounces produced5                                                |  | 8,466 |  |  | 7,695 |  |  | 6,694 |  |  | 6,716 |  |  | 6,931 |  |  | 6,118 | 
|                                                                                  |  |       |  |  |       |  |  |       |  |  |       |  |  |       |  |  |       | 
|Silver ounces sold                                                                |  |       |  |  |       |  |  |       |  |  |       |  |  |       |  |  |       | 
|San Dimas2                                                                        |  | 1,629 |  |  | 1,178 |  |  | 1,295 |  |  | 1,701 |  |  | 1,488 |  |  | 1,232 | 
|Zinkgruvan                                                                        |  | 532   |  |  | 495   |  |  | 580   |  |  | 517   |  |  | 425   |  |  | 319   | 
|Yauliyacu                                                                         |  | 1,097 |  |  | 184   |  |  | 1,155 |  |  | 497   |  |  | 655   |  |  | 11    | 
|Peñasquito                                                                        |  | 1,642 |  |  | 1,304 |  |  | 1,845 |  |  | 1,189 |  |  | 851   |  |  | 1,382 | 
|Cozamin                                                                           |  | 406   |  |  | 301   |  |  | 395   |  |  | 376   |  |  | 374   |  |  | 335   | 
|Barrick 3                                                                         |  | 826   |  |  | 528   |  |  | 470   |  |  | 656   |  |  | 755   |  |  | 747   | 
|Other4                                                                            |  | 1,215 |  |  | 796   |  |  | 1,049 |  |  | 992   |  |  | 1,230 |  |  | 770   | 
|                                                                                  |  | 7,347 |  |  | 4,786 |  |  | 6,789 |  |  | 5,928 |  |  | 5,778 |  |  | 4,796 | 
|Silver equivalent ounces ofgold sold5                                             |  |       |  |  |       |  |  |       |  |  |       |  |  |       |  |  |       | 
|Minto                                                                             |  | 268   |  |  | 357   |  |  | 139   |  |  | 198   |  |  | 196   |  |  | 316   | 
|777                                                                               |  | 1,516 |  |  | -     |  |  | -     |  |  | -     |  |  | -     |  |  | -     | 
|Silver equivalent ounces sold5                                                    |  | 9,131 |  |  | 5,143 |  |  | 6,928 |  |  | 6,126 |  |  | 5,974 |  |  | 5,112 | 
|                                                                                  |  |       |  |  |       |  |  |       |  |  |       |  |  |       |  |  |       | 
|Gold / silver ratio5                                                              |  | 54.1  |  |  | 51.7  |  |  | 58.7  |  |  | 51.2  |  |  | 51.9  |  |  | 50.4  | 
|Cumulative payable silver equivalent ounces produced but
      not yet delivered7 |  | 3,824 |  |  | 5,195 |  |  | 3,212 |  |  | 4,166 |  |  | 4,127 |  |  | 3,805 | 

|1) | Ounces produced represent the quantity of silver and gold
      contained in concentrate or doré prior to smelting or refining deductions.
      Production figures are based on information provided by the operators of
      the mining operations to which the silver or gold interests relate or
      management estimates in those situations where other information is not
      available. Certain production figures may be updated in future periods as
      additional information is received. The Company has been informed that
      reported production related to the Yauliyacu mine may have been overstated
      by a total of approximately 200,000 ounces for all or some portion of the
      period between April 1, 2011 and June 30, 2012. The required adjustments
      to production, if any, related to the Yauliyacu mine for these periods
      will be made once management completes a review of the timing and amount
    of any production variance.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | The ounces produced and sold include ounces received from
      Goldcorp in connection with Goldcorps four year commitment to deliver to
      Silver Wheaton 1.5 million ounces of silver per annum resulting from their
    sale of San Dimas to Primero.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3) | Comprised of the Lagunas Norte, Pierina and Veladero
    silver interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4) | Comprised of the Los Filos, Mineral Park, Neves-Corvo,
      Stratoni, Keno Hill, Minto, 777, Aljustrel and Campo Morado silver
    interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|5) | Gold ounces produced and sold are converted to a silver
      equivalent basis on the ratio of the average silver price received to the
      average gold price received during the period from the assets that produce
    both gold and silver.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|6) | Represents production for the period August 8, 2012 to
    September 30, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|7) | Based on management
estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

SILVER WHEATON 2012 ANNUAL REPORT[15]

---

Quarterly Financial Review

|                                                    |   |           |  |   | 2012      |  |   |           |  |   |           |  |   | 2011      |  |   |           | 
|--------------------------------------------------- | - | --------- |  | - | --------- |  | - | --------- |  | - | --------- |  | - | --------- |  | - | --------- | 
|                                                    |   | Q4        |  |   | Q3        |  |   | Q2        |  |   | Q1        |  |   | Q4        |  |   | Q3        | 
|Total silver ounces sold (000's)                    |   | 7,347     |  |   | 4,786     |  |   | 6,789     |  |   | 5,928     |  |   | 5,778     |  |   | 4,796     | 
|Average realized silver
      price1                | $ | 31.47     |  | $ | 31.16     |  | $ | 29.12     |  | $ | 32.58     |  | $ | 32.09     |  | $ | 36.44     | 
|Silver sales (000's)                                | $ | 231,226   |  | $ | 149,086   |  | $ | 197,694   |  | $ | 193,162   |  | $ | 185,401   |  | $ | 174,733   | 
|Total gold ounces sold                              |   | 32,960    |  |   | 6,905     |  |   | 2,369     |  |   | 3,860     |  |   | 3,777     |  |   | 6,280     | 
|Average realized gold price1                        | $ | 1,699     |  | $ | 1,765     |  | $ | 1,568     |  | $ | 1,678     |  | $ | 1,712     |  | $ | 1,666     | 
|Gold sales (000's)                                  | $ | 56,015    |  | $ | 12,187    |  | $ | 3,714     |  | $ | 6,476     |  | $ | 6,466     |  | $ | 10,462    | 
|Total silver equivalent                             |   |           |  |   |           |  |   |           |  |   |           |  |   |           |  |   |           | 
|ounces sold (000's) 2                               |   | 9,131     |  |   | 5,143     |  |   | 6,928     |  |   | 6,126     |  |   | 5,974     |  |   | 5,112     | 
|Average realized silver
      equivalent price 1, 2 | $ | 31.46     |  | $ | 31.36     |  | $ | 29.07     |  | $ | 32.59     |  | $ | 32.12     |  | $ | 36.23     | 
|Total sales (000's)                                 | $ | 287,241   |  | $ | 161,273   |  | $ | 201,408   |  | $ | 199,638   |  | $ | 191,867   |  | $ | 185,195   | 
|Average cash cost, silver 1, 3                      | $ | 4.12      |  | $ | 4.04      |  | $ | 4.04      |  | $ | 4.02      |  | $ | 4.01      |  | $ | 3.99      | 
|Average cash cost, gold 1, 3                        | $ | 386       |  | $ | 303       |  | $ | 303       |  | $ | 303       |  | $ | 301       |  | $ | 300       | 
|Average cash cost,
      silver equivalent 1, 2, 3  | $ | 4.70      |  | $ | 4.16      |  | $ | 4.06      |  | $ | 4.08      |  | $ | 4.06      |  | $ | 4.12      | 
|Net earnings (000's)                                | $ | 177,744   |  | $ | 119,697   |  | $ | 141,414   |  | $ | 147,181   |  | $ | 144,747   |  | $ | 135,040   | 
|Earnings per share                                  |   |           |  |   |           |  |   |           |  |   |           |  |   |           |  |   |           | 
|Basic                                               | $ | 0.50      |  | $ | 0.34      |  | $ | 0.40      |  | $ | 0.42      |  | $ | 0.41      |  | $ | 0.38      | 
|Diluted                                             | $ | 0.50      |  | $ | 0.34      |  | $ | 0.40      |  | $ | 0.41      |  | $ | 0.41      |  | $ | 0.38      | 
|Cash flow from
      operations (000's)             | $ | 254,026   |  | $ | 128,651   |  | $ | 172,916   |  | $ | 163,811   |  | $ | 163,714   |  | $ | 167,236   | 
|Cash flow from operations per share 4               |   |           |  |   |           |  |   |           |  |   |           |  |   |           |  |   |           | 
|Basic                                               | $ | 0.72      |  | $ | 0.36      |  | $ | 0.49      |  | $ | 0.46      |  | $ | 0.46      |  | $ | 0.47      | 
|Diluted                                             | $ | 0.71      |  | $ | 0.36      |  | $ | 0.49      |  | $ | 0.46      |  | $ | 0.46      |  | $ | 0.47      | 
|Dividends                                           |   |           |  |   |           |  |   |           |  |   |           |  |   |           |  |   |           | 
|Dividends declared (000's)                          | $ | 24,806    |  | $ | 35,388    |  | $ | 31,829    |  | $ | 31,829 5  |  | $ | 31,814    |  | $ | 10,603    | 
|Dividends
      declared per share                  | $ | 0.07      |  | $ | 0.10      |  | $ | 0.09      |  | $ | 0.09      |  | $ | 0.09      |  | $ | 0.03      | 
|Total assets (000's)                                | $ | 3,189,337 |  | $ | 3,046,564 |  | $ | 3,056,825 |  | $ | 3,005,839 |  | $ | 2,872,335 |  | $ | 2,760,675 | 
|Total liabilities
      (000's)                     | $ | 82,263    |  | $ | 71,076    |  | $ | 212,147   |  | $ | 242,873   |  | $ | 218,118   |  | $ | 229,676   | 
|Total shareholders'
      equity (000's)            | $ | 3,107,074 |  | $ | 2,975,488 |  | $ | 2,844,678 |  | $ | 2,762,966 |  | $ | 2,654,217 |  | $ | 2,530,999 | 

|1) | Expressed as United States dollars per ounce.                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Gold ounces sold are converted to a silver equivalent
      basis on the ratio of the average silver price received to the average
      gold price received during the period from the assets that produce both
    gold and silver.
|3) | Refer to discussion on non-IFRS measure (ii) on page 26
    of this MD&A.                                                                                                                                                            
|4) | Refer to discussion on non-IFRS measure (i) on page 25 of
    this MD&A.                                                                                                                                                             
|5) | On March 22, 2012, the Company declared dividends of
      $0.09 per common share for total dividends of $31.8 million, which was
    paid on April 17, 2012.                                                                        

Changes in sales, net earnings and cash flow from operations
  from quarter to quarter are affected primarily by fluctuations in production
  at the mines, the timing of shipments, changes in the price of silver, as well
  as acquisitions of precious metal purchase agreements and the commencement of
  operations of mines under construction.

SILVER WHEATON 2012 ANNUAL REPORT[16]

---

Results of Operations and Operational
  Review

The Company currently has ten business segments: the silver
produced by the San Dimas, Zinkgruvan, Yauliyacu, Peñasquito, Cozamin, Barrick
and Other mines, the gold produced by the Minto and 777 mines and corporate
operations.

Three Months Ended December 31, 2012Average
      
      
      AverageRealized
      
      
      Cash
      
      
      AveragePrice
      
      
      Cost
      
      
      Depletion
      
      
      
      
      
      Cash FlowOunces
      
      
      Ounces
      
      
      
      
      
      ($'s Per
      
      
      ($'s Per
      
      
      ($'s Per
      
      
      Net
      
      
      FromProduced2
      
      
      Sold
      
      
      Sales
      
      
      Ounce)
      
      
      Ounce) 3
      
      
      Ounce)
      
      
      Earnings
      
      
      Operations
      
      
      Total
        AssetsSilverSan Dimas 4
      
      1,694
      
      
      1,629
      
      $
      52,080
      
      $
      31.97
      
      $
      4.13
      
      $
      0.79
      
      $
      44,059
      
      $
      45,351
      
      $
      162,936Zinkgruvan
      
      566
      
      
      532
      
      
      16,485
      
      
      30.99
      
      
      4.15
      
      
      1.68
      
      
      13,387
      
      
      16,668
      
      
      54,075Yauliyacu
      
      616
      
      
      1,097
      
      
      30,753
      
      
      28.03
      
      
      4.08
      
      
      5.02
      
      
      20,773
      
      
      32,106
      
      
      215,295Peñasquito
      
      1,445
      
      
      1,642
      
      
      53,697
      
      
      32.71
      
      
      3.99
      
      
      2.96
      
      
      42,287
      
      
      47,147
      
      
      487,272Cozamin
      
      372
      
      
      406
      
      
      13,109
      
      
      32.25
      
      
      4.12
      
      
      4.05
      
      
      9,790
      
      
      11,873
      
      
      19,135Barrick 5
      
      934
      
      
      826
      
      
      26,920
      
      
      32.59
      
      
      3.90
      
      
      4.34
      
      
      20,112
      
      
      23,561
      
      
      597,736Other
        6
      
      1,407
      
      
      1,215
      
      
      38,182
      
      
      31.43
      
      
      4.43
      
      
      6.29
      
      
      25,167
      
      
      33,296
      
      
      381,4677,034
      
      
      7,347
      
      $
      231,226
      
      $
      31.47
      
      $
      4.12
      
      $
      3.46
      
      $
      175,575
      
      $
      210,002
      
      $
      1,917,916GoldMinto
      
      6,785
      
      
      4,876
      
      $
      8,247
      
      $
      1,691
      
      $
      303
      
      $
      171
      
      $
      5,937
      
      $
      8,052
      
      $
      30,586777
      
      19,615
      
      
      28,084
      
      
      47,768
      
      
      1,701
      
      
      400
      
      
      773
      
      
      14,813
      
      
      40,507
      
      
      332,73226,400
      
      
      32,960
      
      $
      56,015
      
      $
      1,699
      
      $
      386
      
      $
      684
      
      $
      20,750
      
      $
      48,559
      
      $
      363,318Silver equivalent7
      
      8,466
      
      
      9,131
      
      $
      287,241
      
      $
      31.46
      
      $
      4.70
      
      $
      5.25
      
      $
      196,325
      
      $
      258,561
      
      $
      2,281,234CorporateGeneral and administrative
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $
      (9,159
      )Other
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      (9,422
      )Total corporate
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $
      (18,581
      )
      $
      (4,535
      )
      $
      908,1038,466
      
      
      9,131
      
      $
      287,241
      
      $
      31.46
      
      $
      4.70
      
      $
      5.25
      
      $
      177,744
      
      $
      254,026
      
      $
      3,189,337


|1) | All figures in thousands except gold ounces produced and
    sold and per ounce amounts.                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Ounces produced represent the quantity of silver and gold
      contained in concentrate or doré prior to smelting or refining deductions.
      Production figures are based on information provided by the operators of
      the mining operations to which the silver or gold interests relate or
      management estimates in those situations where other information is not
      available. Certain production figures may be updated in future periods as
    additional information is received.
|3) | Refer to discussion on non-IFRS measure (ii) on page 26
    of this MD&A.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4) | Results for San Dimas include 375,000 ounces received
      from Goldcorp in connection with Goldcorps four year commitment to
      deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting
    from their sale of San Dimas to Primero.                                                                                                                                                                                                                                              
|5) | Comprised of the operating Lagunas Norte, Pierina and
      Veladero silver interests in addition to the non-operating Pascua-Lama
    silver interest.                                                                                                                                                                                                                                                                                                                                                    
|6) | Comprised of the operating Los Filos, Keno Hill, Mineral
      Park, Neves-Corvo, Stratoni, Campo Morado, Minto, 777 and Aljustrel silver
      interests in addition to the non-operating Rosemont silver and gold
    interest and Loma de La Plata and Constancia silver interests.                                                                                                                                                                                                                     
|7) | Gold ounces produced and sold are converted to a silver
      equivalent basis on the ratio of the average silver price received to the
      average gold price received during the period from the assets that produce
    both gold and silver.                                                                                                                                                                                                                                                         

SILVER WHEATON 2012 ANNUAL REPORT[17]

---

Three Months Ended December 31, 2011Average
      
      
      AverageRealized
      
      
      Cash
      
      
      AveragePrice
      
      
      Cost
      
      
      Depletion
      
      
      
      
      
      Cash FlowOunces
      
      
      Ounces
      
      
      
      
      
      ($'s Per
      
      
      ($'s Per
      
      
      ($'s Per
      
      
      Net
      
      
      FromProduced 2
      
      
      Sold
      
      
      Sales
      
      
      Ounce)
      
      
      Ounce) 3
      
      
      Ounce)
      
      
      Earnings
      
      
      Operations
      
      
      Total
        AssetsSilverSan Dimas 4
      
      1,578
      
      
      1,488
      
      $
      44,641
      
      $
      30.00
      
      $
      4.09
      
      $
      0.71
      
      $
      37,494
      
      $
      38,551
      
      $
      167,527Zinkgruvan
      
      390
      
      
      425
      
      
      13,537
      
      
      31.87
      
      
      4.10
      
      
      1.69
      
      
      11,077
      
      
      14,061
      
      
      57,639Yauliyacu
      
      583
      
      
      655
      
      
      22,270
      
      
      34.00
      
      
      4.02
      
      
      5.02
      
      
      16,350
      
      
      19,637
      
      
      230,012Peñasquito
      
      1,633
      
      
      851
      
      
      27,374
      
      
      32.17
      
      
      3.96
      
      
      2.41
      
      
      21,954
      
      
      24,004
      
      
      504,973Cozamin
      
      433
      
      
      374
      
      
      12,786
      
      
      34.18
      
      
      4.08
      
      
      4.62
      
      
      9,531
      
      
      10,260
      
      
      25,115Barrick 5
      
      723
      
      
      755
      
      
      24,673
      
      
      32.67
      
      
      3.90
      
      
      3.60
      
      
      19,008
      
      
      21,728
      
      
      601,085Other
        6
      
      1,389
      
      
      1,230
      
      
      40,120
      
      
      32.63
      
      
      3.94
      
      
      4.22
      
      
      30,089
      
      
      36,301
      
      
      251,7166,729
      
      
      5,778
      
      $
      185,401
      
      $
      32.09
      
      $
      4.01
      
      $
      2.90
      
      $
      145,503
      
      $
      164,542
      
      $
      1,838,067GoldMinto
      
      3,891
      
      
      3,777
      
      
      6,466
      
      
      1,712
      
      
      301
      
      
      169
      
      
      4,689
      
      
      6,314
      
      
      33,659Silver equivalent7
      
      6,931
      
      
      5,974
      
      $
      191,867
      
      $
      32.12
      
      $
      4.06
      
      $
      2.91
      
      $
      150,192
      
      $
      170,856
      
      $
      1,871,726CorporateGeneral and administrative
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $
      (6,115
      )Other
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      670Total corporate
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $
      (5,445
      )
      $
      (7,142
      )
      $
      1,000,6096,931
      
      
      5,974
      
      $
      191,867
      
      $
      32.12
      
      $
      4.06
      
      $
      2.91
      
      $
      144,747
      
      $
      163,714
      
      $
      2,872,335


|1) | All figures in thousands except gold ounces produced and
    sold and per ounce amounts.                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Ounces produced represent the quantity of silver and gold
      contained in concentrate or doré prior to smelting or refining deductions.
      Production figures are based on information provided by the operators of
      the mining operations to which the silver or gold interests relate or
      management estimates in those situations where other information is not
      available. Certain production figures may be updated in future periods as
    additional information is received.
|3) | Refer to discussion on non-IFRS measure (ii) on page 26
    of this MD&A.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4) | Results for San Dimas include 375,000 ounces received
      from Goldcorp in connection with Goldcorps four year commitment to
      deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting
    from their sale of San Dimas to Primero.                                                                                                                                                                                                                                              
|5) | Comprised of the operating Lagunas Norte, Pierina and
      Veladero silver interests in addition to the non-operating Pascua-Lama
    silver interest.                                                                                                                                                                                                                                                                                                                                                    
|6) | Comprised of the operating Los Filos, Keno Hill, Mineral
      Park, Neves-Corvo, Stratoni, Campo Morado, Minto and Aljustrel silver
      interests in addition to the non-operating Rosemont silver and gold
    interest and Loma de La Plata silver interest.                                                                                                                                                                                                                                          
|7) | Gold ounces produced and sold are converted to a silver
      equivalent basis on the ratio of the average silver price received to the
      average gold price received during the period from the assets that produce
    both gold and silver.                                                                                                                                                                                                                                                         

For the three months ended December 31, 2012, attributable
silver equivalent production was 8.5 million ounces (7.0 million ounces of
silver and 26,400 ounces of gold), compared with 6.9 million ounces (6.7 million
ounces of silver and 3,900 ounces of gold) for the comparable period in 2011,
with the variance being primarily attributable to the following factors:

- 1.1 million silver equivalent ounces of gold production from the 777 mine;
- 176,000 ounce (45%) increase related to the Zinkgruvan mine, achieved
  primarily through higher recoveries;
- 211,000 ounce (29%) increase related to the Barrick mines, primarily
  related to higher grades and recoveries at the Veladero mine; partially offset
  by
- 188,000 ounce (12%) reduction related to the Peñasquito mine, primarily due
  to lower grades.

SILVER WHEATON 2012 ANNUAL REPORT[18]

---

For the three months ended December 31, 2012, net earnings and
cash flow from operations were $177.7 million and $254.0 million, respectively,
compared with $144.7 million and $163.7 million for the comparable period in
2011, with the variance in net earnings being primarily attributable to the
following factors:

| |  | $17.7 million increase due to a 22% increase in payable
      silver equivalent ounces produced during the three months ended December
      31, 2012, primarily attributable to:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i.  | $10.0 million increase related to gold production at the
      777 mine; and                                
| | --- | ------------------------------------------------------------------------------------------------------------
| |     |                                                                                                             
| | ii. | $5.6 million increase related to a 29% increase in
      payable silver production at the Barrick mines;
and

| |  | $32.7 million increase as a
      result of the timing of shipments of stockpiled concentrate and doré,
      primarily attributable to the following factors:
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i.   | $4.8 million increase relating to gold at the 777
      mine;                   
| | ---- | --------------------------------------------------------------------------------
| |      |                                                                                 
| | ii.  | $25.1 million increase relating to the Peñasquito
      mine;                   
| |      |                                                                                 
| | iii. | $10.0 million increase relating to the Yauliyacu mine;
      partially offset by
| |      |                                                                                 
| | iv.  | $4.8 million decrease relating to Other mines; partially
      offset by        

| |  | $6.2 million decrease due to a reduction in the operating
      margin per ounce due primarily to a higher cost per silver equivalent
      ounce sold; and                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                 
| |  | $13.1 million decrease as a result of an increase in
      corporate costs, as explained in the Corporate Costs section of this
      MD&A ($2.6 million decrease from a cash flow perspective).

SILVER WHEATON 2012 ANNUAL REPORT[19]

---

Year Ended December 31, 2012Average
      
      
      AverageRealized
      
      
      Cash
      
      
      AveragePrice
      
      
      Cost
      
      
      Depletion
      
      
      
      
      
      Cash FlowOunces
      
      
      Ounces
      
      
      
      
      
      ($'s Per
      
      
      ($'s Per
      
      
      ($'s Per
      
      
      Net
      
      
      FromProduced 2
      
      
      Sold
      
      
      Sales
      
      
      Ounce)
      
      
      Ounce) 3
      
      
      Ounce)
      
      
      Earnings
      
      
      Operations
      
      
      Total AssetsSilverSan Dimas 4
      
      5,905
      
      
      5,803
      
      $
      181,906
      
      $
      31.35
      
      $
      4.11
      
      $
      0.79
      
      $
      153,469
      
      $
      158,060
      
      $
      162,936Zinkgruvan
      
      2,502
      
      
      2,124
      
      
      65,914
      
      
      31.03
      
      
      4.14
      
      
      1.68
      
      
      53,553
      
      
      55,855
      
      
      54,075Yauliyacu
      
      2,412
      
      
      2,933
      
      
      86,185
      
      
      29.38
      
      
      4.07
      
      
      5.02
      
      
      59,531
      
      
      80,077
      
      
      215,295Peñasquito
      
      6,572
      
      
      5,980
      
      
      186,085
      
      
      31.12
      
      
      3.99
      
      
      2.96
      
      
      144,524
      
      
      162,225
      
      
      487,272Cozamin
      
      1,576
      
      
      1,478
      
      
      46,601
      
      
      31.54
      
      
      4.11
      
      
      4.05
      
      
      34,552
      
      
      40,143
      
      
      19,135Barrick 5
      
      2,696
      
      
      2,480
      
      
      78,359
      
      
      31.60
      
      
      3.90
      
      
      4.34
      
      
      57,926
      
      
      69,504
      
      
      597,736Other 6
      
      5,231
      
      
      4,052
      
      
      126,118
      
      
      31.12
      
      
      4.10
      
      
      4.72
      
      
      90,381
      
      
      108,208
      
      
      381,46726,894
      
      
      24,850
      
      $
      771,168
      
      $
      31.03
      
      $
      4.06
      
      $
      3.08
      
      $
      593,936
      
      $
      674,072
      
      $
      1,917,916GoldMinto
      
      18,600
      
      
      18,010
      
      $
      30,624
      
      $
      1,700
      
      $
      303
      
      $
      171
      
      $
      22,094
      
      $
      25,059
      
      $
      30,586777
      
      31,439
      
      
      28,084
      
      
      47,768
      
      
      1,701
      
      
      400
      
      
      773
      
      
      14,812
      
      
      40,507
      
      
      332,73250,039
      
      
      46,094
      
      $
      78,392
      
      $
      1,701
      
      $
      362
      
      $
      538
      
      $
      36,906
      
      $
      65,566
      
      $
      363,318Silver equivalent7
      
      29,571
      
      
      27,328
      
      $
      849,560
      
      $
      31.09
      
      $
      4.30
      
      $
      3.70
      
      $
      630,842
      
      $
      739,638
      
      $
      2,281,234CorporateGeneral and administrative
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $
      (30,839
      )Other
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      (13,967
      )Total corporate
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $
      (44,806
      )
      $
      (20,234
      )
      $
      908,10329,571
      
      
      27,328
      
      $
      849,560
      
      $
      31.09
      
      $
      4.30
      
      $
      3.70
      
      $
      586,036
      
      $
      719,404
      
      $
      3,189,337


|1) | All figures in thousands except gold ounces produced and
    sold and per ounce amounts.                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Ounces produced represent the quantity of silver and gold
      contained in concentrate or doré prior to smelting or refining deductions.
      Production figures are based on information provided by the operators of
      the mining operations to which the silver or gold interests relate or
      management estimates in those situations where other information is not
      available. Certain production figures may be updated in future periods as
    additional information is received.
|3) | Refer to discussion on non-IFRS measure (ii) on page 26
    of this MD&A.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4) | Results for San Dimas include 1.5 million ounces received
      from Goldcorp in connection with Goldcorps four year commitment to
      deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting
    from their sale of San Dimas to Primero.                                                                                                                                                                                                                                          
|5) | Comprised of the operating Lagunas Norte, Pierina and
      Veladero silver interests in addition to the non-operating Pascua-Lama
    silver interest.                                                                                                                                                                                                                                                                                                                                                    
|6) | Comprised of the operating Los Filos, Keno Hill, Mineral
      Park, Neves-Corvo, Stratoni, Campo Morado, Minto, 777 and Aljustrel silver
      interests in addition to the non-operating Rosemont silver and gold
    interest and Loma de La Plata and Constancia silver interests.                                                                                                                                                                                                                     
|7) | Gold ounces produced and sold are converted to a silver
      equivalent basis on the ratio of the average silver price received to the
      average gold price received during the period from the assets that produce
    both gold and silver.                                                                                                                                                                                                                                                         

SILVER WHEATON 2012 ANNUAL REPORT[20]

---

Year
        Ended December 31, 2011Average
      
      
      AverageRealized
      
      
      Cash
      
      
      AveragePrice
      
      
      Cost
      
      
      Depletion
      
      
      
      
      
      Cash FlowOunces
      
      
      Ounces
      
      
      
      
      
      ($'s Per
      
      
      ($'s Per
      
      
      ($'s Per
      
      
      Net
      
      
      FromProduced 2
      
      
      Sold
      
      
      Sales
      
      
      Ounce)
      
      
      Ounce) 3
      
      
      Ounce)
      
      
      Earnings
      
      
      Operations
      
      
      Total AssetsSilverSan Dimas 4
      
      5,585
      
      
      5,617
      
      $
      188,377
      
      $
      33.54
      
      $
      4.06
      
      $
      0.71
      
      $
      161,554
      
      $
      164,453
      
      $
      167,527Zinkgruvan
      
      1,691
      
      
      1,466
      
      
      52,974
      
      
      36.14
      
      
      4.08
      
      
      1.69
      
      
      44,503
      
      
      49,377
      
      
      57,639Yauliyacu
      
      2,548
      
      
      1,257
      
      
      43,911
      
      
      34.93
      
      
      4.02
      
      
      5.02
      
      
      32,555
      
      
      38,863
      
      
      230,012Peñasquito
      
      5,284
      
      
      4,135
      
      
      143,069
      
      
      34.61
      
      
      3.93
      
      
      2.41
      
      
      116,855
      
      
      126,812
      
      
      504,973Cozamin
      
      1,567
      
      
      1,261
      
      
      43,990
      
      
      34.85
      
      
      4.07
      
      
      4.62
      
      
      33,018
      
      
      40,586
      
      
      25,115Barrick 5
      
      2,980
      
      
      2,908
      
      
      102,454
      
      
      35.23
      
      
      3.90
      
      
      3.58
      
      
      80,692
      
      
      89,554
      
      
      601,085Other 6
      
      4,902
      
      
      3,603
      
      
      125,854
      
      
      34.93
      
      
      3.94
      
      
      4.27
      
      
      96,298
      
      
      112,414
      
      
      251,71624,557
      
      
      20,247
      
      $
      700,629
      
      $
      34.60
      
      $
      3.99
      
      $
      2.69
      
      $
      565,475
      
      $
      622,059
      
      $
      1,838,067GoldMinto
      
      18,436
      
      
      18,256
      
      
      29,368
      
      
      1,609
      
      
      300
      
      
      169
      
      
      20,799
      
      
      24,240
      
      
      33,659Silver equivalent 7
      
      25,374
      
      
      21,069
      
      $
      729,997
      
      $
      34.65
      
      $
      4.09
      
      $
      2.73
      
      $
      586,274
      
      $
      646,299
      
      $
      1,871,726CorporateGeneral and administrative
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $
      (25,180
      )Other
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      (11,066
      )Total corporate
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      $
      (36,246
      )
      $
      (19,872
      )
      $
      1,000,60925,374
      
      
      21,069
      
      $
      729,997
      
      $
      34.65
      
      $
      4.09
      
      $
      2.73
      
      $
      550,028
      
      $
      626,427
      
      $
      2,872,335


|1) | All figures in thousands except gold ounces produced and
    sold and per ounce amounts.                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Ounces produced represent the quantity of silver and gold
      contained in concentrate or doré prior to smelting or refining deductions.
      Production figures are based on information provided by the operators of
      the mining operations to which the silver or gold interests relate or
      management estimates in those situations where other information is not
      available. Certain production figures may be updated in future periods as
    additional information is received.
|3) | Refer to discussion on non-IFRS measure (ii) on page 26
    of this MD&A.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4) | Results for San Dimas include 1.5 million ounces received
      from Goldcorp in connection with Goldcorps four year commitment to
      deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting
    from their sale of San Dimas to Primero.                                                                                                                                                                                                                                          
|5) | Comprised of the operating Lagunas Norte, Pierina and
      Veladero silver interests in addition to the non-operating Pascua-Lama
    silver interest.                                                                                                                                                                                                                                                                                                                                                    
|6) | Comprised of the operating Los Filos, Keno Hill, Mineral
      Park, Neves-Corvo, Stratoni, Campo Morado, Minto and Aljustrel silver
      interests in addition to the non-operating Rosemont silver and gold
    interest and Loma de La Plata silver interest.                                                                                                                                                                                                                                          
|7) | Gold ounces produced and sold are converted to a silver
      equivalent basis on the ratio of the average silver price received to the
      average gold price received during the period from the assets that produce
    both gold and silver.                                                                                                                                                                                                                                                         

For the year ended December 31, 2012, attributable silver
equivalent production was 29.6 million ounces (26.9 million ounces of silver and
50,000 ounces of gold), compared with 25.4 million ounces (24.6 million ounces
of silver and 18,400 ounces of gold) for the comparable period in 2011, with the
variance being primarily attributable to the following factors:

- 1.7 million silver equivalent ounces of gold production from the 777 mine;
- 810,000 ounce (48%) increase related to the Zinkgruvan mine, achieved
  through higher grades and recoveries; and
- 1.3 million ounce (25%) increase related to the Peñasquito mine reflecting
  the ramping up of milling operations, including the successful commissioning
  of the high pressure grinding circuit during the three month period ended June
  30, 2012.

SILVER WHEATON 2012 ANNUAL REPORT[21]

---

For the year ended December 31, 2012, net earnings and cash
flow from operations were $586.0 million and $719.4 million, respectively,
compared with $550.0 million and $626.4 million for the comparable period in
2011, with the variance in net earnings being primarily attributable to the
following factors:

| |  | $70.8 million increase due to a 17% increase in payable
      silver equivalent ounces produced during the year ended December 31, 2012,
      primarily attributable to:
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                          
| |   | i.                                                                                                                                                                       
| |   |                                                                                                                                                                          
| |   | ii.                                                                                                                                                                      
| |   |                                                                                                                                                                          
| |   | iii.                                                                                                                                                                     

| |  | $58.9 million increase as a result of the timing of
      shipments of stockpiled concentrate and doré, primarily attributable to a
      $46.3 million increase due to Yauliyacu having made alternate arrangements
      to sell its bulk concentrates, resulting in a more consistent delivery
      schedule during the year; partially offset by                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | $91.9 million decrease as a result of a 12% decrease in
      the average earnings from operations on a per ounce basis, driven
      primarily by a 10% decrease in the average realized selling price in
      addition to the Company paying a higher per ounce cost on its recently
      acquired 777 silver and gold interest in comparison to the per ounce cost
      paid related to silver and gold interests acquired in the past; and
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | $8.6 million decrease as a result of an increase in
      corporate costs, as explained in the Corporate Costs section of this
      MD&A ($0.4 million increase from a cash flow perspective).                                                                                                                                                                                                                                                  

Corporate Costs

|                              |   | Three Months Ended |   |   | Years Ended |  
|----------------------------- | - | ------------------ | - | - | ----------- | -
|                              |   | December 31        |   |   | December 31 |  
|(in thousands)                |   | 2012               |   |   | 2011        |  
|General and administrative    | $ | 9,159              |   | $ | 6,115       |  
|Foreign exchange loss (gain)  |   | (57                | ) |   | 65          |  
|Other (income) expense        |   | 1,335              |   |   | (345        | )
|Income tax expense (recovery) |   | 8,144              |   |   | (390        | )
|Total corporate costs         | $ | 18,581             |   | $ | 5,445       |  

For the three months and year ended December 31, 2012,
corporate costs increased by $13.1 million and $8.6 million, respectively,
relative to the comparable periods in the previous year.

SILVER WHEATON 2012 ANNUAL REPORT[22]

---

General and Administrative

|                                                                   |   | Three Months Ended |  |   | Years Ended | 
|------------------------------------------------------------------ | - | ------------------ |  | - | ----------- | 
|                                                                   |   | December 31        |  |   | December 31 | 
|(in thousands)                                                     |   | 2012               |  |   | 2011        | 
|Salaries and benefits                                              |   |                    |  |   |             | 
|Salaries and benefits, excluding PSUs                              | $ | 3,663              |  | $ | 1,819       | 
|PSUs                                                               |   | 472                |  |   | 36          | 
|Total salaries and benefits                                        | $ | 4,135              |  | $ | 1,855       | 
|Depreciation                                                       |   | 49                 |  |   | 61          | 
|Charitable donations                                               |   | 649                |  |   | 422         | 
|Professional fees                                                  |   | 840                |  |   | 611         | 
|Other                                                              |   | 1,914              |  |   | 1,607       | 
|Cash settled general and administrative                            | $ | 7,587              |  | $ | 4,556       | 
|Equity settled stock
      based compensation (a non-cash expense) |   | 1,572              |  |   | 1,559       | 
|Total general and
      administrative                             | $ | 9,159              |  | $ | 6,115       | 

For the three months and year ended December 31, 2012, general
and administrative costs increased by $3.0 million and $5.7 million,
respectively, as compared to the comparable periods of the prior year. This
increase was primarily due to increased compensation costs, including the fair
value adjustment of the Companys performance share units (PSUs) as more fully
described in Note 14.1 to the financial statements.

Other (Income) Expense

|                                                                          |   | Three Months Ended |   |   | Years Ended |  
|------------------------------------------------------------------------- | - | ------------------ | - | - | ----------- | -
|                                                                          |   | December 31        |   |   | December 31 |  
|(in thousands)                                                            |   | 2012               |   |   | 2011        |  
|Dividend income                                                           | $ | (23                | ) | $ | (11         | )
|Interest income                                                           |   | (238               | ) |   | (348        | )
|Stand-by fees                                                             |   | 214                |   |   | 214         |  
|Loss (gain) on long-term investments - share purchase warrants
      held |   | 1,441              |   |   | (262        | )
|Other                                                                     |   | (59                | ) |   | 62          |  
|Total other (income)
      expense                                        | $ | 1,335              |   | $ | (345        | )

During the three months ended December 31, 2012, other expense
was $1.3 million as compared to other income of $0.3 million during the
comparable period of the previous year. This was primarily the result of a $1.4
million unrealized loss related to the fair value adjustment in warrants held
during the current period as compared to a $0.3 million unrealized gain during
the comparable period of the previous year.

During the year ended December 31, 2012, other income was $0.8
million as compared to other expense of $3.2 million during the previous year.
This was primarily the result of a $0.5 million unrealized gain related to the
fair value adjustment in warrants held during the current period as compared to
a $3.1 million unrealized loss during the previous year.

The Company incurred interest costs of $7.4 million during the
  year ended December 31, 2012, of which $6.7 million represents accreted interest
  on the payments due in relation to the Barrick silver interest, with the remainder
  being attributable to interest on bank debt. All of the interest costs incurred
  during 2012 have been capitalized in relation to the Barrick and Constancia
  silver interests. During the year ended December 31, 2011, the Company incurred
  interest costs of $16.2 million, of which $15.2 million represents accreted
  interest on the payments due in relation to the Barrick silver interest, with
  the remainder being attributable to interest on bank debt. All of the interest
  costs incurred during the year ended December 31, 2011 were capitalized in relation
  to the Barrick silver interest.

SILVER WHEATON 2012 ANNUAL REPORT[23]

---

Income Tax Expense (Recovery)

|                                                                                                            |   | Three Months Ended |  |   | Years Ended |  
|----------------------------------------------------------------------------------------------------------- | - | ------------------ |  | - | ----------- | -
|                                                                                                            |   | December 31        |  |   | December 31 |  
|(in thousands)                                                                                              |   | 2012               |  |   | 2011        |  
|                                                                                                            |   |                    |  |   |             |  
|Current income tax expense related to foreign
      jurisdictions                                           | $ | 40                 |  | $ | 150         |  
|Deferred income tax expense (recovery)
      related to:                                                    |   |                    |  |   |             |  
|Origination and reversal of temporary
      differences 1                                                   | $ | 6,159              |  | $ | 1,518       |  
|Write down (reversal
      of write down) of previously             
      recognized temporary differences |   | 1,945              |  |   | (2,058      | )
|                                                                                                            | $ | 8,104              |  | $ | (540        | )
|Total income tax
      expense (recovery)                                                                   | $ | 8,144              |  | $ | (390        | )

|1) | Primarily related to income from Canadian
    operations.
|-- | ---------------------------------------------------------

For the three months and year ended December 31, 2012, income
  tax expense increased by $8.5 million and $6.4 million, respectively, relative
  to the comparable periods of the prior year. This increase was primarily due
  to an increase in deferred income tax expense associated with income from Canadian
  operations and the change in deferred income tax assets recognized which is
  primarily affected by the change in unrealized gains in long-term investments
  in common shares held.

SILVER WHEATON 2012 ANNUAL REPORT[24]

---

Non-IFRS Measures

Silver Wheaton has included, throughout this document, certain
non-IFRS performance measures, including (i) operating cash flow per share
(basic and diluted); (ii) average cash costs of silver and gold on a per ounce
basis; (iii) cash operating margin; and (iv) adjusted net earnings and adjusted
net earnings per share.

| | i. | Operating cash flow per share (basic and diluted) is
      calculated by dividing cash generated by operating activities by the
      weighted average number of shares outstanding (basic and diluted). The
      Company presents operating cash flow per share as it believes that certain
      investors use this information to evaluate the Companys performance in
      comparison to other companies in the precious metals mining industry who
      present results on a similar basis.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The following table provides a reconciliation of
      operating cash flow per share (basic and
diluted).                                                                                                                                                                                                                                                                                                                                                                                           

| |                                                                                        |   | Three Months Ended |  |   | Years Ended | 
| | -------------------------------------------------------------------------------------- | - | ------------------ |  | - | ----------- | 
| |                                                                                        |   | December 31        |  |   | December 31 | 
| | (in thousands, except
      for per share amounts)                                     |   | 2012               |  |   | 2011        | 
| | Cash generated by
      operating activities                                           | $ | 254,026            |  | $ | 163,714     | 
| | Divided by:                                                                            |   |                    |  |   |             | 
| | Basic weighted average number of shares               
      outstanding               |   | 354,301            |  |   | 353,497     | 
| | Diluted
      weighted average number of shares 
                   
      outstanding |   | 356,566            |  |   | 355,797     | 
| | Equals:                                                                                |   |                    |  |   |             | 
| | Operating cash flow per share - basic                                                  | $ | 0.72               |  | $ | 0.46        | 
| | Operating
      cash flow per share - diluted                                          | $ | 0.71               |  | $ | 0.46        | 

SILVER WHEATON 2012 ANNUAL REPORT[25]

---

| | ii. | Average cash cost of silver and gold on a per ounce basis
      is calculated by dividing the total cost of sales, less depletion, by the
      ounces sold. In the precious metals mining industry, this is a common
      performance measure but does not have any standardized meaning. The
      Company believes that, in addition to conventional measures prepared in
      accordance with IFRS, certain investors use this information to evaluate
      the Companys performance and ability to generate cash flow.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The following table provides a reconciliation of average
      cash cost of silver and gold on a per ounce
basis.                                                                                                                                                                                                                                                                                                                                                                                                              

| |                                                                                 |   | Three Months Ended |   |   | Years Ended |  
| | ------------------------------------------------------------------------------- | - | ------------------ | - | - | ----------- | -
| |                                                                                 |   | December 31        |   |   | December 31 |  
| | (in thousands, except
      for gold ounces sold and per ounce amounts)         |   | 2012               |   |   | 2011        |  
| | Cost of sales                                                                   | $ | 90,916             |   | $ | 41,675      |  
| | Less: depletion                                                                 |   | (47,968            | ) |   | (17,393     | )
| | Cash cost of sales                                                              | $ | 42,948             |   | $ | 24,282      |  
| | Cash cost of sales is comprised of:                                             |   |                    |   |   |             |  
| | Total cash cost of silver sold                                                  | $ | 30,237             |   | $ | 23,144      |  
| | Total cash cost of gold sold                                                    |   | 12,711             |   |   | 1,138       |  
| | Total cash cost of sales                                                        | $ | 42,948             |   | $ | 24,282      |  
| | Divided by:                                                                     |   |                    |   |   |             |  
| | Total silver ounces sold                                                        |   | 7,347              |   |   | 5,778       |  
| | Total gold ounces sold                                                          |   | 32,960             |   |   | 3,777       |  
| | Total
      silver equivalent ounces sold 1                                     |   | 9,131              |   |   | 5,974       |  
| | Equals:                                                                         |   |                    |   |   |             |  
| | Average cash cost of silver (per ounce)                                         | $ | 4.12               |   | $ | 4.01        |  
| | Average cash cost of gold (per ounce)                                           | $ | 386                |   | $ | 301         |  
| | Average
      cash cost (per silver equivalent 
                
      ounce 1) | $ | 4.70               |   | $ | 4.06        |  

| | 1) | Gold ounces sold are converted to a silver equivalent
      basis on the ratio of the average silver price received to the average
      gold price received during the period from the assets that produce both
    silver and gold.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SILVER WHEATON 2012 ANNUAL REPORT[26]

---

| | iii. | Cash operating margin is calculated by subtracting the
      average cash cost of silver and gold on a per ounce basis from the average
      realized selling price of silver and gold on a per ounce basis. The
      Company presents cash operating margin as it believes that certain
      investors use this information to evaluate the Companys performance in
      comparison to other companies in the precious metals mining industry who
      present results on a similar basis.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | The following table provides a reconciliation of cash
      operating margin.                                                                                                                                                                                                                                                                                                                                                                                                                    

| |                                                                                        |   | Three Months Ended |   |   | Years Ended |  
| | -------------------------------------------------------------------------------------- | - | ------------------ | - | - | ----------- | -
| |                                                                                        |   | December 31        |   |   | December 31 |  
| |                                                                                        |   |                    |   |   |             |  
| | (in thousands, except
      for per ounce amounts)                                     |   | 2012               |   |   | 2011        |  
| |                                                                                        |   |                    |   |   |             |  
| | Average realized selling price of silver and gold                                      |   |                    |   |   |             |  
| | Sales                                                                                  | $ | 287,241            |   | $ | 191,867     |  
| | Divided
      by - total silver equivalent ounces sold 1                               |   | 9,131              |   |   | 5,974       |  
| |                                                                                        |   |                    |   |   |             |  
| | Equals - average realized price ($'s per silver 
           
      equivalent ounce 1) | $ | 31.46              |   | $ | 32.12       |  
| | Less - average cash
      cost ($'s per silver 
             equivalent
      ounce 1) |   | (4.70              | ) |   | (4.06       | )
| |                                                                                        |   |                    |   |   |             |  
| | Cash operating margin
      per silver equivalent ounce 1                              | $ | 26.76              |   | $ | 28.06       |  

| | 1) | Gold ounces sold are converted to a silver equivalent
      basis on the ratio of the average silver price received to the average
      gold price received during the period from the assets that produce both
    silver and gold.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iv. | Adjusted net earnings and adjusted net earnings per share
      is calculated by removing the effects of the non- cash, fair value
      adjustment on the Companys previously issued and outstanding share
      purchase warrants, which had an exercise price denominated in Canadian
      dollars, from net earnings of the Company. These share purchase warrants
      are classified as a financial liability with any fair value adjustments
      being reflected as a component of net earnings. This accounting treatment
      was applicable to the share purchase warrants which expired or were
      exercised prior to December 22, 2010. The Company believes that, in
      addition to conventional measures prepared in accordance with IFRS, the
      Company and certain investors use this information to evaluate the
      Companys performance.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These non-IFRS measures do not have any
standardized meaning prescribed by IFRS, and other companies may calculate these
measures differently. The presentation of these non-IFRS measures 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 IFRS.

SILVER WHEATON 2012 ANNUAL REPORT[27]

---

Liquidity and Capital Resources

As at December 31, 2012, the Company had cash and cash
equivalents of $778.2 million (December 31, 2011 - $840.2 million) and working
capital of $735.9 million (December 31, 2011  $677.6 million). The Company
invests excess cash in short-term, high credit quality, money market
instruments.

On February 28, 2013, the Company entered into two new
unsecured credit facilities, comprised of (i) a $1 billion revolving credit
facility having a 5 year term; and (ii) a $1.5 billion bridge financing facility
having a 1 year term, as more fully described in the Subsequent Events section
of this MD&A. These facilities replaced the pre-existing $400 million
revolving credit facility. In the opinion of management, the $778 million of
cash and cash equivalents as at December 31, 2012 combined with the liquidity
provided by the $2.5 billion of new credit facilities positions the Company well
to fund all outstanding commitments as well as providing flexibility to acquire
additional accretive precious metal stream interests.

During the year ended December 31, 2012, the Company generated
operating cash flows of $719.4 million compared with $626.4 million during the
previous year, with the increase being primarily related to an increase in the
number of silver equivalent ounces sold.

During the year ended December 31, 2012, the Company had net
cash outflows from financing activities of $139.5 million, which was comprised
of dividend payments of $123.9 million and scheduled principal repayments of
$28.6 million relating to the Companys term loan, partially offset by proceeds
in the amount of $12.9 million from share purchase options and share purchase
warrants exercised during the year. During the year ended December 31, 2011, the
Company had net cash outflows from financing activities of $84.2 million, which
was comprised of dividend payments in the amount of $63.6 million as well as
scheduled principal repayments of $28.6 million relating to the Companys term
loan, partially offset by proceeds in the amount of $7.9 million from share
purchase options and share purchase warrants exercised during the year.

During the year ended December 31, 2012, the Company had net
cash outflows relating to investing activities of $641.9 million, which was
primarily related to upfront payments to Hudbay totaling $500 million related to
the Companys 777 silver and gold interest and Constancia silver interest, in
addition to the scheduled final upfront payment of $137.5 million to Barrick.
During the year ended December 31, 2011, the Company had net cash outflows
relating to investing activities of $130.7 million, which was primarily related
to the scheduled upfront payment of $137.5 million to Barrick and the
acquisition, by way of private placement, of 10 million common shares of Wildcat
Silver Corporation for total consideration of Cdn$13.0 million ($13.7 million),
partially offset by proceeds in the amount of Cdn$23.5 million ($24.3 million)
received from the sale of 1.8 million common shares of Ventana Gold Corp.

SILVER WHEATON 2012 ANNUAL REPORT[28]

---

Contractual Obligations and
Contingencies

Silver and Gold Interests

The following table summarizes the Companys commitments to pay
for silver and gold to which it has the contractual right pursuant to the
precious metal purchase agreements:

Silver and Gold Interests
      Attributable
        PayableProduction to bePurchased
      Per Ounce CashPayment1,2
      Term ofAgreement
      Date ofContractSilver
      Gold
      Silver
      GoldSan Dimas
      100% 3
      -
      $ 4.12
      n/a
      Life of Mine
      15-Oct-04Zinkgruvan
      100%
      -
      $ 4.18
      n/a
      Life of Mine
      8-Dec-04Yauliyacu
      100% 4
      -
      $ 4.08
      n/a
      20 years
      23-Mar-06Peñasquito
      25%
      -
      $ 3.99
      n/a
      Life of Mine
      24-Jul-07Minto
      100%
      100% 5
      $ 3.94
      $ 303
      Life of Mine
      1-Dec-08Cozamin
      100%
      -
      $ 4.12
      n/a
      10 years
      4-Apr-07777
      100%
      100%/50% 6
      $ 5.90
      $ 400
      Life of Mine
      8-Aug-12Salobo
      -
      25%
      n/a
      $ 400
      Life of Mine
      28-Feb-13Sudbury
      -
      70%
      n/a
      $ 400
      20 years
      28-Feb-13BarrickPascua-Lama
      25%
      -
      $ 3.90
      n/a
      Life of Mine
      8-Sep-09Lagunas Norte
      100%
      -
      $ 3.90
      n/a
      4 years 7
      8-Sep-09Pierina
      100%
      -
      $ 3.90
      n/a
      4 years 7
      8-Sep-09Veladero
      100% 8
      -
      $ 3.90
      n/a
      4 years 7
      8-Sep-09OtherLos Filos 3
      100%
      -
      $ 4.17
      n/a
      25 years
      15-Oct-04Keno Hill
      25%
      -
      $ 3.90
      n/a
      Life of Mine
      2-Oct-08Mineral Park
      100%
      -
      $ 3.90
      n/a
      Life of Mine
      17-Mar-08Neves-Corvo
      100%
      -
      $ 4.02
      n/a
      50 years
      5-Jun-07Stratoni
      100%
      -
      $ 4.02
      n/a
      Life of Mine
      23-Apr-07Campo Morado
      75%
      -
      $ 3.94
      n/a
      Life of Mine
      13-May-08Aljustrel
      100%
      -
      $ 3.98
      n/a
      50 years
      5-Jun-07Loma de La Plata
      12.5%
      -
      $ 4.00
      n/a
      Life of Mine
      n/a 9Rosemont
      100%
      100%
      $ 3.90
      $ 450
      Life of Mine
      11-Feb-10Constancia
      100%
      -
      $ 5.90
      n/a
      Life of Mine
      8-Aug-12


|1) | Subject to an annual inflationary adjustment with the
    exception of Loma de La Plata and Sudbury.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Should the prevailing market price for silver or gold be
      lower than this amount, the per ounce cash payment will be reduced to the
    prevailing market price, with the exception of Yauliyacu.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3) | Until August 6, 2014, Silver Wheaton is committed to
      purchase from Primero 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 is committed to purchase an additional 1.5 million ounces
      of silver per annum to be delivered by Goldcorp for a per ounce cash
      payment equal to that applicable under the Los Filos silver purchase
      agreement. After August 6, 2014, Silver Wheaton is committed to purchase
      from Primero a per annum amount equal to the first 6 million ounces of
    payable silver produced at San Dimas and 50% of any excess.
|4) | To a maximum of 4.75 million ounces per annum. In the
      event that silver sold and delivered to Silver Wheaton in any year totals
      less than 4.75 million ounces, the amount sold and delivered to Silver
      Wheaton in subsequent years will be increased to make up for any
      cumulative shortfall, to the extent production permits. The cumulative
      shortfall as at March 23, 2012, representing the six year anniversary, was
    13.0 million ounces.                                                                                                                                                                                                    
|5) | The Company is committed to acquire 100% of the first
    30,000 ounces of gold produced per annum and 50% thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6) | The Companys share of gold production at 777 will remain
      at 100% until the later of the end of 2016 or the satisfaction of a
      completion test relating to Hudbays Constancia project, after which it
    will be reduced to 50% for the remainder of the mine life.                                                                                                                                                                                                                                                                                                                                                                                                    
|7) | The Company is committed to purchase silver production
      from the currently producing mines until December 31, 2013. In addition,
      during 2014 and 2015, the Company is committed to purchase all or a
      portion of the silver production from these mines to the extent of any
      production shortfall at Pascua-Lama relative to the completion guarantee
      provided by Barrick, until such time as the completion guarantee is
    satisfied.                                                                                                                                                                                                                
|8) | Silver Wheaton's attributable silver production is
      subject to a maximum of 8% of the silver contained in the ore mined at
    Veladero during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|9) | Terms of the agreement not yet
  finalized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

SILVER WHEATON 2012 ANNUAL REPORT[29]

---

Other Contractual Obligations and Contingencies

Obligations With Scheduled
        Payment DatesOther(in thousands)
      
      2013
      
      
      2014
        - 2016
      
      
      2017
        - 2018
      
      
      After
        2018
      
      
      Sub-Total
      
      
      Commitments
      
      
      TotalBank debt 1
      $
      28,560
      
      $
      21,500
      
      $
      -
      
      $
      -
      
      $
      50,060
      
      $
      -
      
      $
      50,060Interest on bank debt 2
      
      472
      
      
      145
      
      
      -
      
      
      -
      
      
      617
      
      
      -
      
      
      617Silver and gold interest payments 3Rosemont
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      230,000
      
      
      230,000Loma de La Plata
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      32,400
      
      
      32,400Constancia
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      250,000
      
      
      250,000Operating leases
      
      507
      
      
      1,520
      
      
      132
      
      
      -
      
      
      2,159
      
      
      -
      
      
      2,159Total contractual obligations
      $
      29,539
      
      $
      23,165
      
      $
      132
      
      $
      -
      
      $
      52,836
      
      $
      512,400
      
      $
      565,236


|1) | As more fully disclosed in the Subsequent Events section
      of this MD&A, the bank debt was repaid in full on February 22,
    2013.                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | As the applicable interest rates are floating in nature,
      the interest charges are estimated based on market-based forward interest
    rate curves at the end of the reporting period.
|3) | Does not reflect the contingent payment due related to
    the Salobo gold purchase agreement.                                                                                              

Rosemont

In connection with the Rosemont precious metals purchase
agreement, the Company is committed to pay Augusta total upfront cash payments
of $230 million, payable on an installment basis to partially fund construction
of the Rosemont mine once certain milestones are achieved, including the receipt
of key permits and securing the necessary financing to complete construction of
the mine.

Loma de La Plata

In connection with the Companys election to convert the
debenture with Pan American into a silver purchase agreement, the Company is
committed to pay Pan American total upfront cash payments of $32.4 million
following the satisfaction of certain conditions, including Pan American
receiving all necessary permits to proceed with the mine construction.

Constancia

In connection with the Constancia silver purchase agreement,
the Company is committed to pay Hudbay two further payments of $125 million to
be made once capital expenditures of $500 million and $1 billion have been
incurred at Constancia.

Salobo

Vale is in the process of expanding the mill throughput
capacity at the Salobo mine to 24 million tonnes per annum (Mtpa) from its
current 12 Mtpa. If throughput capacity is expanded above 28 Mtpa within a
predetermined period, Silver Wheaton will be required to make an additional
payment to Vale based on a set fee schedule ranging from $67 million up to $400
million, dependent on the timing and scale of any expansion.

Other

Due to the size, complexity and nature of the Companys
operations, various legal and tax matters are outstanding from time to time,
including an audit by the Canada Revenue Agency of the Companys international
transactions covering the 2005 to 2010 taxation years, which is currently
ongoing. By their nature, contingencies will only be resolved when one or more
future events occur or fail to occur. The assessment of contingencies inherently
involves the exercise of significant judgment and estimates of the outcome of
future events. Based on information available to management at March 21, 2013,
the outstanding legal and tax matters are not expected to have a material
adverse effect on the Company. However, if the Company is unable to resolve any
of these matters favorably, there may be a material adverse impact on the
Companys financial performance, cash flows or results of operations. In the
event that managements estimate of the future resolution of these matters
changes, the Company will recognize the effects of the changes in its
consolidated financial statements in the appropriate period relative to when
such changes occur.

SILVER WHEATON 2012 ANNUAL REPORT[30]

---

Share Capital

During the year ended December 31, 2012, the Company received
cash proceeds of $11.0 million from the exercise of 721,632 share purchase
options at a weighted average exercise price of Cdn$15.17 per option. For the
comparable period in 2011, the Company received cash proceeds of $7.8 million
from the exercise of 642,173 share purchase options at a weighted average
exercise price of Cdn$11.96 per option.

During the year ended December 31, 2012, the Company received
cash proceeds of $1.9 million from the exercise of 93,897 share purchase
warrants with an exercise price of $20.00 per warrant. For the comparable period
in 2011, the Company received cash proceeds of $99,000 from the exercise of
4,968 share purchase warrants with an exercise price of $20.00 per warrant.

As of March 21, 2013, there were 354,433,902 outstanding common
shares, 2,273,895 share purchase options, 130,191 restricted share units and
12,613,290 share purchase warrants.

Risks and Uncertainties

The primary risk factors affecting the Company are set forth
below. For discussion of additional risk factors, please refer to the Companys
Annual Information Form, which is available on the Companys website,
www.silverwheaton.com, and on SEDAR, www.sedar.com, or is available upon request
from the Company.

Commodity Prices

The price of the common shares and the Companys financial
results may be significantly adversely affected by a decline in the price of
silver or gold. The price of silver and gold fluctuates widely, especially in
recent years, and is affected by numerous factors beyond the Companys control,
including, but not limited to, the sale or purchase of silver and gold by
various central banks and financial institutions, interest rates, exchange
rates, inflation or deflation, fluctuation in the value of the United States
dollar and foreign currencies, global and regional supply and demand, and the
political and economic conditions of major silver and gold producing countries
throughout the world.

In the event that the prevailing market price of silver or gold
is at or below the price at which the Company can purchase such pursuant to the
terms of the agreements associated with its silver and gold interests, the
Company will not generate positive cash flow or earnings.

The Mining Operations consist of the San Dimas mine, the
Zinkgruvan mine, the Yauliyacu mine, the Stratoni mine, the Mineral Park mine,
the Los Filos mine, the Peñasquito mine, the Campo Morado mine, the Keno Hill
mine, the Neves-Corvo mine, the Cozamin mine, the Minto mine, the Barrick mines
(including the Pascua-Lama project), the Aljustrel mine, the 777 mine, the
Salobo mine, the Sudbury mines, the Rosemont project, the Loma de La Plata
project and the Constancia project. Silver and gold are by-product metals at all
of the Mining Operations, other than at the Keno Hill mine and the Loma de La
Plata project, and therefore, the economic cut-off applied to the reporting of
silver and gold reserves and resources will be influenced by changes in the
commodity prices of other metals at the mines.

Risks Relating to Mining Operations

To the extent that they relate to the production of silver and
gold from, or the continued operation of, the Mining Operations, the Company
will be subject to the risk factors applicable to the operators of such mines or
projects, including the following as more fully described in the Companys
Annual Information Form: government regulations; international operations;
exploration, development and operating risks; environmental regulation;
permitting; compliance with laws; infrastructure; mineral reserve and mineral
resource estimates; need for additional mineral reserves; land title; commodity
price fluctuations; additional capital; and permitting, construction,
development and expansion risk.

SILVER WHEATON 2012 ANNUAL REPORT[31]

---

No Control Over Mining Operations

The Company has agreed to purchase a certain percentage of the
silver and / or gold produced by the Mining Operations. The Company is not
directly involved in the ownership or operation of mines and has no contractual
rights relating to the operation of the Mining Operations. As a result, the cash
flow of the Company is dependent upon the activities of third parties which
creates the risk that at any time those third parties may: (i) have business
interests or targets that are inconsistent with those of the Company, (ii) take
action contrary to the Companys policies or objectives, (iii) be unable or
unwilling to fulfill their obligations under their agreements with the Company,
or (iv) experience financial, operational or other difficulties, including
insolvency, which could limit a third partys ability to perform its obligations
under the precious metal purchase agreements. Except in limited circumstances,
the Company will not be entitled to any material compensation if such operations
do not meet their forecasted silver or gold production targets in any specified
period or if the operations shut down or discontinue their operations on a
temporary or permanent basis. There can be no assurance that the silver or gold
production from such properties will ultimately meet forecasts or targets. At
any time, any of the operators of the Mining Operations may decide to suspend or
discontinue operations.

Taxes

A significant portion of the Companys operating profit is
derived from its subsidiaries, Silver Wheaton (Caymans) Ltd. and, historically,
Silverstone Resources (Barbados) Corp, which are incorporated and operated in
the Cayman Islands and Barbados, respectively, such that the Companys profits
are subject to minimal income tax.

The introduction of new tax laws or regulations, or changes to,
or differing interpretation of, or application of, existing tax laws or
regulations in Canada, the Cayman Islands, Luxembourg, Barbados, the Netherlands
or any of the countries in which the Mining Operations are located or to which
shipments of silver or gold are made, could result in an increase in the
Companys taxes, or other governmental charges, duties or impositions. Due to
the size, complexity and nature of the Companys operations, various tax matters
are outstanding from time to time, including an audit by the Canada Revenue
Agency of the Companys international transactions covering the 2005 to 2010
taxation years. No assurance can be given that new tax laws or regulations will
not be enacted or that existing tax laws or regulations will not be changed,
interpreted or applied in a manner which could have a material adverse effect on
the Company.

Credit and Liquidity Risk

The Company is exposed to various counterparty risks and
liquidity risks including, but not limited to: (i) through the companies with
which the Company has precious metal purchase agreements; (ii) through financial
institutions that hold the Companys cash and cash equivalents; (iii) through
companies that have payables to the Company, including concentrate customers;
(iv) through the Companys insurance providers; and (v) through the Companys
lenders. The Company is also exposed to liquidity risks in meeting its operating
expenditure requirements in instances where cash positions are unable to be
maintained or appropriate financing is unavailable. These factors may impact the
ability of the Company to obtain loans and other credit facilities in the future
and, if obtained, on terms favourable to the Company. If these risks
materialize, the Companys operations could be adversely impacted and the
trading price of the common shares could be adversely affected.

Competition

The Company competes with other companies for precious metal
purchase agreements and similar transactions. Some of these companies may
possess greater financial and technical resources than the Company. Such
competition may result in the Company being unable to enter into desirable
precious metal purchase agreements or similar transactions, to recruit or retain
qualified employees or to acquire the capital necessary to fund its precious
metal purchase agreements. Existing or future competition in the mining industry
could materially adversely affect the Companys prospects for entering into
additional precious metal purchase agreements in the future.

Acquisition Strategy

As part of the Companys business strategy, it has sought and
will continue to seek new exploration, mining and development opportunities in
the resource industry. In pursuit of such opportunities, the Company may fail to
select appropriate acquisition candidates or negotiate acceptable arrangements,
including arrangements to finance acquisitions or integrate the acquired
businesses and their personnel into the Company. The Company cannot assure that
it can complete any acquisition or business arrangement that it pursues, or is
pursuing, on favourable terms, or that any acquisitions or business arrangements
completed will ultimately benefit the Company.

SILVER WHEATON 2012 ANNUAL REPORT[32]

---

Market Price of the Common Shares and
the Common Share Purchase Warrants

The common shares are listed and posted for trading on the
Toronto Stock Exchange and on the New York Stock Exchange and the Companys
common share purchase warrants are listed and posted for trading on the Toronto
Stock Exchange. An investment in the Companys securities is highly speculative.
Securities of companies involved in the resource industry have experienced
substantial volatility in the past, often based on factors unrelated to the
financial performance or prospects of the companies involved. The price of the
common shares and the Companys common share purchase warrants are also likely
to be significantly affected by short-term changes in silver and gold prices,
the Companys financial condition or results of operations as reflected in its
quarterly earnings reports, and the other risk factors identified herein.

Equity Price Risk

The Company is exposed to equity price risk as a result of
holding long-term investments in other exploration and mining companies. Just as
investing in the Company is inherent with risks such as those set out in this
MD&A, by investing in these other companies, the Company is exposed to the
risks associated with owning equity securities and those risks inherent in the
investee companies. The Company does not actively trade these investments.

Dividend Policy

The declaration, timing, amount and payment of dividends is at
the discretion of the Board of Directors. There can be no assurance that the
Company will continue to declare a dividend on a quarterly, annual or other
basis.

Dependence Upon Key Management Personnel

The Company is dependent on the services of a small number of
key executives who are highly skilled and experienced. The loss of these
employees or the Companys inability to attract and retain additional highly
skilled employees may adversely affect its business and future operations.

Litigation

The Company is from time to time involved in various claims,
legal proceedings and disputes arising in the ordinary course of business. If
the Company is unable to resolve these disputes favorably, it may have a
material adverse impact on the Companys financial performance, cash flow or
results of operations.

Other Risks

Critical Accounting Estimates

The preparation of financial statements in conformity with IFRS
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenditures during the reporting period. Note 2 of the Companys consolidated
financial statements describes all of the significant accounting policies.

Silver and Gold Interests

Attributable Reserve and Resource Estimates

Silver and gold interests are significant assets of the
Company, with a carrying value of $2.3 billion at December 31, 2012. This amount
represents the capitalized expenditures related to the acquisition of the silver
and gold interests, net of accumulated depletion. The Company estimates the
reserves and resources relating to each agreement. Reserves are estimates of the
amount of silver or gold that can be economically and legally extracted from the
mining properties at which the Company has precious metal purchase agreements,
adjusted where applicable to reflect the Companys percentage entitlement to
silver and gold produced from such mines. The Company estimates its reserves and
resources based on information compiled by appropriately qualified persons
relating to the geological data on the size, depth and shape of the ore body,
and require complex geological judgments to interpret the data. The estimation
of recoverable reserves is based upon factors such as estimates of foreign
exchange rates, commodity prices, future capital requirements, and production
costs along with geological assumptions and judgments made in estimating the
size and grade of the ore body. Changes in the reserve or resource estimates may
impact upon the carrying value of the Companys silver and gold interests and
depletion charges.

SILVER WHEATON 2012 ANNUAL REPORT[33]

---

Depletion

As described above, the cost of these silver and gold interests
is separately allocated to reserves, resources and exploration potential. The
value allocated to reserves is classified as depletable and is depleted on a
unit-of-sale basis over the estimated recoverable proven and probable reserves
at the mine corresponding to the specific agreement. The value associated with
resources and exploration potential is the value beyond proven and probable
reserves at acquisition and is classified as non-depletable until such time as
it is transferred to the depletable category as a result of the conversion of
resources and / or exploration potential into reserves. These calculations
require the use of estimates and assumptions, including the amount of
recoverable reserves. Changes in the estimated recoverable reserves, resources
or exploration potential will directly impact the depletion rate used. Changes
to depletion rates are accounted for prospectively.

Impairment of Assets

Management considers each silver and gold interest to be a
separate cash generating unit, which is the lowest level for which cash inflows
are largely independent of those of other assets. At the end of each reporting
period, the Company reviews the carrying amounts of each silver and gold
interest to determine whether there is any indication that those silver and gold
interests have suffered an impairment loss. If such an indication exists, the
recoverable amount of the silver and gold interest is estimated in order to
determine the extent of the impairment (if any). The recoverable amount of each
silver and gold interest is the higher of fair value less costs to sell (Fair
Value Approach) and value in use (Value-In-Use Approach).

Under the Fair Value Approach, the net asset value (NAV)
methodology is used to determine the fair value that could be received from each
silver and gold interest in an arms length transaction at the measurement date.
NAV is estimated by using an appropriate discount rate to calculate the present
value of expected future cash flows associated with each mineral category. The
values are adjusted for each mineral category dependent on the likelihood of
conversion from resources to reserves. A market multiple is applied to the NAV
computed in order to assess the estimated fair value. Silver and precious metals
companies typically trade at a market capitalization that is based on a multiple
of their underlying NAV. Consequently, a market participant would generally
apply a NAV multiple when estimating the fair value of a silver and gold
interest.

Under the Value-In-Use Approach, the net present value (NPV)
methodology is used. NPV is estimated by using a discount rate to calculate the
present value of expected future cash flows. The discount rate is based on the
Companys weighted average cost of capital, adjusted for various risks.

The expected future cash flows are managements best estimates
of expected future revenues and costs. Under each method, expected future
revenues reflect the estimated future production for each mine at which the
Company has a precious metal purchase agreement based on detailed life of mine
plans received from each of the partners. Included in these forecasts is the
production of mineral resources that do not currently qualify for inclusion in
proven and probable ore reserves where there is a high degree of confidence in
its economic extraction. This is consistent with the methodology that is used to
measure value beyond proven and probable reserves when allocating the purchase
price to acquired silver and gold interests. Expected future revenues also
reflect managements estimated long-term metal prices, which are determined
based on current prices, forward pricing curves and forecasts of expected
long-term metal prices prepared by analysts. These estimates often differ from
current price levels, but are consistent with how a market participant would
assess future long-term metal prices. Estimated future cash costs are fixed
based on the terms of each precious metal purchase agreement, as disclosed in
Note 20 to the financial statements.

If the carrying amount of the asset exceeds its recoverable
amount, the asset is considered impaired and an impairment charge is reflected
as a component of net earnings so as to reduce the carrying amount to its
recoverable value. A previously recognized impairment charge is reversed only if
there has been a change in the estimates used to determine the assets
recoverable amount since the last impairment charge was recognized. If this is
the case, the carrying amount of the asset is increased to its recoverable
amount. The increased amount cannot exceed the carrying amount that would have
been determined, net of depletion, had no impairment charge been recognized for
the asset in prior years. Such reversal is reflected as a component of net
earnings.

No impairment charge was required at December 31, 2012 and
December 31, 2011.

Valuation of Stock Based Compensation

The Company has various forms of stock based compensation,
including share purchase options, restricted share units (RSUs) and
performance share units (PSUs). The calculation of the fair value of share
purchase options, RSUs and PSUs issued requires the use of estimates as more
fully described below.

SILVER WHEATON 2012 ANNUAL REPORT[34]

---

The Company recognizes a stock based compensation expense for
all share purchase options and RSUs awarded to employees, officers and directors
based on the fair values of the share purchase options and RSUs at the date of
grant. The fair values of share purchase options and RSUs at the date of grant
are expensed over the vesting periods of the share purchase options and RSUs,
respectively, with a corresponding increase to equity. The fair value of share
purchase options is determined using the Black-Scholes option pricing model with
market related inputs as of the date of grant. Share purchase options with
graded vesting schedules are accounted for as separate grants with different
vesting periods and fair values. The fair value of RSUs is the market value of
the underlying shares at the date of grant. At the end of each reporting period,
the Company re-assesses its estimates of the number of awards that are expected
to vest and recognizes the impact of any revisions to this estimate in the
consolidated statement of earnings.

The Company recognizes a stock based compensation expense for
PSUs which are awarded to eligible employees and are settled in cash. The
related expense is based on the value of the anticipated settlement and
multiplier for current performance at the end of the associated performance
periods. This estimated expense is reflected as a component of net earnings over
the vesting period of the PSUs with the related obligation recorded as a
liability on the balance sheet. The amount of compensation expense is adjusted
at the end of each reporting period to reflect the fair market value of common
shares and the number of PSUs anticipated to vest based on the anticipated
performance factor.

Revenue Recognition

Revenue from the sale of silver and gold is recognized in the
accounts when persuasive evidence of an arrangement exists, title and risk
passes to the buyer, collection is reasonably assured and the price is
reasonably determinable. Selling prices are determined at the point revenue is
recognized by reference to active and freely traded commodity markets, for
example the London Bullion Market for commodities, in an identical form to the
product sold.

Where the Company acquires silver or gold in concentrate form,
final silver or gold prices are set on a specified future period (the
Quotational Period) pursuant to the concentrate sales contracts with
third-party smelters, typically one to three months after the shipment date,
based on market prices for silver or gold. Revenues and the associated cost of
sales are recorded on a gross basis under these contracts at the time title
passes to the buyer based on the forward price for the expected settlement
period. The contracts, in general, provide for a provisional payment of 90% of
the estimated value of the silver and/or gold sold under the concentrate sales
contract based upon provisional assays and quoted silver and gold prices, with
the 10% holdback being payable upon final settlement, which is based upon the
average applicable price for the Quotational Period applied to the actual number
of silver or gold ounces recovered calculated using confirmed smelter weights
and settlement assays. This 10% holdback is reflected as a component of Accounts
Receivable in the Companys consolidated balance sheet. Final settlement
generally occurs from three to six months after shipment. The Companys
provisionally priced sales contain an embedded derivative that is required to be
separated from the host contract for accounting purposes. The host contract is
the receivable from the sale of concentrates measured at the forward price at
the time of sale. The embedded derivative does not qualify for hedge accounting.
The embedded derivative is recorded on the balance sheet as a derivative asset
in Accounts Receivable or as a derivative liability in Accounts Payable and
Accrued Liabilities and is adjusted to fair value through revenue each period
until the date of final settlement.

At December 31, 2012, the Company had outstanding provisionally
priced sales of $12.7 million (2011 - $3.6 million) where the quotational period
pricing was estimated based on the forward price for silver. These sales
consisted of 0.4 million ounces of silver (2011  0.1 million ounces of silver)
and had a fair value loss adjustment of approximately $1.1 million (2011 - $0.3
million gain) associated with the embedded derivative. For each one cent per
ounce increase or decrease in realized silver price, revenue would increase or
decrease by approximately $3,800 (2011 - $1,200).

Financial Instruments

In order to mitigate the effect of short-term volatility in
silver and gold prices, the Company will occasionally enter into forward
contracts in relation to silver and gold deliveries that it is highly confident
will occur within a given quarter. The Company does not hedge its long-term
exposure to commodity prices. Other than these very short-term forward
contracts, the Company has not used derivative financial instruments to manage
the risks associated with its operations and therefore, in the normal course of
business, it is inherently exposed to currency, interest rate and commodity
price fluctuations. No forward contracts were outstanding at December 31, 2012
and December 31, 2011.

The Company owns equity interests in several publicly traded
mineral exploration, development and mining companies as long-term investments
and therefore is inherently exposed to various risk factors including currency
risk, market price risk and liquidity risk.

SILVER WHEATON 2012 ANNUAL REPORT[35]

---

Changes in Accounting Policies

IFRS 7  Financial Instruments (amended 2010)

In October 2010, the International Accounting Standards Board
(IASB) issued amendments to IFRS 7  Financial Instruments: Disclosures, which
improves the disclosure requirements in relation to transferred financial
assets. This amendment is applicable for the Companys interim and annual
consolidated financial statements for its fiscal year beginning January 1, 2012.
The adoption of this amended standard did not result in a material impact on the
Companys consolidated financial statements.

IAS 12  Income Taxes (amended 2010)

In December 2010, the IASB issued amendments to IAS 12  Income
Taxes, which provides a practical solution to determining the recovery of
investment properties as it relates to the accounting for deferred income taxes.
This amendment is applicable for the Companys interim and annual consolidated
financial statements for its fiscal year beginning January 1, 2012. The adoption
of this amended standard did not result in a material impact on the Companys
consolidated financial statements.

Future Changes in Accounting
  Policies

The IASB has issued the following new or amended standards:

Standards required to be applied for periods beginning on or
after July 1, 2012:

- IAS 1 - Presentation of Financial Statements (amended 2011)

Standards required to be applied for periods beginning on or
after January 1, 2013:

- IFRS 7  Financial Instruments (amended 2011)
- IFRS 10 - Consolidated Financial Statements (IFRS 10)
- IFRS 11 - Joint Arrangements (IFRS 11)
- IFRS 12 - Disclosure of Interests in Other Entities (IFRS 12)
- IFRS 13 - Fair Value Measurement
- IAS 19  Employee Benefits (amended 2011)
- IAS 27 - Separate Financial Statements (amended 2011) (IAS 27)
- IAS 28 - Investments in Associates (amended 2011) (IAS 28)
- IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine

Standards required to be applied for periods beginning on or
after January 1, 2014:

- IAS 32  Financial Instruments: Presentation (amended 2011)

Standards required to be applied for periods beginning on or
after January 1, 2015:

- IFRS 9 (2010)  Financial Instruments (amended 2010)

The Company has early adopted IFRS 9 (2009)  Financial
Instruments. Early adoption of the above standards is permitted, however, IFRS
10, IFRS 11, IFRS 12, IAS 27 and IAS 28 must be initially applied concurrently.

Based upon its current facts and circumstances, the Company
does not expect to be materially affected by the application of these new
standards.

SILVER WHEATON 2012 ANNUAL REPORT[36]

---

Subsequent Events

Declaration of Dividend

On March 21, 2013, the Board of Directors declared a dividend
in the amount of $0.14 per common share, representing 20% of the cash generated
by operating activities during the three months ended December 31, 2012, payable
to shareholders of record on April 2, 2013. This dividend is expected to be
distributed on or about April 12, 2013.

Acquisition of New Gold Interests

Salobo

On February 28, 2013, the Company entered into an agreement to
acquire from Vale an amount of gold equal to 25% of the life of mine gold
production from its currently producing Salobo mine, located in Brazil. Silver
Wheaton made a total upfront cash payment of $1.33 billion on March 12, 2013
and, in addition, will make ongoing payments of the lesser of $400 per ounce of
gold (subject to an inflationary adjustment of 1% beginning in the fourth year)
or the prevailing market price per ounce of gold delivered. Vale is in the
process of expanding the mill throughput at the Salobo mine to 24 million tonnes
per annum (Mtpa) from its current 12 Mtpa. If the expansion to 24 Mtpa is not
completed by December 31, 2016, Silver Wheaton would be entitled to a gross up
(a temporary increased percentage of gold production) based on the pro-rata
achievement of the target production. If throughput capacity is expanded above
28 Mtpa within a predetermined period, Silver Wheaton will be required to make
an additional payment to Vale based on a set fee schedule ranging from $67
million up to $400 million, dependent on the timing and scale of any expansion.

Sudbury

On February 28, 2013, the Company entered into an agreement to
acquire from Vale an amount of gold equal to 70% of the gold production from
certain of its currently producing Sudbury mines located in Canada, including
the Coleman mine, Copper Cliff mine, Garson mine, Stobie mine, Creighton mine,
Totten mine and the Victor project for a period of 20 years. Silver Wheaton made
a total upfront cash payment on March 12, 2013 of $570 million plus warrants to
purchase 10 million shares of Silver Wheaton common stock at a strike price of
$65, with a term of 10 years. In addition, Silver Wheaton will make ongoing
payments of the lesser of $400 per ounce of gold or the prevailing market price
per ounce of gold delivered.

New Credit Facilities

On February 28, 2013, the Company entered into two new
unsecured credit facilities, comprised of (i) a $1 billion revolving credit
facility having a 5 year term (the Revolving Facility); and (ii) a $1.5
billion bridge financing facility having a 1 year term (the Bridge Facility).
The Revolving Facility and Bridge Facility replaced the $400 million Revolver
Loan and the Term Loan, with the latter being repaid in full on February 22,
2013. Silver Wheaton has committed to use 100% of the net proceeds from the
issuance of equity securities or debt securities to repay the Bridge Facility.
The Bridge Facility is available for up to two drawdowns until May 31, 2013,
after which the amount available under the Bridge Facility shall be reduced to
the then outstanding balance. The Revolving Facility can be drawn down at any
time to finance acquisitions, investments or for general corporate purposes.

Until June 30, 2013, at the Companys option, amounts drawn
under the Bridge Facility incur interest at either (i) LIBOR plus 1.70% or; (ii)
the Bank of Nova Scotias Base Rate plus 0.70% . After June 30, 2013, at the
Companys option, amounts drawn under the Bridge Facility incur interest based
on the Companys leverage ratio at either (i) LIBOR plus 1.20% to 2.20% or; (ii)
the Bank of Nova Scotias Base Rate plus 0.20% to 1.20% . The interest rates
applicable to any amounts outstanding under the Bridge Facility will increase by
0.25% on each 90 day anniversary of the date of execution of the Bridge
Facility. A funding fee of 0.25% is applicable to both the principal amount of
either drawdown under the Bridge Facility as well as to any amounts outstanding
under the Bridge Facility at April 30, 2013. In addition, any amounts
outstanding under the Bridge Facility on May 29, 2013, August 27, 2013 and
November 25, 2013 are subject to a duration fee of 0.50%, 0.75% and 1.00%,
respectively.

At the Companys option, amounts drawn under the Revolving
Facility incur interest based on the Companys leverage ratio at either (i)
LIBOR plus 1.20% to 2.20% or; (ii) the Bank of Nova Scotias Base Rate plus
0.20% to 1.20% . Undrawn amounts under both facilities are subject to a stand-by
fee of 0.24% to 0.44% per annum, dependent on the Companys leverage ratio.

SILVER WHEATON 2012 ANNUAL REPORT[37]

---

Under the new credit facilities, the Company is required to
maintain a leverage ratio less than or equal to 3.5:1 (4.5:1 during the six
month period following any acquisition greater than $400 million) and a tangible
net worth greater than 80% of the tangible net worth at September 30, 2012 plus
50% of the positive net earnings for each fiscal quarter thereafter.

On March 11, 2013, the Company made a drawdown on the Bridge
Facility of $1.09 billion to partially fund the upfront cash payment on the
Sudbury and Salobo gold interests.

Controls and Procedures

Disclosure Controls and Procedures

Silver Wheatons management, with the participation of its
Chief Executive Officer and Chief Financial Officer, has evaluated the design
and effectiveness of Silver Wheatons disclosure controls and procedures, as
defined in the rules of the U.S. Securities and Exchange Commission and Canadian
Securities Administrators, as of December 31, 2012. Based on that evaluation,
the Companys Chief Executive Officer and Chief Financial Officer have concluded
that Silver Wheatons disclosure controls and procedures were effective at the
reasonable assurance level as of December 31, 2012.

Internal Control Over Financial
Reporting

The Companys management, with the participation of its Chief
Executive Officer and Chief Financial Officer, are responsible for establishing
and maintaining adequate internal control over financial reporting. Under the
supervision of the Chief Financial Officer, the Companys internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with IFRS. The
Companys controls include policies and procedures that:

- pertain to the maintenance of records that, in reasonable detail,
  accurately and fairly reflect the transactions and dispositions of the assets
  of the Company;
- provide reasonable assurance that transactions are recorded as necessary to
  permit preparation of financial statements in accordance with IFRS, and that
  receipts and expenditures of the Company are being made only in accordance
  with authorizations of the Companys management and directors; and,
- provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use or disposition of the Companys assets that
  could have a material effect on the annual financial statements or interim
  financial statements.

There have been no changes in the Companys internal control
over financial reporting during the year ended December 31, 2012 that would
materially affect, or is reasonably likely to materially affect, the Companys
internal control over financial reporting.

The Companys management, including its Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of the Companys
internal control over financial reporting using the framework and criteria
established in Internal Control  Integrated Framework, issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, management has concluded that the internal control over financial
reporting was effective at the reasonable assurance level as of December 31,
2012.

Limitation of Controls and Procedures

The Companys management, including its Chief Executive Officer
and Chief Financial Officer, believe that any disclosure controls and procedures
or internal control over financial reporting, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, they cannot provide absolute
assurance that all control issues and instances of fraud, if any, within the
Company have been prevented or detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by unauthorized override of the controls. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Accordingly,
because of the inherent limitations in a cost effective control system,
misstatements due to error or fraud may occur and not be detected.

SILVER WHEATON 2012 ANNUAL REPORT[38]

---

Attributable Reserves and Resources
  (1)

The following tables set forth the estimated Mineral Reserves
and Mineral Resources (silver and/or gold only) for the mines relating to which
the Company has purchase agreements, adjusted where applicable to reflect the
Companys percentage entitlement to silver and/or gold produced from such mines,
as of December 31, 2012, unless otherwise noted. The tables are based on
information available to the Company as of the date of this document, and
therefore will not reflect updates, if any, after such date. The most current
Mineral Reserves and Mineral Resources will be available on the Companys
website.

ATTRIBUTABLE PROVEN AND PROBABLE
  RESERVES(1,2,3,8,17)AS OF DECEMBER 31, 2012 UNLESSOTHERWISE
  NOTED(6)

|                      |  | Proven  |  |  | Probable |  |  | Proven
      & Probable |  |  |         | 
|--------------------- |  | ------- |  |  | -------- |  |  | ----------------------- |  |  | ------- | 
|                      |  |         |  |  |          |  |  |                         |  |  |         | 
|                      |  |         |  |  |          |  |  |                         |  |  |         | 
|                      |  | Tonnage |  |  | Grade    |  |  | Contained               |  |  | Tonnage | 
|SILVER                |  | Mt      |  |  | g/t      |  |  | Moz                     |  |  | Mt      | 
|Peñasquito (25%)(14)  |  |         |  |  |          |  |  |                         |  |  |         | 
|Mill                  |  | 144.5   |  |  | 29.4     |  |  | 136.4                   |  |  | 121.2   | 
|Heap Leach            |  | 8.1     |  |  | 14.6     |  |  | 3.8                     |  |  | 21.9    | 
|San Dimas(10,14)      |  | -       |  |  | -        |  |  | -                       |  |  | 3.8     | 
|Pascua-Lama (25%)(14) |  | 9.9     |  |  | 59.5     |  |  | 18.9                    |  |  | 86.3    | 
|Lagunas Norte(11)     |  | 3.4     |  |  | 3.2      |  |  | 0.4                     |  |  | 38.6    | 
|Pierina(11)           |  | 2.8     |  |  | 9.0      |  |  | 0.8                     |  |  | 20.6    | 
|Veladero(11)          |  | 4.7     |  |  | 10.6     |  |  | 1.6                     |  |  | 62.4    | 
|Yauliyacu(11, 12)     |  | 1.1     |  |  | 96.0     |  |  | 3.3                     |  |  | 2.9     | 
|777(13,14)            |  | 4.9     |  |  | 26.8     |  |  | 4.2                     |  |  | 7.5     | 
|Neves-Corvo           |  |         |  |  |          |  |  |                         |  |  |         | 
|Copper                |  | 6.1     |  |  | 40.0     |  |  | 7.8                     |  |  | 18.0    | 
|Zinc                  |  | 11.5    |  |  | 72.0     |  |  | 26.7                    |  |  | 11.2    | 
|Rosemont(15)          |  | 279.5   |  |  | 4.1      |  |  | 37.0                    |  |  | 325.8   | 
|Constancia            |  | 359.0   |  |  | 3.3      |  |  | 38.3                    |  |  | 91.0    | 
|Mineral Park(15)      |  | 293.9   |  |  | 2.7      |  |  | 25.7                    |  |  | 74.5    | 
|Zinkgruvan            |  |         |  |  |          |  |  |                         |  |  |         | 
|Zinc                  |  | 8.4     |  |  | 95.0     |  |  | 25.8                    |  |  | 2.4     | 
|Copper                |  | 3.9     |  |  | 32.0     |  |  | 4.0                     |  |  | 0.1     | 
|Aljustrel             |  |         |  |  |          |  |  |                         |  |  |         | 
|Copper                |  | 2.2     |  |  | 19.2     |  |  | 1.3                     |  |  | 8.4     | 
|Campo Morado (75%)    |  | 0.8     |  |  | 158.2    |  |  | 4.0                     |  |  | 0.2     | 
|Stratoni              |  | 1.7     |  |  | 174.0    |  |  | 9.3                     |  |  | 0.1     | 
|Minto                 |  | 5.5     |  |  | 5.4      |  |  | 1.0                     |  |  | 5.9     | 
|Cozamin(11)           |  |         |  |  |          |  |  |                         |  |  |         | 
|Copper                |  | 0.9     |  |  | 63.0     |  |  | 1.7                     |  |  | 4.9     | 
|Los Filos             |  | 72.6    |  |  | 5.3      |  |  | 12.3                    |  |  | 224.1   | 
|                      |  |         |  |  |          |  |  |                         |  |  |         | 
|Total Silver          |  |         |  |  |          |  |  | 364.2                   |  |  |         | 
|GOLD                  |  |         |  |  |          |  |  |                         |  |  |         | 
|Salobo (25%)(16)      |  | 159.2   |  |  | 0.42     |  |  | 2.15                    |  |  | 121.5   | 
|Sudbury (70%)(11)     |  | 34.8    |  |  | 0.29     |  |  | 0.33                    |  |  | 26.5    | 
|777(13,14)            |  | 3.9     |  |  | 1.90     |  |  | 0.24                    |  |  | 5.9     | 
|Minto                 |  | 5.5     |  |  | 0.69     |  |  | 0.12                    |  |  | 5.9     | 
|TOTAL GOLD            |  |         |  |  |          |  |  | 2.84                    |  |  |         | 

SILVER WHEATON 2012 ANNUAL REPORT[39]

---

ATTRIBUTABLE MEASURED & INDICATED
  RESOURCES(1,2,3,4,5,9,17)AS OF DECEMBER 31, 2012 UNLESSOTHERWISE NOTED(6)

|                         |  |         |  |  | Measured |  |  |           |  |  |         |  |  | Indicated |  |  |           |  |  | Measured
      & Indicated | 
|------------------------ |  | ------- |  |  | -------- |  |  | --------- |  |  | ------- |  |  | --------- |  |  | --------- |  |  | -------------------------- | 
|                         |  | Tonnage |  |  | Grade    |  |  | Contained |  |  | Tonnage |  |  | Grade     |  |  | Contained |  |  | Tonnage                    | 
|SILVER                   |  | Mt      |  |  | g/t      |  |  | Moz       |  |  | Mt      |  |  | g/t       |  |  | Moz       |  |  | Mt                         | 
|Peñasquito (25%)(14)     |  |         |  |  |          |  |  |           |  |  |         |  |  |           |  |  |           |  |  |                            | 
|Mill                     |  | 31.4    |  |  | 14.4     |  |  | 14.6      |  |  | 112.9   |  |  | 13.1      |  |  | 47.6      |  |  | 144.2                      | 
|Heap Leach               |  | 0.9     |  |  | 5.0      |  |  | 0.1       |  |  | 5.4     |  |  | 4.2       |  |  | 0.7       |  |  | 6.4                        | 
|Pascua-Lama (25%)(14)    |  | 5.3     |  |  | 24.5     |  |  | 4.2       |  |  | 55.9    |  |  | 23.4      |  |  | 42.1      |  |  | 61.2                       | 
|Yauliyacu(11, 12)        |  | 0.7     |  |  | 115.6    |  |  | 2.5       |  |  | 5.1     |  |  | 227.1     |  |  | 37.2      |  |  | 5.8                        | 
|Neves-Corvo              |  |         |  |  |          |  |  |           |  |  |         |  |  |           |  |  |           |  |  |                            | 
|Copper                   |  | 4.1     |  |  | 49.3     |  |  | 6.4       |  |  | 23.1    |  |  | 50.7      |  |  | 37.6      |  |  | 27.1                       | 
|Zinc                     |  | 13.0    |  |  | 59.7     |  |  | 25.0      |  |  | 51.6    |  |  | 55.4      |  |  | 92.0      |  |  | 64.6                       | 
|Rosemont(15)             |  | 38.5    |  |  | 3.0      |  |  | 3.7       |  |  | 197.7   |  |  | 2.7       |  |  | 17.1      |  |  | 236.2                      | 
|Constancia               |  | 119.0   |  |  | 2.3      |  |  | 8.6       |  |  | 344.0   |  |  | 2.0       |  |  | 21.9      |  |  | 463.0                      | 
|Mineral Park(15)         |  | 101.0   |  |  | 2.6      |  |  | 8.4       |  |  | 175.6   |  |  | 2.7       |  |  | 15.2      |  |  | 276.6                      | 
|Zinkgruvan               |  |         |  |  |          |  |  |           |  |  |         |  |  |           |  |  |           |  |  |                            | 
|Zinc                     |  | 1.0     |  |  | 88.8     |  |  | 2.7       |  |  | 3.7     |  |  | 124.6     |  |  | 14.7      |  |  | 4.6                        | 
|Copper                   |  | 1.5     |  |  | 21.2     |  |  | 1.0       |  |  | 0.5     |  |  | 33.8      |  |  | 0.6       |  |  | 2.0                        | 
|Aljustrel                |  |         |  |  |          |  |  |           |  |  |         |  |  |           |  |  |           |  |  |                            | 
|Zinc                     |  | 1.3     |  |  | 65.6     |  |  | 2.7       |  |  | 20.5    |  |  | 60.3      |  |  | 39.7      |  |  | 21.8                       | 
|Copper                   |  | -       |  |  | -        |  |  | -         |  |  | 0.1     |  |  | 11.7      |  |  | 0.04      |  |  | 0.1                        | 
|Campo Morado (75%)       |  | 5.0     |  |  | 128.9    |  |  | 20.6      |  |  | 2.4     |  |  | 123.5     |  |  | 9.7       |  |  | 7.4                        | 
|Loma de La Plata (12.5%) |  | -       |  |  | -        |  |  | -         |  |  | 3.6     |  |  | 169.0     |  |  | 19.8      |  |  | 3.6                        | 
|Minto                    |  | 9.4     |  |  | 3.9      |  |  | 1.2       |  |  | 27.2    |  |  | 3.2       |  |  | 2.8       |  |  | 36.5                       | 
|Keno Hill (25%)          |  |         |  |  |          |  |  |           |  |  |         |  |  |           |  |  |           |  |  |                            | 
|Underground              |  | -       |  |  | -        |  |  | -         |  |  | 0.6     |  |  | 506.0     |  |  | 10.4      |  |  | 0.6                        | 
|Elsa Tailings            |  | -       |  |  | -        |  |  | -         |  |  | 0.6     |  |  | 119.0     |  |  | 2.4       |  |  | 0.6                        | 
|Los Filos                |  | 9.6     |  |  | 8.5      |  |  | 2.6       |  |  | 61.4    |  |  | 6.8       |  |  | 13.4      |  |  | 71.0                       | 
|                         |  |         |  |  |          |  |  |           |  |  |         |  |  |           |  |  |           |  |  |                            | 
|Total Silver             |  |         |  |  |          |  |  | 104.3     |  |  |         |  |  |           |  |  | 424.8     |  |  |                            | 
|GOLD                     |  |         |  |  |          |  |  |           |  |  |         |  |  |           |  |  |           |  |  |                            | 
|Salobo (25%)(16)         |  | 12.3    |  |  | 0.47     |  |  | 0.19      |  |  | 48.8    |  |  | 0.37      |  |  | 0.58      |  |  | 61.1                       | 
|Sudbury (70%)(11)        |  | -       |  |  | -        |  |  | -         |  |  | 23.3    |  |  | 0.33      |  |  | 0.25      |  |  | 23.3                       | 
|Minto                    |  | 9.4     |  |  | 0.44     |  |  | 0.13      |  |  | 27.2    |  |  | 0.28      |  |  | 0.24      |  |  | 36.5                       | 
|TOTAL GOLD               |  |         |  |  |          |  |  | 0.32      |  |  |         |  |  |           |  |  | 1.07      |  |  |                            | 

SILVER WHEATON 2012 ANNUAL REPORT[40]

---

ATTRIBUTABLE INFERRED RESOURCES
  (1,2,3,4,5,9,17)AS OF DECEMBER 31, 2012 UNLESS OTHERWISE NOTED
(6)

InferredTonnage
      
      
      Grade
      
      
      ContainedSILVER
      
      Mt
      
      
      g/t
      
      
      MozPeñasquito (25%)(14)Mill
      
      31.7
      
      
      9.1
      
      
      9.3Heap Leach
      
      12.7
      
      
      1.6
      
      
      0.7San Dimas(10,14)
      
      6.9
      
      
      300.4
      
      
      66.3Pascua-Lama (25%)(14)
      
      8.1
      
      
      15.5
      
      
      4.0777(13,14)
      
      1.2
      
      
      39.2
      
      
      1.5Neves-CorvoCopper
      
      25.4
      
      
      47.2
      
      
      38.6Zinc
      
      22.1
      
      
      51.0
      
      
      36.2Rosemont(15)
      
      104.5
      
      
      3.3
      
      
      11.1Constancia
      
      223.0
      
      
      1.9
      
      
      13.4Mineral Park(15)
      
      320.1
      
      
      2.3
      
      
      23.9ZinkgruvanZinc
      
      4.6
      
      
      78.0
      
      
      11.4Copper
      
      0.6
      
      
      31.0
      
      
      0.6AljustrelZinc
      
      8.7
      
      
      50.4
      
      
      14.0Copper
      
      4.7
      
      
      16.0
      
      
      2.4Campo Morado (75%)
      
      1.7
      
      
      128.9
      
      
      7.1Stratoni
      
      0.7
      
      
      217.0
      
      
      4.7Loma de La Plata (12.5%)
      
      0.2
      
      
      76.0
      
      
      0.4Minto
      
      8.5
      
      
      2.9
      
      
      0.8Keno Hill (25%)Underground
      
      0.2
      
      
      340.8
      
      
      1.9Los Filos
      
      239.2
      
      
      6.0
      
      
      46.5TOTAL SILVER
      
      
      
      
      
      
      
      294.7GOLDSalobo (25%)(16)
      
      37.0
      
      
      0.31
      
      
      0.37Sudbury (70%)(11)
      
      18.9
      
      
      0.67
      
      
      0.40777(13,14)
      
      0.6
      
      
      1.96
      
      
      0.04Minto
      
      8.5
      
      
      0.24
      
      
      0.07TOTAL GOLD
      
      
      
      
      
      
      
      0.88


SILVER WHEATON 2012 ANNUAL REPORT[41]

---

Notes:

|1. | All Mineral Reserves and Mineral Resources have been
      calculated in accordance with the CIM Standards and NI 43-101, or the
  AusIMM JORC equivalent.                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Mineral Reserves and Mineral Resources are reported above
      in millions of metric tonnes (Mt), grams per metric tonne (g/t) and
  millions of ounces (Moz).                                                                                                                                                                                                           
|3. | Individual qualified persons (QPs), as defined by the
      NI 43-101, for the technical information contained in this document
      (including the Mineral Reserve and Mineral Resource estimates) for the
  following operations are as follows:                                                                                                                           
|   | a.                                                                                                                                                                                                                                                                                                                                                                              
|   | b.                                                                                                                                                                                                                                                                                                                                                                              
|4. | The Mineral Resources reported in the above tables are
      exclusive of Mineral Reserves. The Minto, Campo Morado, Neves-Corvo,
      Zinkgruvan and Aljustrel mines report Mineral Resources inclusive of
      Mineral Reserves. The Companys QPs have made the exclusive Mineral
      Resource estimates for these mines based on average mine recoveries and
  dilution.
|5. | Mineral Resources which are not Mineral Reserves do not
  have demonstrated economic viability.                                                                                                                                                                                                                                                                                 
|6. | Other than as detailed below, Mineral Reserves and
      Mineral Resources are reported as of December 31, 2012 based on
      information available to the Company as of the date of this document, and
  therefore will not reflect updates, if any, after such date.                                                                                                         
|   | a.                                                                                                                                                                                                                                                                                                                                                                              
|   | b.                                                                                                                                                                                                                                                                                                                                                                              
|   | c.                                                                                                                                                                                                                                                                                                                                                                              
|   | d.                                                                                                                                                                                                                                                                                                                                                                              
|   | e.                                                                                                                                                                                                                                                                                                                                                                              
|   | f.                                                                                                                                                                                                                                                                                                                                                                              
|   | g.                                                                                                                                                                                                                                                                                                                                                                              
|   | h.                                                                                                                                                                                                                                                                                                                                                                              
|   | i.                                                                                                                                                                                                                                                                                                                                                                              
|   | j.                                                                                                                                                                                                                                                                                                                                                                              
|7. | Process recoveries are the average percentage of silver
      or gold in a saleable product (doré or concentrate) recovered from mined
      ore at the applicable site process plants as reported by the
  operators.                                                                                                                                                          
|8. | Mineral Reserves are estimated using appropriate process
  recovery rates and the following commodity prices:                                                                                                                                                                                                                                                                   
|   | a.                                                                                                                                                                                                                                                                                                                                                                              
|   | b.                                                                                                                                                                                                                                                                                                                                                                              
|   | c.                                                                                                                                                                                                                                                                                                                                                                              
|   | d.                                                                                                                                                                                                                                                                                                                                                                              
|   | e.                                                                                                                                                                                                                                                                                                                                                                              
|   | f.                                                                                                                                                                                                                                                                                                                                                                              
|   | g.                                                                                                                                                                                                                                                                                                                                                                              
|   | h.                                                                                                                                                                                                                                                                                                                                                                              
|   | i.                                                                                                                                                                                                                                                                                                                                                                              
|   | j.                                                                                                                                                                                                                                                                                                                                                                              
|   | k.                                                                                                                                                                                                                                                                                                                                                                              
|   | l.                                                                                                                                                                                                                                                                                                                                                                              
|   | m.                                                                                                                                                                                                                                                                                                                                                                              
|   | n.                                                                                                                                                                                                                                                                                                                                                                              
|   | o.                                                                                                                                                                                                                                                                                                                                                                              
|   | p.                                                                                                                                                                                                                                                                                                                                                                              
|9. | Mineral Resources are estimated using appropriate
      recovery rates and the following commodity prices:                                                                                                                                                                                                                                                                      
|   | a.                                                                                                                                                                                                                                                                                                                                                                              
|   | b.                                                                                                                                                                                                                                                                                                                                                                              
|   | c.                                                                                                                                                                                                                                                                                                                                                                              
|   | d.                                                                                                                                                                                                                                                                                                                                                                              
|   | e.                                                                                                                                                                                                                                                                                                                                                                              
|   | f.                                                                                                                                                                                                                                                                                                                                                                              
|   | g.                                                                                                                                                                                                                                                                                                                                                                              
|   | h.                                                                                                                                                                                                                                                                                                                                                                              
|   | i.                                                                                                                                                                                                                                                                                                                                                                              

SILVER WHEATON 2012 ANNUAL REPORT[42]

---

| | j. | Zinkgruvan  3.1% Zn equivalent cut-off for the zinc
  Resource and 1.5% Cu cut-off for the copper Resource.                                                                                                                                                                                                                           
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | k. | Aljustrel  1.5% Cu cut-off for all copper Resources,
      4.5% Zn cut-off for Feitais and Moinho zinc Resources and 4.0% for Estação
  zinc Resources.                                                                                                                                                                               
| | l. | Campo Morado  $18.92 per ounce silver for the G-9 zones
  and 5% Zn cut-off for the El Rey, Naranjo and Reforma deposits.                                                                                                                                                                                                             
| | m. | Stratoni - $15.00 per ounce silver.                                                                                                                                                                                                                                                                                                    
| | n. | Minto  0.5% Cu cut-off.                                                                                                                                                                                                                                                                                                               
| | o. | Loma de La Plata  $12.50 per ounce silver.                                                                                                                                                                                                                                                                                            
| | p. | Keno Hill  $15.25 per ounce silver for the Southwest and
      99 Zones, $14.50 per ounce silver for the East Zone, $17.00 per ounce
      silver for the Elsa Tailings, $18.50 per ounce silver for the Lucky Queen
      and Onek deposits, $23.00 per ounce silver for Bermingham and $24.00 per
  ounce silver for Flame and Moth.
| | q. | Salobo - $1,150 per ounce gold.                                                                                                                                                                                                                                                                                                        
| | r. | Sudbury - $975 per ounce gold.                                                                                                                                                                                                                                                                                                         

|10. | The San Dimas silver purchase agreement provides that
      from August 6, 2010 until August 5, 2014, Primero Mining Corp. (Primero)
      will deliver to the Company 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 the Company will receive an additional 1.5 million ounces of
      silver per annum to be delivered by Goldcorp Inc. (Goldcorp). Beginning
      August 6, 2014, Primero will deliver to the Company a per annum amount
      equal to the first 6.0 million ounces of payable silver produced at San
  Dimas and 50% of any excess, for the life of the mine.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|11. | The Companys attributable Resources and Reserves for
      Pierina, Lagunas Norte, Veladero, Cozamin and Yauliyacu silver interests
      in addition to the Sudbury and 777 gold interests have been constrained to
  the production expected for the various contracts.                                                                                                                                                                                                                                                                                                                                                                                                        
|12. | The Companys Yauliyacu silver purchase agreement (March
      2006) with Glencore International AG provides for the delivery of up to
      4.75 million ounces of silver per year for 20 years. In the event that
      silver sold and delivered to Silver Wheaton in any year totals less than
      4.75 million ounces, the amount sold and delivered to Silver Wheaton in
      subsequent years will be increased to make up for any cumulative
      shortfall, to the extent production permits. Depending upon production
      levels it is possible that the Companys current attributable tonnage may
  not be mined before the agreement expires.                 
|13. | The 777 purchase agreement provides that Hudbay Minerals
      Inc. (Hudbay) will deliver 100% of the payable silver for the life of
      the mine and 100% of the payable gold until completion of the Constancia
      project, after which the gold stream will reduce to 50%. The gold figures
      in this table represent the attributable 777 Resources and Reserves
  constrained to the production expected for the 777 contract. .                                                                                                                                                                                                                                  
|14. | In reliance upon Section 9.2 of NI 43-101, all technical
      information in this document regarding Peñasquito, San Dimas, Pascua-Lama
      and 777 was sourced by the Company from the following SEDAR
  (www.sedar.com) filed documents:                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | a.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | b.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | c.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | d.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company QP's have approved the disclosure in this
  document in reliance on such documents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|15. | The Mineral Park and Rosemont Resources and Reserves do
      not include the SX/EW leach material since this process does not recover
  silver.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|16. | The Company has filed a technical report for Salobo,
  which is available on SEDAR.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|17. | Silver and gold are produced as by-product metal at all
      operations with the exception of silver at the Keno Hill mine and Loma de
      La Plata project; therefore, the economic cut-off applied to the reporting
      of silver and gold Resources and Reserves will be influenced by changes in
      the commodity prices of other metals at the
time.                                                                                                                                                                                                                                                                                                                 

SILVER WHEATON 2012 ANNUAL REPORT[43]

---

Cautionary Note Regarding Forward-Looking
  Statements

The information contained herein contains forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and forward-looking information within the
meaning of applicable Canadian securities legislation. Forward-looking
statements, which are all statements other than statements of historical fact,
include, but are not limited to, statements with respect to the future price of
silver or gold, the estimation of mineral reserves and resources, the
realization of mineral reserve estimates, the timing and amount of estimated
future production, costs of production, reserve determination, reserve
conversion rates and statements as to any future dividends. Generally, these
forward-looking statements can be identified by the use of forward-looking
terminology such as plans, expects or does not expect, is expected,
budget, scheduled, estimates, forecasts, intends, anticipates or
does not anticipate, or believes, or variations of such words and phrases or
statements that certain actions, events or results may, could, would,
might or will be taken, occur or be achieved. Forward-looking statements
are subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or achievements of
Silver Wheaton to be materially different from those expressed or implied by
such forward-looking statements, including but not limited to: fluctuations in
the price of silver or gold; the absence of control over mining operations from
which Silver Wheaton purchases silver and gold and risks related to these mining
operations including risks related to fluctuations in the price of the primary
commodities mined at such operations, actual results of mining and exploration
activities, economic and political risks of the jurisdictions in which the
mining operations are located and changes in project parameters as plans
continue to be refined; and differences in the interpretation or application of
tax laws and regulations; as well as those factors discussed in the section
entitled Description of the Business - Risk Factors in Silver Wheaton's Annual
Information Form available on SEDAR at www.sedar.com and in Silver Wheaton's
Form 40-F on file with the U.S. Securities and Exchange Commission in
Washington, D.C. Forward-looking statements are based on assumptions management
believes to be reasonable, including but not limited to: the continued operation
of the mining operations from which Silver Wheaton purchases silver and gold, no
material adverse change in the market price of commodities, that the mining
operations will operate and the mining projects will be completed in accordance
with their public statements and achieve their stated production outcomes, and
such other assumptions and factors as set out herein. Although Silver Wheaton
has attempted to identify important factors that could cause actual results to
differ materially from those contained in forward-looking statements, there may
be other factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements will prove
to be accurate. Accordingly, readers should not place undue reliance on
forward-looking statements. Silver Wheaton does not undertake to update any
forward-looking statements that are included or incorporated by reference
herein, except in accordance with applicable securities laws.

Cautionary Language Regarding
  Reserves And Resources

For further information on Mineral Reserves and Mineral
Resources and on Silver Wheaton more generally, readers should refer to Silver
Wheatons Annual Information Form for the year ended December 31, 2012 and other
continuous disclosure documents filed by Silver Wheaton since January 1, 2013,
available on SEDAR at www.sedar.com. Silver Wheatons Mineral Reserves and
Mineral Resources are subject to the qualifications and notes set forth therein.
Mineral Resources which are not Mineral Reserves do not have demonstrated
economic viability.

Cautionary Note to United States Investors Concerning Estimates
  of Measured, Indicated and Inferred Resources:The information contained
  herein uses the terms Measured, Indicated and Inferred
  Mineral Resources. United States investors are advised that while such terms
  are recognized and required by Canadian regulations, the United States Securities
  and Exchange Commission does not recognize them and expressly prohibits U.S.
  registered companies from including such terms in their filings with the SEC.
  Inferred Mineral Resources have a great amount of uncertainty as
  to their existence, and as to their economic and legal feasibility. It cannot
  be assumed that all or any part of an Inferred Mineral Resource will ever be
  upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral
  Resources may not form the basis of feasibility or other economic studies. United
  States investors are cautioned not to assume that all or any part of Measured
  or Indicated Mineral Resources will ever be converted into Mineral Reserves.
  United States investors are also cautioned not to assume that all or any part
  of an Inferred Mineral Resource exists, or is economically or legally mineable.
  United States investors are urged to consider closely the disclosure in Silver
  Wheatons Form 40-F, a copy of which may be obtained from Silver Wheaton
  or from http://www.sec.gov/edgar.shtml.

SILVER WHEATON 2012 ANNUAL REPORT[44]

---

Managements Responsibility
  for Financial Reporting

The accompanying consolidated financial statements of Silver
Wheaton Corp. (Silver Wheaton) were prepared by management, which is
responsible for the integrity and fairness of the information presented,
including the many amounts that must of necessity be based on estimates and
judgments. These consolidated financial statements were prepared in accordance
with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board. Financial information appearing
throughout our Managements Discussion and Analysis (MD&A) is consistent
with these consolidated financial statements.

In discharging our responsibility for the integrity and
fairness of the consolidated financial statements and for the accounting systems
from which they are derived, we maintain and rely on a comprehensive system of
internal controls designed to ensure that transactions are authorized, assets
are safeguarded and proper records are maintained. These controls include
business planning; delegation of authority; careful selection and hiring of
staff; accountability for performance within appropriate and well-defined areas
of responsibility; and the communication of policies and guidelines of business
conduct throughout the company.

The Board of Directors oversees managements responsibilities
for financial reporting through the Audit Committee, which is composed entirely
of directors who are neither officers nor employees of Silver Wheaton. The Audit
Committee reviews Silver Wheatons interim and annual consolidated financial
statements and MD&A and recommends them for approval by the Board of
Directors. Other key responsibilities of the Audit Committee include monitoring
Silver Wheatons system of internal controls, monitoring its compliance with
legal and regulatory requirements, selecting the external auditors and reviewing
the qualifications, independence and performance of the external auditors.

Deloitte LLP, Independent Registered Chartered Accountants,
appointed by the shareholders of Silver Wheaton upon the recommendation of the
Audit Committee and Board, have performed an independent audit of the
consolidated financial statements and their report follows. The auditors have
full and unrestricted access to the Audit Committee to discuss their audit and
related findings.

/s/ Randy Smallwood
    /s/ Gary BrownRandy Smallwood
    Gary BrownPresident & Chief Executive Officer
    Senior Vice President & Chief Financial
      OfficerMarch 21, 2013


SILVER WHEATON 2012 ANNUAL REPORT[45]

---

Report of Independent Registered
  Chartered Accountants

To the Board of Directors and Shareholders of Silver Wheaton
Corp.

We have audited the accompanying consolidated financial
statements of Silver Wheaton Corp. and subsidiaries (the Company), which
comprise the consolidated balance sheets as at December 31, 2012 and December
31, 2011, and the consolidated statements of earnings, consolidated statements
of comprehensive income, consolidated statements of cash flows and consolidated
statements of shareholders equity for the years then ended, and a summary of
significant accounting policies and other explanatory information.

Management's responsibility for the consolidated financial
statements

Management is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or
error.

Auditor's responsibility

Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances. An
audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of Silver Wheaton Corp.
and subsidiaries as at December 31, 2012 and December 31, 2011 and their
financial performance and their cash flows for the years then ended in
accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board.

Other matter

We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the Company's
internal control over financial reporting as of December 31, 2012, based on the
criteria established in Internal ControlIntegrated Frameworkissued by
the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March 21, 2013 expressed an unqualified opinion on the Companys
internal control over financial reporting.

/s/ Deloitte LLP

Independent Registered Chartered Accountants

Vancouver, Canada March 21, 2013

SILVER WHEATON 2012 ANNUAL REPORT[46]

---

Managements Report on Internal
  Control Over Financial Reporting

Management of Silver Wheaton Corp. (Silver Wheaton) is
responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is a process
designed by, or under the supervision of the Chief Executive Officer and the
Chief Financial Officer and effected by the Board of Directors, management and
other personnel to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board. It includes those
policies and procedures that:

| | i.   | pertain to the maintenance of records that accurately and
      fairly reflect, in reasonable detail, the transactions related to Silver
      Wheatons assets                                                                                                                                                  
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                  
| | ii.  | provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with IFRS, and Silver Wheaton receipts and expenditures are
      made only in accordance with authorizations of management and Silver
      Wheatons directors
| |      |                                                                                                                                                                                                                                                                                                                  
| | iii. | provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use, or disposition of
      Silver Wheatons assets that could have a material effect on Silver
      Wheatons financial statements.                                                                  

Due to its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements on a timely basis.
Also, projections of any evaluation of the effectiveness of internal control
over financial reporting to future periods are subject to the risk that the
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of Silver Wheatons
internal control over financial reporting as of December 31, 2012, based on the
criteria set forth in Internal Control  Integrated Frameworkissued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on this assessment, management has concluded that, as of December 31,
2012, Silver Wheatons internal control over financial reporting was
effective.

The effectiveness of Silver Wheatons internal control over
financial reporting, as of December 31, 2012, has been audited by Deloitte LLP,
Independent Registered Chartered Accountants, as stated in their report which
appears on the following page.

/s/ Randy Smallwood
    /s/ Gary BrownRandy Smallwood
    Gary BrownPresident & Chief Executive Officer
    Senior Vice President & Chief Financial
      OfficerMarch 21, 2013


SILVER WHEATON 2012 ANNUAL REPORT[47]

---

Report of Independent Registered
  Chartered Accountants

To the Shareholders and Board of Directors of Silver Wheaton
Corp.

We have audited the internal control over financial reporting
of Silver Wheaton Corp. and subsidiaries (the Company) as of December 31,
2012, based on the criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company's management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the
accompanying Managements Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Company's internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a
process designed by, or under the supervision of, the company's principal
executive and principal financial officers, or persons performing similar
functions, and effected by the company's board of directors, management, and
other personnel to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A
company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.

Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud
may not be prevented or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over financial reporting
to future periods are subject to the risk that the controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31,
2012, based on the criteria established in Internal Control  Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission.

We have also audited, in accordance with Canadian generally
accepted auditing standards and the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements as of and
for the year ended December 31, 2012 of the Company and our report dated March
21, 2013 expressed an unqualified opinion on those financial statements.

/s/ Deloitte LLP

Independent Registered Chartered Accountants

Vancouver, Canada March 21, 2013

SILVER WHEATON 2012 ANNUAL REPORT[48]

---

Consolidated Statements of Earnings

|                                                                                                                                      |  |      |  |   | Years Ended December 31 |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | - | ----------------------- | -
|                                                                                                                                      |  |      |  |   |                         |  
|(US dollars and shares
      in thousands, except per share amounts)                                                                  |  | Note |  |   | 2012                    |  
|                                                                                                                                      |  |      |  |   |                         |  
|Sales                                                                                                                                 |  | 5    |  | $ | 849,560                 |  
|                                                                                                                                      |  |      |  |   |                         |  
|Cost of sales                                                                                                                         |  |      |  |   |                         |  
|Cost of sales, excluding
      depletion                                                                                              |  |      |  | $ | 117,489                 |  
|Depletion                                                                                                                             |  |      |  |   | 101,229                 |  
|                                                                                                                                      |  |      |  |   |                         |  
|Total cost of sales                                                                                                                   |  |      |  | $ | 218,718                 |  
|                                                                                                                                      |  |      |  |   |                         |  
|Earnings from operations                                                                                                              |  |      |  | $ | 630,842                 |  
|                                                                                                                                      |  |      |  |   |                         |  
|Expenses and other income                                                                                                             |  |      |  |   |                         |  
|General and administrative
      1                                                                                                    |  | 6    |  | $ | 30,839                  |  
|Foreign exchange loss (gain)                                                                                                          |  |      |  |   | 29                      |  
|Other (income) expense                                                                                                                |  |      |  |   | (817                    | )
|                                                                                                                                      |  |      |  | $ | 30,051                  |  
|Earnings before income taxes                                                                                                          |  |      |  | $ | 600,791                 |  
|Income tax expense                                                                                                                    |  | 19   |  |   | (14,755                 | )
|                                                                                                                                      |  |      |  |   |                         |  
|Net earnings                                                                                                                          |  |      |  | $ | 586,036                 |  
|                                                                                                                                      |  |      |  |   |                         |  
|Basic earnings per share                                                                                                              |  |      |  | $ | 1.66                    |  
|Diluted earnings per share                                                                                                            |  |      |  | $ | 1.65                    |  
|                                                                                                                                      |  |      |  |   |                         |  
|Weighted average number of shares outstanding                                                                                         |  |      |  |   |                         |  
|Basic                                                                                                                                 |  | 15   |  |   | 353,874                 |  
|Diluted                                                                                                                               |  | 15   |  |   | 356,008                 |  
|1)    Equity settled stock based compensation
      (a non-cash item)          included
      in general and administrative expenses. |  |      |  | $ | 6,420                   |  

Consolidated Statements of Comprehensive
  Income

|                                                         |  |      |  |   | Years Ended December 31 |  
|-------------------------------------------------------- |  | ---- |  | - | ----------------------- | -
|(US dollars in thousands)                                |  | Note |  |   | 2012                    |  
|                                                         |  |      |  |   |                         |  
|Net earnings                                             |  |      |  | $ | 586,036                 |  
|                                                         |  |      |  |   |                         |  
|Other comprehensive income (loss)                        |  |      |  |   |                         |  
|Loss on long-term investments
      - common shares held |  | 8    |  | $ | (31,134                 | )
|Deferred income tax recovery                             |  | 19   |  |   | 2,479                   |  
|                                                         |  |      |  |   |                         |  
|Total other comprehensive
      loss                     |  |      |  | $ | (28,655                 | )
|                                                         |  |      |  |   |                         |  
|Total comprehensive
      income                         |  |      |  | $ | 557,381                 |  

The accompanying notes form an integral part of these
consolidated financial statements.

SILVER WHEATON 2012 ANNUAL REPORT[49]

---

Consolidated Balance Sheets

|                                                 |  |        |  |   | December 31 |   |   | December 31 | 
|------------------------------------------------ |  | ------ |  | - | ----------- | - | - | ----------- | 
|(US dollars in
      thousands)                  |  | Note   |  |   | 2012        |   |   | 2011        | 
|                                                 |  |        |  |   |             |   |   |             | 
|Assets                                           |  |        |  |   |             |   |   |             | 
|                                                 |  |        |  |   |             |   |   |             | 
|Current assets                                   |  |        |  |   |             |   |   |             | 
|Cash and cash equivalents                        |  |        |  | $ | 778,216     |   | $ | 840,201     | 
|Accounts receivable                              |  | 7      |  |   | 6,197       |   |   | 3,890       | 
|Other                                            |  |        |  |   | 966         |   |   | 1,221       | 
|                                                 |  |        |  |   |             |   |   |             | 
|Total current
      assets                       |  |        |  | $ | 785,379     |   | $ | 845,312     | 
|                                                 |  |        |  |   |             |   |   |             | 
|Non-current assets                               |  |        |  |   |             |   |   |             | 
|Silver and gold interests                        |  | 9      |  | $ | 2,281,234   |   | $ | 1,871,726   | 
|Long-term investments                            |  | 8      |  |   | 121,377     |   |   | 151,621     | 
|Deferred income taxes                            |  | 19     |  |   | -           |   |   | 2,301       | 
|Other                                            |  |        |  |   | 1,347       |   |   | 1,375       | 
|                                                 |  |        |  |   |             |   |   |             | 
|Total non-current
      assets                   |  |        |  | $ | 2,403,958   |   | $ | 2,027,023   | 
|                                                 |  |        |  |   |             |   |   |             | 
|Total assets                                     |  |        |  | $ | 3,189,337   |   | $ | 2,872,335   | 
|                                                 |  |        |  |   |             |   |   |             | 
|                                                 |  |        |  |   |             |   |   |             | 
|Liabilities                                      |  |        |  |   |             |   |   |             | 
|                                                 |  |        |  |   |             |   |   |             | 
|Current liabilities                              |  |        |  |   |             |   |   |             | 
|Accounts payable and
      accrued liabilities   |  |        |  | $ | 20,898      |   | $ | 8,345       | 
|Current portion of bank
      debt               |  | 10     |  |   | 28,560      |   |   | 28,560      | 
|Current portion of silver interest payments      |  | 11     |  |   | -           |   |   | 130,789     | 
|                                                 |  |        |  |   |             |   |   |             | 
|Total current
      liabilities                  |  |        |  | $ | 49,458      |   | $ | 167,694     | 
|                                                 |  |        |  |   |             |   |   |             | 
|Non-current liabilities                          |  |        |  |   |             |   |   |             | 
|Long-term portion of bank
      debt             |  | 10     |  | $ | 21,500      |   | $ | 50,060      | 
|Deferred income taxes                            |  | 19     |  |   | 9,250       |   |   | -           | 
|Performance share units                          |  | 14.1   |  |   | 2,055       |   |   | 364         | 
|                                                 |  |        |  |   |             |   |   |             | 
|Total non-current
      liabilities              |  |        |  | $ | 32,805      |   | $ | 50,424      | 
|                                                 |  |        |  |   |             |   |   |             | 
|Total liabilities                                |  |        |  | $ | 82,263      |   | $ | 218,118     | 
|                                                 |  |        |  |   |             |   |   |             | 
|Shareholders' equity                             |  |        |  |   |             |   |   |             | 
|                                                 |  |        |  |   |             |   |   |             | 
|Issued capital                                   |  | 12     |  | $ | 1,811,577   |   | $ | 1,793,772   | 
|                                                 |  |        |  |   |             |   |   |             | 
|Reserves                                         |  | 13     |  |   | (1,710      | ) |   | 25,422      | 
|                                                 |  |        |  |   |             |   |   |             | 
|Retained earnings                                |  |        |  |   | 1,297,207   |   |   | 835,023     | 
|                                                 |  |        |  |   |             |   |   |             | 
|Total
      shareholders' equity                 |  |        |  | $ | 3,107,074   |   | $ | 2,654,217   | 
|                                                 |  |        |  |   |             |   |   |             | 
|Total liabilities
      and shareholders' equity |  |        |  | $ | 3,189,337   |   | $ | 2,872,335   | 
|                                                 |  |        |  |   |             |   |   |             | 
|Commitments and contingencies                    |  | 10, 20 |  |   |             |   |   |             | 

|/s/ Randy
      Smallwood |  | /s/
      John Brough
|------------------------- |  | ---------------------
|Randy Smallwood           |  | John Brough          
|Director                  |  | Director             

The accompanying notes form an integral part of these
consolidated financial statements.

SILVER WHEATON 2012 ANNUAL REPORT[50]

---

Consolidated Statements of Cash
  Flows

|                                                                           |  |      |  |   | Years Ended December 31 |  
|-------------------------------------------------------------------------- |  | ---- |  | - | ----------------------- | -
|                                                                           |  |      |  |   |                         |  
|(US dollars in thousands)                                                  |  | Note |  |   | 2012                    |  
|                                                                           |  |      |  |   |                         |  
|Operating activities                                                       |  |      |  |   |                         |  
|Net earnings                                                               |  |      |  | $ | 586,036                 |  
|Adjustments for                                                            |  |      |  |   |                         |  
|Depreciation and depletion                                                 |  |      |  |   | 101,457                 |  
|Equity settled stock based
      compensation                              |  |      |  |   | 6,420                   |  
|Cash settled stock based
      compensation                                |  | 14.1 |  |   | 1,685                   |  
|Deferred income tax expense                                                |  | 19   |  |   | 14,031                  |  
|(Gain) loss on fair value
      adjustment of share purchase warrants held |  | 8    |  |   | (496                    | )
|Investment income recognized
      in net earnings                         |  |      |  |   | (1,367                  | )
|Other                                                                      |  |      |  |   | (15                     | )
|Change in non-cash
      operating working capital                         |  | 16   |  |   | 10,366                  |  
|Operating cash flows before interest received                              |  |      |  | $ | 718,117                 |  
|Interest received                                                          |  |      |  |   | 1,287                   |  
|Cash generated by
      operating activities                               |  |      |  | $ | 719,404                 |  
|                                                                           |  |      |  |   |                         |  
|Financing activities                                                       |  |      |  |   |                         |  
|Bank debt repaid                                                           |  | 10   |  | $ | (28,560                 | )
|Share purchase warrants exercised                                          |  |      |  |   | 1,878                   |  
|Share purchase options exercised                                           |  |      |  |   | 11,030                  |  
|Dividends paid                                                             |  | 12.2 |  |   | (123,852                | )
|Cash applied to financing
      activities                                 |  |      |  | $ | (139,504                | )
|                                                                           |  |      |  |   |                         |  
|Investing activities                                                       |  |      |  |   |                         |  
|Silver and gold interests                                                  |  |      |  | $ | (640,718                | )
|Silver and gold interests - interest paid                                  |  |      |  |   | (671                    | )
|Acquisition of long-term investments                                       |  | 8    |  |   | (395                    | )
|Proceeds on disposal of long-term investments                              |  | 8    |  |   | -                       |  
|Dividend income received                                                   |  |      |  |   | 80                      |  
|Other                                                                      |  |      |  |   | (192                    | )
|Cash applied to investing
      activities                                 |  |      |  | $ | (641,896                | )
|                                                                           |  |      |  |   |                         |  
|Effect of exchange
      rate changes on cash and cash equivalents         |  |      |  | $ | 11                      |  
|                                                                           |  |      |  |   |                         |  
|(Decrease) increase in cash and cash equivalents                           |  |      |  | $ | (61,985                 | )
|Cash and cash equivalents,
      beginning of year                         |  |      |  |   | 840,201                 |  
|                                                                           |  |      |  |   |                         |  
|Cash and cash equivalents,
      end of year                               |  |      |  | $ | 778,216                 |  

At December 31, 2012, the Companys cash and cash equivalents
consisted of $375.2 million in cash (December 31, 2011 - $119.3 million) and
$403.0 million in cash equivalents (December 31, 2011 - $720.9 million). Cash
equivalents include short-term deposits, treasury bills, commercial paper,
bankers depository notes and bankers acceptances with terms to maturity of
less than three months.

The accompanying notes form an integral part of these
consolidated financial statements.

SILVER WHEATON 2012 ANNUAL REPORT[51]

---

Consolidated Statements of Shareholders
  Equity

|                                     |   |           |  |   | Reserves |   |   |          |   |   |             |  
|------------------------------------ | - | --------- |  | - | -------- | - | - | -------- | - | - | ----------- | -
|                                     |   |           |  |   |          |   |   |          |   |   |             |  
|                                     |   |           |  |   |          |   |   |          |   |   |             |  
|                                     |   |           |  |   | Share    |   |   | Share    |   |   |             |  
|                                     |   |           |  |   | Purchase |   |   | Purchase |   |   | Restricted  |  
|                                     |   | Issued    |  |   | Warrants |   |   | Options  |   |   | Share Units |  
|(US dollars in thousands)            |   | Capital   |  |   | Reserve  |   |   | Reserve  |   |   | Reserve     |  
|At January 1, 2011                   | $ | 1,782,510 |  | $ | 7,471    |   | $ | 9,853    |   | $ | 1,952       |  
|Total comprehensive income           |   |           |  |   |          |   |   |          |   |   |             |  
|Net earnings                         | $ | -         |  | $ | -        |   | $ | -        |   | $ | -           |  
|OCI 1                                |   | -         |  |   | -        |   |   | -        |   |   | -           |  
|Total comprehensive
      income     | $ | -         |  | $ | -        |   | $ | -        |   | $ | -           |  
|Fair value of SBC 1                  | $ | -         |  | $ | -        |   | $ | 4,674    |   | $ | 1,655       |  
|Options 1exercised                   |   | 10,052    |  |   | -        |   |   | (2,213   | ) |   | -           |  
|RSUs 1released                       |   | 1,097     |  |   | -        |   |   | -        |   |   | (1,097      | )
|Warrants 1exercised                  |   | 113       |  |   | (14      | ) |   | -        |   |   | -           |  
|Realized gain on disposal of LTI's 1 |   | -         |  |   | -        |   |   | -        |   |   | -           |  
|Dividends (Note
      12.2)          |   | -         |  |   | -        |   |   | -        |   |   | -           |  
|At December 31, 2011                 | $ | 1,793,772 |  | $ | 7,457    |   | $ | 12,314   |   | $ | 2,510       |  
|Total comprehensive income           |   |           |  |   |          |   |   |          |   |   |             |  
|Net earnings                         | $ | -         |  | $ | -        |   | $ | -        |   | $ | -           |  
|OCI 1                                |   | -         |  |   | -        |   |   | -        |   |   | -           |  
|Total comprehensive
      income     | $ | -         |  | $ | -        |   | $ | -        |   | $ | -           |  
|Fair value of SBC 1                  | $ | -         |  | $ | -        |   | $ | 5,191    |   | $ | 1,229       |  
|Options 1exercised                   |   | 14,485    |  |   | -        |   |   | (3,455   | ) |   | -           |  
|RSUs 1released                       |   | 1,186     |  |   | -        |   |   | -        |   |   | (1,186      | )
|Warrants 1exercised                  |   | 2,134     |  |   | (256     | ) |   | -        |   |   | -           |  
|Dividends (Note
      12.2)          |   | -         |  |   | -        |   |   | -        |   |   | -           |  
|At December 31,
      2012           | $ | 1,811,577 |  | $ | 7,201    |   | $ | 14,050   |   | $ | 2,553       |  

|1) | Definitions as follows: OCI = Other Comprehensive
      Income (Loss); SBC = Equity Settled Stock Based Compensation; Options
      = Share Purchase Options; RSUs = Restricted Share Units; Warrants =
      Share Purchase Warrants; LTIs = Long-Term Investments in Common Shares
  Held.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes form an integral part of these
consolidated financial statements.

SILVER WHEATON 2012 ANNUAL REPORT[52]

---

Notes to the Consolidated Financial StatementsYears Ended December 31, 2012 and 2011 (US Dollars)

1.     
  Description of Business and Nature of Operations

Silver Wheaton Corp. (Silver Wheaton or the Company) is a
mining company which generates its revenue primarily from the sale of silver.
The Company is incorporated and domiciled in Canada, and its registered office
is at Suite 3150  666 Burrard Street, Vancouver, British Columbia, V6C 2X8. The
Company trades on the Toronto Stock Exchange (TSX) and the New York Stock
Exchange (NYSE) under the symbol SLW. In addition, the Company has share
purchase warrants that trade on the TSX under the symbol SLW.WT.U.

Including the agreements entered into after December 31, 2012
(Note 22), the Company has entered into 20 long-term purchase agreements
associated with silver and/or gold (precious metal purchase agreements),
relating to 23 different mining assets, whereby Silver Wheaton acquires silver
and gold production from the counterparties for a per ounce cash payment at or
below the prevailing market price. During the year ended December 31, 2012, the
per ounce price paid by the Company for silver and gold under the agreements
averaged $4.06 and $362, respectively. The primary drivers of the Companys
financial results are the volume of silver production at the various mines and
the price of silver realized by Silver Wheaton upon sale.

The consolidated financial statements of the Company for the
year ended December 31, 2012 were authorized for issue in accordance with a
resolution of the Board of Directors dated on March 21, 2013.

2.     
  Significant Accounting Policies

2.1.      Basis
of Presentation

These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) on a
historical cost basis, except for derivative financial instruments which have
been measured at fair value as at the relevant balance sheet date. The
consolidated financial statements are presented in United States (US) dollars,
which is the Companys functional currency, and all values are rounded to the
nearest thousand US dollars (000s) unless otherwise noted. References to Cdn$
refer to Canadian dollars.

2.2.     
Statement of Compliance

These consolidated financial statements have been prepared in
accordance with IFRS as issued by the International Accounting Standards Board
(IASB).

The preparation of financial statements in accordance with IFRS
requires the use of certain accounting estimates. It also requires management to
exercise judgment in applying the Companys accounting policies. The areas
involving a higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the financial statements, are disclosed in Note
3.

2.3.     
Principles of Consolidation

The consolidated financial statements include the accounts of
the Company and its 100% owned subsidiaries Silver Wheaton (Caymans) Ltd. (SW
Caymans) and Silverstone Resources (Barbados) Corp. (SST Barbados).

Subsidiaries are fully consolidated from the date on which the
Company obtains a controlling interest. Control exists when the Company has the
power to govern the financial and operating policies of an entity so as to
obtain benefits from the entitys activities. Subsidiaries are included in the
consolidated financial results of the Company from the effective date of
acquisition up to the effective date of disposition or loss of control.

The financial statements of the subsidiaries are prepared for
the same reporting period as the parent company, using consistent accounting
policies. Balances, transactions, income and expenses between the Company and
its subsidiaries are eliminated on consolidation.

2.4.      Cash
and Cash Equivalents

Cash and cash equivalents include cash and highly liquid money
market investments including short-term deposits, treasury bills, commercial
paper, bankers depository notes and bankers acceptances with terms to maturity
of less than three months.

SILVER WHEATON 2012 ANNUAL REPORT[53]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

2.5.     
Revenue Recognition

Revenue from the sale of silver and gold is recognized when
persuasive evidence of an arrangement exists, title and risk passes to the
buyer, collection is reasonably assured and the price is reasonably
determinable. Selling prices are determined at the point revenue is recognized
by reference to active and freely traded commodity markets, for example the
London Bullion Market for commodities, in an identical form to the product sold.

Where the Company acquires silver or gold in concentrate form,
final silver or gold prices are set on a specified future quotational period
(the Quotational Period) pursuant to the concentrate sales contracts with
third-party smelters, typically one to three months after the shipment date,
based on market prices for silver or gold. Revenues and the associated cost of
sales are recorded on a gross basis under these contracts at the time title
passes to the buyer based on the forward price for the expected settlement
period. The contracts, in general, provide for a provisional payment based upon
provisional assays and quoted silver and gold prices. Final settlement is based
upon the average applicable price for the Quotational Period applied to the
actual number of silver or gold ounces recovered calculated using confirmed
smelter weights and settlement assays. Final settlement generally occurs from
three to six months after shipment. The Companys provisionally priced sales
contain an embedded derivative that is required to be separated from the host
contract for accounting purposes. The host contract is the receivable from the
sale of concentrates measured at the forward price at the time of sale. The
embedded derivative does not qualify for hedge accounting. The embedded
derivative is recorded on the balance sheet as a derivative asset in Accounts
Receivable or as a derivative liability in Accounts Payable and Accrued
Liabilities and is adjusted to fair value through revenue each period until the
date of final settlement.

2.6.     
Financial Instruments

In November 2009, the IASB introduced IFRS 9, Financial
Instruments (IFRS 9), which is part of a project to replace IAS 39, Financial
Instruments: Recognition and Measurement. Adoption of IFRS 9 is required by
January 1, 2015, with early adoption permitted. The Company has elected to adopt
IFRS 9 and the related consequential amendments effective January 1, 2010.

Financial assets and financial liabilities are recognized when
the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through net earnings)
are added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial
liabilities at fair value through net earnings are recognized immediately in net
earnings.

2.7.     
Financial Assets

Financial assets are subsequently measured at either amortized
cost or fair value, depending on the classification of the financial assets.

Financial Assets at Fair Value Through Other Comprehensive
Income (FVTOCI)

The Companys long-term investments in common shares held are
for long-term strategic purposes and not for trading. Upon the application of
IFRS 9, the Company made an irrevocable election to designate these long-term
investments in common shares held as FVTOCI as it believes that this provides a
more meaningful presentation for long-term strategic investments, rather than
reflecting changes in fair value immediately in net earnings.

Long-term investments in common shares held are initially
measured at fair value plus transaction costs. Subsequently, they are measured
at fair value with gains and losses arising from changes in fair value
recognized as a component of other comprehensive income (OCI) and accumulated
in the long-term investment revaluation reserve. The cumulative gain or loss
will not be reclassified to net earnings on disposal of these long-term
investments.

Dividends on these long-term investments in common shares held
  are recognized as a component of net earnings in the period they are received
  under the classification Other (Income) Expense.

SILVER WHEATON 2012 ANNUAL REPORT [54]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

Financial Assets at Fair Value Through Net Earnings
(FVTNE)

Warrants held by the Company for long-term investment purposes
are classified as FVTNE. These warrants are measured at fair value at the end of
each reporting period, with any gains or losses arising on remeasurement
recognized as a component of net earnings under the classification Other
(Income) Expense.

As discussed in Note 2.5, the Companys provisionally priced
sales contain an embedded derivative that is remeasured at fair value at the end
of each reporting period. Fair value gains and losses related to the embedded
derivative are included in revenue in the period they occur.

Financial Assets at Amortized Cost

Cash and cash equivalents are stated at amortized cost. Other
receivables are non-interest bearing and are stated at amortized cost, which
approximate fair values due to the short terms to maturity. Where necessary,
other receivables are reported net of allowances for uncollectable amounts.

Foreign Exchange Gains and Losses

The fair value of financial assets denominated in a foreign
currency is determined in that foreign currency and translated at the spot rate
at the end of each reporting period. The foreign exchange component forms part
of its fair value gain or loss. Therefore,

- For financial assets that are classified as FVTNE, the foreign exchange
  component is recognized as a component of net earnings, and
- For financial assets that are classified as FVTOCI, the foreign exchange
  component is recognized as a component of OCI.

Derecognition of Financial Assets

The Company derecognizes a financial asset only when the
contractual rights to cash flows from the asset expire, or when it transfers the
financial asset and substantially all the risks and rewards of ownership of the
asset to another entity. If the Company neither transfers nor retains
substantially all the risks and rewards of ownership and continues to control
the transferred asset, the Company recognizes its retained interest in the asset
and an associated liability for amounts it may have to pay. If the Company
retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Company continues to recognize the financial asset and also
recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset that is classified as
FVTOCI, the cumulative gain or loss (net of tax) previously accumulated in the
long-term investment revaluation reserve is not reclassified to net earnings,
but is reclassified to retained earnings.

2.8.     
Financial Liabilities and Equity Instruments

Debt and equity instruments issued by the Company are
classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definition of a financial
liability and equity instrument. All financial liabilities are subsequently
measured at amortized cost using the effective interest method or at FVTNE,
depending on the classification of the instrument.

Equity Instruments

An equity instrument is a contract that evidences a residual
  interest in the assets of an entity after deducting all of its liabilities.
  Equity instruments issued by the Company are recognized at the proceeds received
  less direct issue costs (net of any current or deferred income tax recovery
  attributable to such costs).

SILVER WHEATON 2012 ANNUAL REPORT[55]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

Share Purchase Warrants Issued

Share purchase warrants issued with an exercise price
denominated in a currency other than the Companys functional currency (US
dollars) are considered derivative instruments. As such, they are classified as
financial liabilities measured at FVTNE and are remeasured at fair value at the
end of each reporting period with all changes being reflected as a component of
net earnings. This accounting treatment is not applicable to any of the
Companys outstanding share purchase warrants.

Share purchase warrants issued with an exercise price
denominated in the Companys functional currency (US dollars) are considered
equity instruments with the consideration received reflected within
shareholders equity under the classification of share purchase warrants
reserve. Upon exercise, the original consideration is reallocated from share
purchase warrants reserve to issued share capital along with the associated
exercise price.

Other Financial Liabilities

Accounts payable and accrued liabilities, silver interest
payments and bank debt are initially measured at fair value, net of transaction
costs, and are subsequently measured at amortized cost using the effective
interest method. The effective interest method is a method of calculating the
amortized cost of a financial liability and of allocating interest expense over
the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the
financial liability, or (where appropriate) a shorter period, to the net
carrying amount on initial recognition.

Foreign Exchange Gains and Losses

The fair value of financial liabilities denominated in a
foreign currency is determined in that foreign currency and translated at the
spot rate at the end of each reporting period. Therefore,

- For financial liabilities that are denominated in a foreign currency and
  are measured at amortized cost at the end of each reporting period, the
  foreign exchange gains and losses are determined based on the amortized cost
  of the instruments and are recognized as a component of net earnings, and
- For financial liabilities that are classified as FVTNE, the foreign
  exchange component forms part of the fair value gains or losses and is
  recognized as a component of net earnings.

Derecognition of Financial Liabilities

The Company derecognizes financial liabilities when the
Companys obligations are discharged, cancelled or they expire. The difference
between the carrying amount of the financial liability derecognized and the
consideration paid and payable, including any non-cash assets transferred or
liabilities assumed, is recognized as a component of net earnings.

2.9.     
Silver and Gold Interests

Agreements for which settlement is called for in silver and
gold, the amount of which is based on production at the mines, are stated at
cost less accumulated depletion and accumulated impairment charges.

The cost of the asset is comprised of its purchase price, any
closing costs directly attributable to acquiring the asset, and, for qualifying
assets, borrowing costs. The purchase price is the aggregate cash amount paid
and the fair value of any other non-cash consideration given to acquire the
asset.

Depletion

The cost of these silver and gold interests is separately allocated
  to reserves, resources and exploration potential. The value allocated to reserves
  is classified as depletable and is depleted on a unit-of-sale basis over the
  estimated recoverable proven and probable reserves at the mine corresponding
  to the specific agreement. The value associated with resources and exploration
  potential is the value beyond proven and probable reserves at acquisition and
  is classified as non-depletable until such time as it is transferred to the
  depletable category as a result of the conversion of resources and / or exploration
  potential into reserves.

SILVER WHEATON 2012 ANNUAL REPORT[56]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

Asset Impairment

Management considers each silver and gold interest to be a
separate cash generating unit, which is the lowest level for which cash inflows
are largely independent of those of other assets. At the end of each reporting
period, the Company reviews the carrying amounts of each silver and gold
interest to determine whether there is any indication that those silver and gold
interests have suffered an impairment loss. If such an indication exists, the
recoverable amount of the silver and gold interest is estimated in order to
determine the extent of the impairment (if any). The recoverable amount of each
silver and gold interest is the higher of fair value less costs to sell (Fair
Value Approach) and value in use (Value-In-Use Approach).

Under the Fair Value Approach, the net asset value (NAV)
methodology is used to determine the fair value that could be received from each
silver and gold interest in an arms length transaction at the measurement date.
NAV is estimated by using an appropriate discount rate to calculate the present
value of expected future cash flows associated with each mineral category. The
values are adjusted for each mineral category dependent on the likelihood of
conversion from resources to reserves. A market multiple is applied to the NAV
computed in order to assess the estimated fair value. Silver and precious metals
companies typically trade at a market capitalization that is based on a multiple
of their underlying NAV. Consequently, a market participant would generally
apply a NAV multiple when estimating the fair value of a silver and gold
interest.

Under the Value-In-Use Approach, the net present value (NPV)
methodology is used. NPV is estimated by using a discount rate to calculate the
present value of expected future cash flows. The discount rate is based on the
Companys weighted average cost of capital, adjusted for various risks.

The expected future cash flows are managements best estimates
of expected future revenues and costs. Under each method, expected future
revenues reflect the estimated future production for each mine at which the
Company has a precious metal purchase agreement based on detailed life of mine
plans received from each of the partners. Included in these forecasts is the
production of mineral resources that do not currently qualify for inclusion in
proven and probable ore reserves where there is a high degree of confidence in
its economic extraction. This is consistent with the methodology that is used to
measure value beyond proven and probable reserves when allocating the purchase
price to acquired silver and gold interests. Expected future revenues also
reflect managements estimated long-term metal prices, which are determined
based on current prices, forward pricing curves and forecasts of expected
long-term metal prices prepared by analysts. These estimates often differ from
current price levels, but are consistent with how a market participant would
assess future long-term metal prices. Estimated future cash costs are fixed
based on the terms of each precious metal purchase agreement, as disclosed in
Note 20.

If the carrying amount of the asset exceeds its recoverable
amount, the asset is considered impaired and an impairment charge is reflected
as a component of net earnings so as to reduce the carrying amount to its
recoverable value. A previously recognized impairment charge is reversed only if
there has been a change in the estimates used to determine the assets
recoverable amount since the last impairment charge was recognized. If this is
the case, the carrying amount of the asset is increased to its recoverable
amount. The increased amount cannot exceed the carrying amount that would have
been determined, net of depletion, had no impairment charge been recognized for
the asset in prior years. Such reversal is reflected as a component of net
earnings.

No impairment charge was required at December 31, 2012 and
December 31, 2011.

2.10.    Borrowing and
Debt Issue Costs

Borrowing costs allocable to the acquisition or construction of
qualifying assets, which necessarily take a substantial period of preparation
for their intended use, are capitalized and included in the carrying amounts of
the related assets until such time as the assets are substantially ready for
their intended use. Borrowing costs that do not relate to the acquisition or
construction of qualifying assets are reflected as a component of net earnings
under the classification Other (Income) Expense, as incurred. For the purposes
of determining whether borrowing costs are allocable to qualifying assets,
general borrowings are first considered to relate to qualifying assets to the
extent of the cumulative investment made by the Company.

Debt issue costs are treated as an adjustment to the carrying
  amount of the original liability and are amortized over the life of the new
  or modified liability.

SILVER WHEATON 2012 ANNUAL REPORT[57]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

2.11.    Stock Based
Payment Transactions

The Company recognizes a stock based compensation expense for
all share purchase options and restricted share units (RSUs) awarded to
employees, officers and directors based on the fair values of the share purchase
options and RSUs at the date of grant. The fair values of share purchase options
and RSUs at the date of grant are expensed over the vesting periods of the share
purchase options and RSUs, respectively, with a corresponding increase to
equity. The fair value of share purchase options is determined using the
Black-Scholes option pricing model with market related inputs as of the date of
grant. Share purchase options with graded vesting schedules are accounted for as
separate grants with different vesting periods and fair values. The fair value
of RSUs is the market value of the underlying shares at the date of grant. At
the end of each reporting period, the Company re-assesses its estimates of the
number of awards that are expected to vest and recognizes the impact of any
revisions to this estimate in the consolidated statement of earnings.

The Company recognizes a stock based compensation expense for
performance share units (PSUs) which are awarded to eligible employees and are
settled in cash. Compensation expense for the PSUs is recorded on a
straight-line basis over the three year vesting period. This estimated expense
is reflected as a component of net earnings over the vesting period of the PSUs
with the related obligation recorded as a liability on the balance sheet. The
amount of compensation expense is adjusted at the end of each reporting period
to reflect (i) the fair market value of common shares; (ii) the number of PSUs
anticipated to vest; and (iii) the anticipated performance factor.

2.12.    Income Taxes

Income tax expense comprises current and deferred tax. Current
and deferred taxes are recognized as a component of net earnings except to the
extent that it relates to items recognized directly in equity or as a component
of OCI.

Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at the end of the
reporting period, and any adjustment to tax payable in respect of previous
years.

Deferred tax is recognized using the liability method on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the balance sheet. Deferred tax is calculated
using tax rates and laws that have been enacted or substantively enacted at the
end of the reporting period and which are expected to apply when the related
deferred income tax assets are realized or the deferred income tax liabilities
are settled.

Deferred tax liabilities are generally recognized for all
taxable temporary differences. Taxable temporary differences arising on
investments in subsidiaries are recognized except where the reversal of the
temporary difference can be controlled and it is probable that the difference
will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary
differences, carry forward of unused tax assets and unused tax losses to the
extent it is probable that the Company will have taxable income against which
those deductible temporary differences, carry forward of unused tax assets and
unused tax losses can be utilized. The carrying amount of the deferred tax asset
is reviewed at the end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable income will be available to
allow all or part of the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are not recognized
for temporary differences arising from goodwill or from the initial recognition
of assets or liabilities acquired in a transaction other than a business
combination which do not affect either accounting or taxable income or loss.

2.13.    Earnings Per
Share

Earnings per share calculations are based on the weighted average
  number of common shares and common share equivalents issued and outstanding
  during the year. Diluted earnings per share is calculated using the treasury
  method which requires the calculation of diluted earnings per share by assuming
  that outstanding share purchase options and warrants, with an average market
  price that exceeds the average exercise prices of the options and warrants for
  the year, are exercised and the proceeds are used to repurchase shares of the
  Company at the average market price of the common shares for the year.

SILVER WHEATON 2012 ANNUAL REPORT[58]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

2.14.    Foreign Currency
Translation

The functional currency is the currency of the primary economic
environment in which the Company operates. The consolidated financial statements
are presented in US dollars, which is the Companys functional currency. Foreign
currency monetary assets and liabilities are translated into US dollars at the
exchange rates prevailing at the balance sheet date. Non-monetary assets
denominated in foreign currencies are translated using the rate of exchange at
the transaction date. Foreign currency transactions are translated at the US
dollar rate prevailing on the transaction dates. Foreign exchange gains and
losses are included in the determination of net earnings except for the foreign
exchange gains and losses on the Companys long-term investments in common
shares held which are reflected as a component of OCI and accumulated in a
separate component of the investments revaluation reserve which is a component
of shareholders equity until they are realized as a result of a sale, at which
time the accumulated foreign exchange gain or loss is reallocated from the
investments reserve to retained earnings.

2.15.    Leasing

Leases are classified as finance leases whenever the terms of
the lease transfer substantially all of the risks and rewards of ownership to
the lessee. All other leases are classified as operating leases. At December 31,
2012 and December 31, 2011, the Company was not a party to any finance leases.

The Company as the Lessee

Operating lease payments are recognized on a straight-line
basis over the term of the lease, except where another systematic basis is more
representative of the time pattern in which economic benefits from the leased
assets are consumed.

In the event that lease incentives are received to enter into
operating leases, such incentives are recognized as a liability. The aggregate
benefit of incentives is recognized as a reduction to rental expense on a
straight-line basis, except where another systematic basis is more
representative of the time pattern in which economic benefits from the leased
assets are consumed.

2.16.    Provisions

Provisions are recognized when the Company has a present
obligation (legal or constructive) as a result of a past event, it is probable
that the Company will be required to settle the obligation, and a reliable
estimate can be made of the amount required to settle the obligation.

The amount recognized as a provision is the best estimate of
the consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties surrounding
the obligation. Where a provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the present value of those
cash flows.

When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a receivable is
recognized as an asset if it is virtually certain that reimbursement will be
received and the amount of the receivable can be measured reliably.

2.17.    Changes in
Accounting Policies

Accounting Policies Implemented Effective January 1,
2012

IFRS 7  Financial Instruments (amended 2010)

In October 2010, the IASB issued amendments to IFRS 7 
  Financial Instruments: Disclosures which improves the disclosure requirements
  in relation to transferred financial assets. This amendment is applicable for
  the Companys interim and annual consolidated financial statements for
  its fiscal year beginning January 1, 2012. The adoption of this amended standard
  did not result in a material impact on the Companys consolidated financial
  statements.

SILVER WHEATON 2012 ANNUAL REPORT[59]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

IAS 12  Income Taxes (amended 2010)

In December 2010, the IASB issued amendments to IAS 12  Income
Taxes which provides a practical solution to determining the recovery of
investment properties as it relates to the accounting for deferred income taxes.
This amendment is applicable for the Companys interim and annual consolidated
financial statements for its fiscal year beginning January 1, 2012. The adoption
of this amended standard did not result in a material impact on the Companys
consolidated financial statements.

2.18.    Future Changes
in Accounting Policies

The IASB has issued the following new or amended standards:

Standards required to be applied for periods beginning on or
after July 1, 2012:

- IAS 1 - Presentation of Financial Statements (amended 2011)

Standards required to be applied for periods beginning on or
after January 1, 2013:

- IFRS 7  Financial Instruments (amended 2011)
- IFRS 10 - Consolidated Financial Statements (IFRS 10)
- IFRS 11 - Joint Arrangements (IFRS 11)
- IFRS 12 - Disclosure of Interests in Other Entities (IFRS 12)
- IFRS 13 - Fair Value Measurement
- IAS 19  Employee Benefits (amended 2011)
- IAS 27 - Separate Financial Statements (amended 2011) (IAS 27)
- IAS 28 - Investments in Associates (amended 2011) (IAS 28)
- IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine

Standards required to be applied for periods beginning on or
after January 1, 2014:

- IAS 32  Financial Instruments: Presentation (amended 2011)

Standards required to be applied for periods beginning on or
after January 1, 2015:

- IFRS 9 (2010)  Financial Instruments (amended 2010)

The Company has early adopted IFRS 9 (2009)  Financial
Instruments. Early adoption of the above standards is permitted, however, IFRS
10, IFRS 11, IFRS 12, IAS 27 and IAS 28 must be initially applied concurrently.

Based upon its current facts and circumstances, the Company does
  not expect to be materially affected by the application of these new standards.

SILVER WHEATON 2012 ANNUAL REPORT[60]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

3.     
  Key Sources of Estimation Uncertainty and Critical Accounting Judgments

The preparation of the Companys consolidated financial
statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets,
liabilities and contingent liabilities at the date of the consolidated financial
statements and reported amounts of revenues and expenses during the reporting
period. Estimates and assumptions are continuously evaluated and are based on
managements experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. However,
actual outcomes can differ from these estimates.

Information about significant areas of estimation uncertainty
and judgments made by management in preparing the consolidated financial
statements are described below.

Key Sources of Estimation Uncertainty

3.1.     
Attributable Reserve and Resource Estimates

Silver and gold interests are significant assets of the
Company, with a carrying value of $2.3 billion at December 31, 2012. This amount
represents the capitalized expenditures related to the acquisition of the silver
and gold interests, net of accumulated depletion. The Company estimates the
reserves and resources relating to each agreement. Reserves are estimates of the
amount of silver or gold that can be economically and legally extracted from the
mining properties at which the Company has precious metal purchase agreements,
adjusted where applicable to reflect the Companys percentage entitlement to
silver and gold produced from such mines. The Company estimates its reserves and
resources based on information compiled by appropriately qualified persons
relating to the geological data on the size, depth and shape of the ore body,
and require complex geological judgments to interpret the data. The estimation
of recoverable reserves is based upon factors such as estimates of foreign
exchange rates, commodity prices, future capital requirements, and production
costs along with geological assumptions and judgments made in estimating the
size and grade of the ore body. Changes in the reserve or resource estimates may
impact upon the carrying value of the Companys silver and gold interests and
depletion charges.

3.2.     
Depletion

As described in Note 2.9, the Companys silver and gold
interests are separately allocated to reserves, resources and exploration
potential. The value allocated to reserves is classified as depletable and is
depleted on a unit-of-sale basis over the estimated recoverable proven and
probable reserves at the mine corresponding to the specific agreement. To make
this allocation, the Company estimates the recoverable reserves, resources and
exploration potential at each mining operation. These calculations require the
use of estimates and assumptions, including the amount of contained silver and
gold, recovery rates and payable rates. Changes to these assumptions may impact
the estimated recoverable reserves, resources or exploration potential which
could directly impact the depletion rates used. Changes to depletion rates are
accounted for prospectively.

3.3.     
Impairment of Assets

As more fully described in Note 2.9, the Company assesses each
silver and gold interest each reporting period to determine whether any
indication of impairment exists. The calculation of the recoverable amount
requires the use of estimates and assumptions such as long-term commodity
prices, discount rates, recoverable ounces of silver and gold, and operating
performance.

3.4.     
Valuation of Stock Based Compensation

As more fully described in Note 2.11, the Company has various
forms of stock based compensation, including share purchase options, RSUs and
PSUs. The calculation of the fair value of share purchase options, RSUs and PSUs
issued requires the use of estimates as more fully described in Notes 13.2, 13.3
and 14.1, respectively.

3.5.     
Provisionally Priced Concentrate Sales

As discussed in Note 2.5, the Companys provisionally priced
  sales contain an embedded derivative that is required to be separated from the
  host contract for accounting purposes and adjusted to fair value through revenue
  each reporting period, until the date of final settlement. The calculation of
  the fair value of the embedded derivative requires the use of estimates and
  assumptions related to the future price of silver and/or gold.

SILVER WHEATON 2012 ANNUAL REPORT[61]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

3.6.     
Contingencies

Due to the size, complexity and nature of the Companys
operations, various legal and tax matters are outstanding from time to time,
including an audit by the Canada Revenue Agency of the Companys international
transactions covering the 2005 to 2010 taxation years. By their nature,
contingencies will only be resolved when one or more future events occur or fail
to occur. The assessment of contingencies inherently involves the exercise of
significant judgment and estimates of the outcome of future events. If the
Company is unable to resolve any of these matters favorably, there may be a
material adverse impact on the Companys financial performance, cash flows or
results of operations. In the event that managements estimate of the future
resolution of these matters changes, the Company will recognize the effects of
the changes in its consolidated financial statements in the appropriate period
relative to when such changes occur.

Critical Accounting Judgments

3.7.     
Functional Currency

The functional currency for each of the Companys subsidiaries
is the currency of the primary economic environment in which the entity
operates. As a result of the following factors, the Company has determined that
the functional currency of each entity is the US dollar:

- The Companys revenue is denominated in US dollars;
- The majority of the Companys cash is held in US dollars;
- The Companys cash cost of sales is denominated in US dollars; and
- The Company generally seeks to raise capital in US dollars.

Determination of the functional currency may involve certain
judgments to determine the primary economic environment and the Company
reconsiders the functional currency of its entities if there is a change in
events and conditions which determined the primary economic environment.

3.8.     
Income Taxes

The interpretation of existing tax laws or regulations in
Canada, the Cayman Islands, Luxembourg, Barbados, the Netherlands or any of the
countries in which the mining operations are located or to which shipments of
silver or gold are made requires the use of judgment. Differing interpretation
of these laws or regulations could result in an increase in the Companys taxes,
or other governmental charges, duties or impositions. In assessing the
probability of realizing deferred income tax assets, management makes estimates
related to expectations of future taxable income and expected timing of
reversals of existing temporary differences. Estimates of future taxable income
are based on forecasted cash flows.

4.     
  Financial Instruments

The Company thoroughly examines the various financial
instrument risks to which it is exposed and assesses the impact and likelihood
of those risks. These risks may include credit risk, liquidity risk, currency
risk, interest rate risk, commodity price risk and other price risks. Where
material, these risks are reviewed and monitored by the Board of Directors.

4.1.      Capital
Risk Management

The Company manages its capital to ensure that it will be able
to continue as a going concern while maximizing the return to stakeholders
through the optimization of the debt and equity balance.

The capital structure of the Company consists of debt (Note 10)
  and equity attributable to common shareholders, comprising of issued capital
  (Note 12), accumulated reserves (Note 13) and retained earnings.

SILVER WHEATON 2012 ANNUAL REPORT[62]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

The Company is not subject to any externally imposed capital
requirements with the exception of complying with the minimum tangible net worth
covenant under the credit agreement governing bank debt (Note 10).

The Company is in compliance with the debt covenants at
December 31, 2012, as described in Note 10.

4.2.     
Categories of Financial Assets and Liabilities

Cash and cash equivalents are reported at amortized cost. Other
receivables are non-interest bearing and are stated at amortized cost, which
approximate fair values due to the short terms to maturity. Where necessary,
other receivables are reported net of allowances for uncollectable amounts. All
other financial assets are reported at fair value. Fair value adjustments on
financial assets are reflected as a component of net earnings with the exception
of fair value adjustments associated with the Companys long-term investments in
common shares held. As these long-term investments are held for strategic
purposes and not for trading, the Company has made a one time, irrevocable
election to reflect the fair value adjustments associated with these investments
as a component of OCI. Financial liabilities are reported at amortized cost
using the effective interest method, except for derivative liabilities which are
measured at fair value through net earnings. The following table summarizes the
classification of the Companys financial assets and liabilities:

|                                                                                                                                                |  |      |  |   | December
      31 |  |   | December 31 | 
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | - | ----------------- |  | - | ----------- | 
|(in thousands)                                                                                                                                  |  | Note |  |   | 2012              |  |   | 2011        | 
|Financial assets                                                                                                                                |  |      |  |   |                   |  |   |             | 
|Fair value through net earnings                                                                                                                 |  |      |  |   |                   |  |   |             | 
|Long-term investments -
      warrants held                                                                                                     |  | 8    |  | $ | 2,694             |  | $ | 2,582       | 
|Trade
      receivables from provisional concentrate sales, net of fair
                   
      value adjustment                              |  | 7    |  |   | 5,909             |  |   | 3,494       | 
|Fair value through other comprehensive income                                                                                                   |  |      |  |   |                   |  |   |             | 
|Long-term investments -
      common shares held                                                                                                |  | 8    |  |   | 118,683           |  |   | 149,039     | 
|Amortized cost                                                                                                                                  |  |      |  |   |                   |  |   |             | 
|Cash and cash equivalents                                                                                                                       |  |      |  |   | 778,216           |  |   | 840,201     | 
|Other receivables                                                                                                                               |  | 7    |  |   | 288               |  |   | 396         | 
|                                                                                                                                                |  |      |  | $ | 905,790           |  | $ | 995,712     | 
|                                                                                                                                                |  |      |  |   |                   |  |   |             | 
|Financial liabilities                                                                                                                           |  |      |  |   |                   |  |   |             | 
|Fair value through net earnings                                                                                                                 |  |      |  |   |                   |  |   |             | 
|Accrued
      liabilities from provisional concentrate sales related to fair
                  
      value adjustment, net of trade receivable |  | 7    |  | $ | 634               |  | $ | 1,567       | 
|Amortized cost                                                                                                                                  |  |      |  |   |                   |  |   |             | 
|Accounts payable and
      accrued liabilities                                                                                                  |  |      |  |   | 19,094            |  |   | 6,688       | 
|Bank debt                                                                                                                                       |  | 10   |  |   | 50,060            |  |   | 78,620      | 
|Silver interest payments                                                                                                                        |  | 11   |  |   | -                 |  |   | 130,789     | 
|                                                                                                                                                |  |      |  | $ | 69,788            |  | $ | 217,664     | 

SILVER WHEATON 2012 ANNUAL REPORT[63]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

4.3.     
Credit Risk

Credit risk is the risk that the counterparty to a financial
instrument will cause a financial loss for the Company by failing to discharge
its obligations. To mitigate exposure to credit risk on financial assets, the
Company has established policies to limit the concentration of credit risk, to
ensure counterparties demonstrate minimum acceptable credit worthiness and to
ensure liquidity of available funds.

The Company closely monitors its financial assets and does not
have any significant concentration of credit risk. The Company invests surplus
cash in short-term, high credit quality, money market instruments. In addition,
counterparties used to sell silver and gold are all large, international
organizations with strong credit ratings and the balance of trade receivables
owed to the Company in the ordinary course of business is not significant.
Therefore, the Company is not exposed to significant credit risk and, overall,
the Companys credit risk has not changed significantly from the prior year.

At December 31, 2012 and December 31, 2011, there were no
significant trade receivables owed to the Company which were past due. The
Companys maximum exposure to credit risk related to its financial assets is as
follows:

|                                                                                         |  |      |  |   | December 31 |  |   | December 31 | 
|---------------------------------------------------------------------------------------- |  | ---- |  | - | ----------- |  | - | ----------- | 
|(in thousands)                                                                           |  | Note |  |   | 2012        |  |   | 2011        | 
|Cash and cash equivalents                                                                |  |      |  | $ | 778,216     |  | $ | 840,201     | 
|Trade receivables from provisional concentrate sales, net
      of fair value adjustment |  | 7    |  |   | 5,909       |  |   | 3,494       | 
|Other receivables                                                                        |  | 7    |  |   | 288         |  |   | 396         | 
|                                                                                         |  |      |  | $ | 784,413     |  | $ | 844,091     | 

4.4.     
Liquidity Risk

The Company has in place a rigorous planning and budgeting
process to help determine the funds required to support the Companys normal
operating requirements on an ongoing basis and its expansionary plans. The
Company ensures that there are sufficient committed loan facilities to meet its
short-term business requirements, taking into account its anticipated cash flows
from operations and its holdings of cash and cash equivalents. As at December
31, 2012, the Company had cash and cash equivalents of $778.2 million (December
31, 2011 - $840.2 million) and working capital of $735.9 million (December 31,
2011  $677.6 million). The Company invests surplus cash in short-term, high
credit quality money market instruments. On February 28, 2013, the Company
replaced the $400 million revolving term loan (Note 10) with a $1 billion
revolving credit facility having a 5 year term (Note 22), which can be drawn at
any time to finance acquisitions, investments or for general corporate
purposes.

Silver Wheaton holds common shares and common share purchase
warrants of several publicly traded mineral exploration, development and mining
companies (Note 8) with a combined market value at December 31, 2012 of $121.4
million (December 31, 2011 - $151.6 million). The daily exchange traded volume
of these shares, including the shares underlying the warrants, is not sufficient
for the Company to liquidate its position in a short period of time without
potentially affecting the market value of the shares. These shares and warrants
are held for strategic purposes and are considered long-term investments and
therefore, as part of the Companys planning, budgeting and liquidity analysis
process, these investments are not relied upon to provide operational
liquidity.

The following tables summarize the timing associated with the
  Companys remaining contractual payments relating to its financial liabilities
  and commitments. The tables reflect the undiscounted cash flows of financial
  liabilities based on the earliest date on which the Company can be required
  to pay (assuming that the Company is in compliance with all of its obligations).
  The tables include both interest and principal cash flows. To the extent that
  applicable interest rates are floating in nature, the interest charges are estimated
  based on market-based forward interest rate curves at the end of the reporting
  period. The contractual maturity date of these financial liabilities and commitments
  is based on the earliest date on which the Company may be required to pay.

SILVER WHEATON 2012 ANNUAL REPORT[64]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

|                                                                                                                                                                                                     |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   | As
      at December 31, 2012 | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------ |  | - | ------ |  | - | ---- |  | - | ---- |  | - | ---- |  | - | ----------------------------- | 
|                                                                                                                                                                                                     |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   |                               | 
|(in thousands)                                                                                                                                                                                       |   | 2013   |  |   | 2014   |  |   | 2015 |  |   | 2016 |  |   | 2017 |  |   | Thereafter                    | 
|                                                                                                                                                                                                     |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   |                               | 
|Non-derivative financial                                                                                                                                                                             |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   |                               | 
|liabilities and commitments                                                                                                                                                                          |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   |                               | 
|Bank debt 1                                                                                                                                                                                          | $ | 28,560 |  | $ | 21,500 |  | $ | -    |  | $ | -    |  | $ | -    |  | $ | -                             | 
|Interest on bank debt 2                                                                                                                                                                              |   | 472    |  |   | 145    |  |   | -    |  |   | -    |  |   | -    |  |   | -                             | 
|Silver and gold interest                                                                                                                                                                             |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   |                               | 
|payments 3                                                                                                                                                                                           |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   |                               | 
|Constancia
    4                                                                                                                                                                                     |   | -      |  |   | -      |  |   | -    |  |   | -    |  |   | -    |  |   | -                             | 
|Rosemont
    5                                                                                                                                                                                       |   | -      |  |   | -      |  |   | -    |  |   | -    |  |   | -    |  |   | -                             | 
|Loma de La
      Plata 6                                                                                                                                                                             |   | -      |  |   | -      |  |   | -    |  |   | -    |  |   | -    |  |   | -                             | 
|Accounts payable and            
      accrued liabilities                                                                                                                                           |   | 19,094 |  |   | -      |  |   | -    |  |   | -    |  |   | -    |  |   | -                             | 
|Performance share units                                                                                                                                                                              |   | -      |  |   | 1,064  |  |   | 991  |  |   | -    |  |   | -    |  |   | -                             | 
|Derivative financial liabilities                                                                                                                                                                     |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   |                               | 
|Accrued liabilities from 
                
      provisional concentrate            
      sales related to fair value 
                
      adjustment, net of trade            
      receivable |   | 634    |  |   | -      |  |   | -    |  |   | -    |  |   | -    |  |   | -                             | 
|                                                                                                                                                                                                     |   |        |  |   |        |  |   |      |  |   |      |  |   |      |  |   |                               | 
|Total                                                                                                                                                                                                | $ | 48,760 |  | $ | 22,709 |  | $ | 991  |  | $ | -    |  | $ | -    |  | $ | -                             | 

|1) | As more fully disclosed in Note 22, the bank debt was
    repaid in full on February 22, 2013.                                                                                                                                                                                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | As the applicable interest rates are floating in nature,
      the interest charges are estimated based on market-based forward interest
    rate curves at the end of the reporting period.                                                                                                                                                                                                                                   
|3) | Does not reflect the contingent payment due related to
    the Salobo gold purchase agreement (Note 20).                                                                                                                                                                                                                                                                                                                       
|4) | In connection with the Constancia silver purchase
      agreement, the Company is committed to pay Hudbay two further payments of
      $125 million to be made once capital expenditures of $500 million and $1
    billion have been incurred at Constancia.                                                                                                                                                                 
|5) | In connection with the Rosemont precious metals purchase
      agreement, the Company is committed to pay Augusta total upfront cash
      payments of $230 million, payable on an installment basis, to partially
      fund construction of the Rosemont mine once certain milestones are
      achieved, including the receipt of key permits and securing the necessary
    financing to complete construction of the mine.
|6) | In connection with the Companys election to convert the
      debenture with Pan American into a silver purchase agreement, the Company
      is committed to pay Pan American total upfront cash payments of $32.4
      million following the satisfaction of certain conditions, including Pan
      American receiving all necessary permits to proceed with the mine
    construction.                                   

SILVER WHEATON 2012 ANNUAL REPORT[65]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

|                                                                                                                                                              |   |         |  |   |        |  |   |        |  |   |      |  |   |      |  |   | As at
      December 31, 2011 | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------- |  | - | ------ |  | - | ------ |  | - | ---- |  | - | ---- |  | - | ----------------------------- | 
|                                                                                                                                                              |   |         |  |   |        |  |   |        |  |   |      |  |   |      |  |   |                               | 
|(in thousands)                                                                                                                                                |   | 2012    |  |   | 2013   |  |   | 2014   |  |   | 2015 |  |   | 2016 |  |   | Thereafter                    | 
|Non-derivative financial liabilities and commitments                                                                                                          |   |         |  |   |        |  |   |        |  |   |      |  |   |      |  |   |                               | 
|Bank debt                                                                                                                                                     | $ | 28,560  |  | $ | 28,560 |  | $ | 21,500 |  | $ | -    |  | $ | -    |  | $ | -                             | 
|Interest on bank debt 1                                                                                                                                       |   | 1,006   |  |   | 618    |  |   | 174    |  |   | -    |  |   | -    |  |   | -                             | 
|Silver and gold interest payments                                                                                                                             |   |         |  |   |        |  |   |        |  |   |      |  |   |      |  |   |                               | 
|Barrick                                                                                                                                                       |   | 137,500 |  |   | -      |  |   | -      |  |   | -    |  |   | -    |  |   | -                             | 
|Rosemont 2                                                                                                                                                    |   | -       |  |   | -      |  |   | -      |  |   | -    |  |   | -    |  |   | -                             | 
|Loma
      de La Plata 3                                                                                                                                      |   | -       |  |   | -      |  |   | -      |  |   | -    |  |   | -    |  |   | -                             | 
|Accounts payable and accrued        liabilities                                                                                                               |   | 6,324   |  |   | -      |  |   | -      |  |   | -    |  |   | -    |  |   | -                             | 
|Performance share units                                                                                                                                       |   | -       |  |   | -      |  |   | 364    |  |   | -    |  |   | -    |  |   | -                             | 
|Derivative financial liabilities                                                                                                                              |   |         |  |   |        |  |   |        |  |   |      |  |   |      |  |   |                               | 
|Accrued
      liabilities from        provisional
      concentrate sales        related
      to fair value adjustment,        net
      of trade receivable |   | 1,567   |  |   | -      |  |   | -      |  |   | -    |  |   | -    |  |   | -                             | 
|                                                                                                                                                              |   |         |  |   |        |  |   |        |  |   |      |  |   |      |  |   |                               | 
|Total                                                                                                                                                         | $ | 174,957 |  | $ | 29,178 |  | $ | 21,674 |  | $ | -    |  | $ | -    |  | $ | -                             | 

|1) | As the applicable interest rates are floating in nature,
      the interest charges are estimated based on market-based forward interest
    rate curves at the end of the reporting period.                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | In connection with the Rosemont precious metals purchase
      agreement, the Company is committed to pay Augusta total upfront cash
      payments of $230 million, payable on an installment basis, to partially
      fund construction of the Rosemont mine once certain milestones are
      achieved, including the receipt of key permits and securing the necessary
    financing to complete construction of the mine.
|3) | In connection with the Companys election to convert the
      debenture with Pan American into a silver purchase agreement, the Company
      is committed to pay Pan American total upfront cash payments of $32.4
      million following the satisfaction of certain conditions, including Pan
      American receiving all necessary permits to proceed with the mine
    construction.                                   

**4.5.        Currency Risk******

The Company undertakes certain transactions denominated in
Canadian dollars, including certain operating expenses and the acquisition of
strategic long-term investments. As a result, the Company is exposed to
fluctuations in the value of the Canadian dollar relative to the US dollar. The
carrying amounts of the Companys Canadian dollar denominated monetary assets
and monetary liabilities at the end of the reporting period are as follows:

|                                            |   | December 31 |  |   | December 31 | 
|------------------------------------------- | - | ----------- |  | - | ----------- | 
|(in thousands)                              |   | 2012        |  |   | 2011        | 
|Monetary assets                             |   |             |  |   |             | 
|Cash and cash equivalents                   | $ | 1,007       |  | $ | 690         | 
|Accounts receivable                         |   | 127         |  |   | 115         | 
|Long-term investments - common shares held  |   | 116,108     |  |   | 144,039     | 
|Long-term
      investments - warrants held |   | 2,694       |  |   | 2,582       | 
|                                            | $ | 119,936     |  | $ | 147,426     | 
|Monetary liabilities                        |   |             |  |   |             | 
|Accounts payable and accrued liabilities    | $ | 5,785       |  | $ | 3,107       | 
|Performance share
      units               |   | 1,923       |  |   | 348         | 
|                                            | $ | 7,708       |  | $ | 3,455       | 

SILVER WHEATON 2012 ANNUAL REPORT[66]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

The following tables detail the Companys sensitivity to a 10%
increase or decrease in the Canadian dollar relative to the United States
dollar, representing the sensitivity used when reporting foreign currency risk
internally to key management personnel and represents managements assessment of
the reasonably possible change in exchange rates.

|                                                  |   | As
      at December 31, 2012 |  
|------------------------------------------------- | - | ----------------------------- | -
|                                                  |   | 10% Increase in the           |  
|(in thousands)                                    |   | Canadian Dollar               |  
|Increase (decrease) in net earnings               | $ | (388                          | )
|Increase (decrease) in other comprehensive income |   | 11,611                        |  
|Increase (decrease) in total comprehensive income | $ | 11,223                        |  

|                                                  |   | As
      at December 31, 2011 |  
|------------------------------------------------- | - | ----------------------------- | -
|                                                  |   | 10% Increase in the           |  
|(in
      thousands)                              |   | Canadian Dollar               |  
|Increase (decrease) in net earnings               | $ | (7                            | )
|Increase (decrease) in other comprehensive income |   | 14,404                        |  
|Increase (decrease) in total comprehensive income | $ | 14,397                        |  

**4.6.        Interest Rate Risk******

The Company is exposed to interest rate risk on its outstanding
borrowings and short-term investments. Presently, all of the Companys
outstanding borrowings are at floating interest rates and all of its
interest-bearing investments have terms of less than three months. The Company
monitors its exposure to interest rates and has not entered into any derivative
contracts to manage this risk. During the year ended December 31, 2012, the
weighted average interest rate paid by the Company on its outstanding borrowings
was 1.12% (2011  1.13%) .

For the year ended December 31, 2012, all of the interest
incurred by the Company has been capitalized as it relates to the acquisition of
the Barrick and Constancia silver interests, both of which were under
development during the period. For the year ended December 31, 2011, all of the
interest incurred by the Company was capitalized as it relates to the
acquisition of the Barrick silver interest, which was under development during
the period. As a result, changes in interest rates will not materially affect
the Companys net earnings or OCI. A fluctuation in interest rates of 100 basis
points (1 percent) would have impacted the amount of interest capitalized during
the year ended December 31, 2012 by approximately $0.6 million (2011 - $0.9
million).

**4.7.        Commodity Price
  Risk**

The price of the common shares and the Companys financial
results may be significantly adversely affected by a decline in the price of
silver or gold. The price of silver and gold can fluctuate widely, and is
affected by numerous factors beyond the Companys control, including but not
limited to, the sale or purchase of silver and gold by various central banks and
financial institutions, interest rates, exchange rates, inflation or deflation,
fluctuation in the value of the US dollar and foreign currencies, global and
regional supply and demand, and the political and economic conditions of major
silver and gold producing countries throughout the world.

In the event that the prevailing market price of silver or gold
  is at or below the price at which the Company can purchase such, pursuant to
  the terms of the agreements associated with its silver and gold interests, the
  Company may not generate positive cash flow or earnings.

SILVER WHEATON 2012 ANNUAL REPORT[67]

---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

**4.8.        Other Price
  Risk**

The Company is exposed to equity price risk as a result of
holding long-term investments in other exploration and mining companies. The
Company does not actively trade these investments.

The sensitivity analysis below has been determined based on the
exposure to equity price risks at December 31, 2012.

If equity prices had been 10% higher or lower:

- Net earnings for the year ended December 31, 2012 would have
  increased/decreased by approximately $0.3 million (2011 - $0.3 million) as a
  result of changes in the fair value of share purchase warrants held; and
- Other comprehensive income for the year ended December 31, 2012 would have
  increased/decreased by approximately $11.9 million (2011 - $14.9 million) as a
  result of changes in the fair value of common shares held.

**4.9.        Fair Value Estimation******

The Company classifies its fair value measurements within a
fair value hierarchy, which reflects the significance of the inputs used in
making the measurements as defined in IFRS 7  Financial Instruments:
Disclosures (IFRS 7).

|Level 1 - | Unadjusted quoted prices at the
      measurement date for identical assets or liabilities in active markets.                                                                                                                                                                                                                                          
|--------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |                                                                                                                                                                                                                                                                                                                                                        
|Level 2 - | Observable inputs other than quoted prices included in
      Level 1, such as quoted prices for similar assets and liabilities in
      active markets; quoted prices for identical or similar assets and
      liabilities in markets that are not active; or other inputs that are
      observable or can be corroborated by observable market data.
|          |                                                                                                                                                                                                                                                                                                                                                        
|Level 3 - | Unobservable inputs which are
      supported by little or no market activity.                                                                                                                                                                                                                                                                         

The following table sets forth the Companys financial assets
and liabilities measured at fair value by level within the fair value hierarchy.
As required by IFRS 7, assets and liabilities are classified in their entirety
based on the lowest level of input that is significant to the fair value
measurement.

|                                                                                                                                       |   | December 31, 2012 |  
|-------------------------------------------------------------------------------------------------------------------------------------- | - | ----------------- | -
|                                                                                                                                       |   |                   |  
|                                                                                                                                       |   |                   |  
|                                                                                                                                       |   |                   |  
|                                                                                                                                       |   |                   |  
|(in thousands)                                                                                                                         |   | Total             |  
|                                                                                                                                       |   |                   |  
|Trade receivables from provisional concentrate sales, 
          net of fair value adjustment                                          | $ | 5,909             |  
|Accrued liabilities from provisional concentrate     
      sales related to fair value adjustment, net of      trade
      receivable |   | (634              | )
|Long-term investments - common shares held                                                                                             |   | 118,683           |  
|Long-term investments
      - warrants held                                                                                            |   | 2,694             |  
|                                                                                                                                       |   |                   |  
|                                                                                                                                       | $ | 126,652           |  

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

|                                                                                                                                               |   |         |   |   | December 31, 2011  |  |   |                   |  
|---------------------------------------------------------------------------------------------------------------------------------------------- | - | ------- | - | - | ------------------ |  | - | ----------------- | -
|                                                                                                                                               |   |         |   |   |                    |  |   |                   |  
|                                                                                                                                               |   |         |   |   | Quoted prices in   |  |   |                   |  
|                                                                                                                                               |   |         |   |   | active markets for |  |   | Significant other |  
|                                                                                                                                               |   |         |   |   | identical assets   |  |   | observable inputs |  
|(in thousands)                                                                                                                                 |   | Total   |   |   | (Level 1)          |  |   | (Level 2)         |  
|                                                                                                                                               |   |         |   |   |                    |  |   |                   |  
|Trade receivables from provisional concentrate 
          
      sales, net of fair value adjustment                                           | $ | 3,494   |   | $ | -                  |  | $ | 3,494             |  
|Accrued liabilities from provisional concentrate 
          
      sales related to fair value adjustment, net of      
      trade receivable |   | (1,567  | ) |   | -                  |  |   | (1,567            | )
|Long-term investments - common shares held                                                                                                     |   | 149,039 |   |   | 149,039            |  |   | -                 |  
|Long-term investments - warrants held                                                                                                          |   | 2,582   |   |   | -                  |  |   | 2,582             |  
|                                                                                                                                               |   |         |   |   |                    |  |   |                   |  
|                                                                                                                                               | $ | 153,548 |   | $ | 149,039            |  | $ | 4,509             |  

The Companys trade receivables from provisional concentrate
sales are valued based on forward prices of silver and gold until the date of
final settlement (Note 2.5) . As such, these receivables are classified within
Level 2 of the fair value hierarchy.

The Companys long-term investments in common shares held are
valued using quoted market prices in active markets and, as such, are classified
within Level 1 of the fair value hierarchy. The fair value of the long-term
investments in common shares held is calculated as the quoted market price of
the common share multiplied by the quantity of shares held by the Company.

The fair value of the Companys long-term investments in
warrants held that are not traded in an active market is determined using a
Black-Scholes model based on assumptions including risk free interest rate,
expected dividend yield, expected volatility, estimated forfeiture rate and
expected warrant life which are supported by observable current market
conditions and as such are classified within Level 2 of the fair value
hierarchy. The use of reasonably possible alternative assumptions would not
significantly affect the Companys results.

Cash and cash equivalents are reported at amortized cost. Other
receivables and trade payables are non-interest bearing and are stated at
carrying values, which approximate fair values due to the short terms to
maturity. Where necessary, other receivables are reported net of allowances for
uncollectable amounts.

The Companys bank debt (Note 10) and the silver interest
payments due (Note 11) are reported at amortized cost using the effective
interest method.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

**5.     
  Revenue**

|                     |   | Years Ended December 31 | 
|-------------------- | - | ----------------------- | 
|(in thousands)       |   | 2012                    | 
|Sales                |   |                         | 
|Silver bullion sales |   |                         | 
|Silver credit sales  | $ | 611,468                 | 
|Concentrate sales    |   | 159,700                 | 
|                     | $ | 771,168                 | 
|Gold bullion sales   |   |                         | 
|Gold credit sales    | $ | 47,768                  | 
|Concentrate sales    |   | 30,624                  | 
|                     | $ | 78,392                  | 
|Total sales revenue  | $ | 849,560                 | 

Silver and Gold Credit Sales

Under certain precious metal purchase agreements, silver and/or
gold is acquired from the counterparty in the form of silver or gold credits,
which is then sold through a network of third party brokers or dealers. Revenue
from silver and gold credit sales is recognized at the time of the sale of such
credits, which is also the date that title to the silver or gold passes to the
third party dealer or broker. The Company will occasionally enter into forward
contracts in relation to silver or gold deliveries that it is highly confident
will occur within a given quarter. No forward contracts were outstanding at
December 31, 2012 or December 31, 2011. The sales price is fixed at the delivery
date based on either the terms of these short-term forward sales contracts or
the spot price of silver or gold.

Concentrate Sales

As described in Note 2.5, under certain precious metal purchase
agreements, silver and/or gold is acquired from the counterparty in concentrate
form, which is then sold under the terms of concentrate sales contracts to
third-party smelters or traders.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

**6.     
  General and Administrative**

|                                                                   |  |      |  |   | Years Ended December 31 | 
|------------------------------------------------------------------ |  | ---- |  | - | ----------------------- | 
|(in thousands)                                                     |  | Note |  |   | 2012                    | 
|Salaries and benefits                                              |  |      |  |   |                         | 
|Salaries and benefits, excluding PSUs                              |  |      |  | $ | 10,173                  | 
|PSUs                                                               |  | 14.1 |  |   | 1,685                   | 
|Total salaries and benefits                                        |  |      |  | $ | 11,858                  | 
|Depreciation                                                       |  |      |  |   | 228                     | 
|Charitable donations                                               |  |      |  |   | 1,857                   | 
|Professional fees                                                  |  |      |  |   | 2,981                   | 
|Other                                                              |  |      |  |   | 7,495                   | 
|Cash settled general and administrative                            |  |      |  | $ | 24,419                  | 
|Equity settled stock
      based compensation (a non-cash expense) |  |      |  |   | 6,420                   | 
|Total general and
      administrative                             |  |      |  | $ | 30,839                  | 

**7.     
  Accounts Receivable**

|                                                                                         |   | December 31 |  |   | December 31 | 
|---------------------------------------------------------------------------------------- | - | ----------- |  | - | ----------- | 
|(in thousands)                                                                           |   | 2012        |  |   | 2011        | 
|Trade receivables from provisional concentrate sales, net
      of fair value adjustment | $ | 5,909       |  | $ | 3,494       | 
|Other receivables                                                                        |   | 288         |  |   | 396         | 
|Total accounts
      receivable                                                          | $ | 6,197       |  | $ | 3,890       | 

Trade Receivables from Provisional
Concentrate Sales, Net of Fair Value Adjustment

As discussed in Note 2.5, under certain precious metal purchase
agreements, silver and/or gold is acquired from the counterparty in concentrate
form, which is then sold under the terms of concentrate sales contracts to
third-party smelters or traders. Where the Company acquires silver or gold in
concentrate form, final silver or gold prices are set on a specified future
Quotational Period pursuant to the concentrate sales contracts with third-party
smelters, typically one to three months after the shipment date, based on market
prices for silver or gold. The contracts, in general, provide for a provisional
payment of 90% of the estimated value of the silver and/or gold sold under the
concentrate sales contract based upon provisional assays and quoted silver and
gold prices, with the 10% holdback being payable upon final settlement, which is
based upon the average applicable price for the Quotational Period applied to
the actual number of silver or gold ounces recovered calculated using confirmed
smelter weights and settlement assays. This 10% holdback is reflected as a
component of Accounts Receivable in the Companys consolidated balance sheet.
Final settlement generally occurs from three to six months after shipment. The
Companys provisionally priced sales contain an embedded derivative that is
required to be separated from the host contract for accounting purposes. The
host contract is the receivable from the sale of concentrates measured at the
forward price at the time of sale. The embedded derivative does not qualify for
hedge accounting. The embedded derivative is recorded on the balance sheet as a
derivative asset in Accounts Receivable or as a derivative liability in Accounts
Payable and Accrued Liabilities and is adjusted to fair value through revenue
each period until the date of final settlement.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

At December 31, 2012, the Company had outstanding provisionally
priced sales of $12.7 million (2011 - $3.6 million) where the quotational period
pricing was estimated based on the forward price for silver. These sales
consisted of 0.4 million ounces of silver (2011  0.1 million ounces of silver)
and had a fair value loss adjustment of approximately $1.1 million (2011 - $0.3
million gain) associated with the embedded derivative. For each one cent per
ounce increase or decrease in realized silver price, revenue would increase or
decrease by approximately $3,800 (2011 - $1,200).

**8.     
  Long-Term Investments**

|                   |   | December 31 |  |   | December 31 | 
|------------------ | - | ----------- |  | - | ----------- | 
|(in thousands)     |   | 2012        |  |   | 2011        | 
|Common shares held | $ | 118,683     |  | $ | 149,039     | 
|Warrants held      |   | 2,694       |  |   | 2,582       | 
|                   | $ | 121,377     |  | $ | 151,621     | 

Common Shares Held

|               |   |                  |  |   | December
      31, 2012 |  
|-------------- | - | ---------------- |  | - | ----------------------- | -
|               |   |                  |  |   | Fair Value              |  
|               |   |                  |  |   | Adjustment Losses       |  
|(in thousands) |   | Fair
      Value |  |   | Included in OCI         |  
|Bear Creek     | $ | 44,130           |  | $ | (2,041                  | )
|Revett         |   | 14,824           |  |   | (9,747                  | )
|Sabina         |   | 31,164           |  |   | (13,013                 | )
|Other          |   | 28,565           |  |   | (6,333                  | )
|               | $ | 118,683          |  | $ | (31,134                 | )

|               |   |                  |  |   | December 31, 2011 |  
|-------------- | - | ---------------- |  | - | ----------------- | -
|               |   |                  |  |   | Fair Value        |  
|               |   |                  |  |   | Adjustment Losses |  
|(in thousands) |   | Fair
      Value |  |   | Included in OCI   |  
|Bear Creek     | $ | 46,171           |  | $ | (80,524           | )
|Revett         |   | 23,793           |  |   | (1,043            | )
|Sabina         |   | 44,177           |  |   | (21,817           | )
|Other          |   | 34,898           |  |   | (15,730           | )
|               | $ | 149,039          |  | $ | (119,114          | )

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

Warrants Held

|               |   |                  |  |   | December
      31, 2012 |  
|-------------- | - | ---------------- |  | - | ----------------------- | -
|               |   |                  |  |   | Fair Value              |  
|               |   |                  |  |   | Adjustment              |  
|               |   |                  |  |   | (Losses) Gains          |  
|               |   |                  |  |   | Included in Net         |  
|(in thousands) |   | Fair
      Value |  |   | Earnings                |  
|Revett         | $ | -                |  | $ | (357                    | )
|Other          |   | 2,694            |  |   | 853                     |  
|               | $ | 2,694            |  | $ | 496                     |  

|               |   |                  |  |   | December 31, 2011 |  
|-------------- | - | ---------------- |  | - | ----------------- | -
|               |   |                  |  |   | Fair Value        |  
|               |   |                  |  |   | Adjustment Losses |  
|               |   |                  |  |   | Included in Net   |  
|(in thousands) |   | Fair
      Value |  |   | Earnings          |  
|Revett         | $ | 741              |  | $ | (55               | )
|Other          |   | 1,841            |  |   | (3,063            | )
|               | $ | 2,582            |  | $ | (3,118            | )

The Companys long-term investments in common shares (LTIs)
are held for long-term strategic purposes and not for trading purposes. As such,
the Company has elected to reflect any fair value adjustments as a component of
OCI.

While long-term investments in warrants are also held for
long-term strategic purposes, they meet the definition of a derivative and
therefore are classified as financial assets with fair value adjustments being
recorded as a component of net earnings under the classification Other (Income)
Expense. Warrants that do not have a quoted market price have been valued using
a Black-Scholes option pricing model.

By holding these long-term investments, the Company is
inherently exposed to various risk factors including currency risk, market price
risk and liquidity risk (Note 4).

During the year ended December 31, 2012, the value of the
Companys LTIs decreased by $31.1 million. As a result of this decrease, the
deferred tax liability attributable to the LTIs was reduced and the Company
recorded a deferred income tax recovery being reflected as a component of OCI of
$2.5 million. The reduction of the deferred tax liability attributable to the
LTIs resulted in the reversal of previously recognized deferred income tax
assets which increased the deferred income tax expense reflected in net
earnings.

Bear Creek

At December 31, 2012, Silver Wheaton owned approximately 13.3
million (December 31, 2011  13.3 million) common shares of Bear Creek Mining
Corporation (Bear Creek), representing approximately 14% (December 31, 2011 
14%) of the outstanding shares of Bear Creek. At December 31, 2012, the fair
value of the Companys investment in Bear Creek was $44.1 million (December 31,
2011 - $46.2 million).

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

During the year ended December 31, 2011, the value of the Company's investment in Bear Creek declined by approximately $80.5 million. The value of this investment was adversely affected by an action by the Peruvian government relating to
Bear Creek's title over the mineral concessions covering the Santa Ana project. While the Santa Ana project remains an important asset for Bear Creek, Silver Wheaton's strategic focus related to its investment in Bear Creek is the Corani
project, which is proceeding towards permitting.

Revett

At December 31, 2012, Silver Wheaton owned 5.3 million common shares (December 31, 2011 -  5.0 million common shares and common share purchase warrants exercisable to acquire an additional 0.3 million common shares) of Revett Minerals Inc.
("Revett"), representing approximately 15% (December 31, 2011 -  16%) of the outstanding shares of Revett. At December 31, 2012, the fair value of the Company's investment in Revett was $14.8 million (December 31, 2011 -
$24.5 million).

During the year ended December 31, 2012, the Company acquired 0.3 million common shares of Revett from the exercise of 0.3 million Revett warrants for total consideration of $0.4 million.

Sabina

At December 31, 2012, Silver Wheaton owned 11.7 million (December 31, 2011 -  11.7 million) common shares of Sabina Gold & Silver Corp. ("Sabina"), representing approximately 7% (December 31, 2011 -  7%) of the outstanding
shares of Sabina. At December 31, 2012, the fair value of the Company's investment in Sabina was $31.2 million (December 31, 2011 - $44.2 million).

Other

At December 31, 2012, Silver Wheaton owned common shares and common share purchase warrants of several other publicly traded mineral exploration, development and mining companies. As Silver Wheaton's investment represents less than 10% of the
outstanding shares of each of the respective companies and is not considered material to Silver Wheaton's overall financial position, these investments have been reflected in the financial statements as part of Other long-term investments.

During the year ended December 31, 2011, the Company acquired, by way of private placement, 10 million common shares of Wildcat Silver Corporation for total consideration of Cdn$13.0 million ($13.7 million). In addition, Silver Wheaton sold
its investment of 1.8 million common shares of Ventana Gold Corp. ("Ventana") for proceeds of Cdn$23.5 million ($24.3 million) after the successful acquisition of Ventana by AUX Canada, resulting in a realized gain of $4.5
million.

At December 31, 2012, the fair value of the Other long-term investments was $31.3 million (December 31, 2011 - $36.7 million).

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

9.      Silver
  and Gold Interests

|                 |   | December 31, 2012 | 
|---------------- | - | ----------------- | 
|                 |   | Cost              | 
|                 |   | Balance -         | 
|(in thousands)   |   | Jan 1,
      2012 | 
|Silver interests |   |                   | 
|San Dimas        | $ | 190,331           | 
|Zinkgruvan       |   | 77,919            | 
|Yauliyacu        |   | 285,292           | 
|Peñasquito       |   | 524,626           | 
|Cozamin          |   | 41,959            | 
|Barrick 1        |   | 623,809           | 
|Other
      2    |   | 294,367           | 
|                 | $ | 2,038,303         | 
|Gold interests   |   |                   | 
|Minto            | $ | 47,774            | 
|777              |   | -                 | 
|                 | $ | 47,774            | 
|                 | $ | 2,086,077         | 

|1) | Comprised of the Pascua-Lama, Lagunas Norte, Pierina and
    Veladero silver interests.                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Comprised of the Los Filos, Keno Hill, Mineral Park,
      Neves-Corvo, Stratoni, Campo Morado, Minto, 777, Aljustrel, Loma de La
      Plata and Constancia silver interests and the Rosemont silver and gold
    interest.

|                 |   | December 31, 2011 | 
|---------------- | - | ----------------- | 
|                 |   | Cost              | 
|                 |   | Balance -         | 
|(in thousands)   |   | Jan 1,
      2011 | 
|Silver interests |   |                   | 
|San Dimas        | $ | 190,331           | 
|Zinkgruvan       |   | 77,919            | 
|Yauliyacu        |   | 285,292           | 
|Peñasquito       |   | 524,626           | 
|Cozamin          |   | 41,959            | 
|Barrick 1        |   | 607,612           | 
|Other
      2    |   | 294,258           | 
|                 | $ | 2,021,997         | 
|Gold interests   |   |                   | 
|Minto            | $ | 47,774            | 
|                 | $ | 2,069,771         | 

|1) | Comprised of the Pascua-Lama, Lagunas Norte, Pierina and
    Veladero silver interests.                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Comprised of the Los Filos, Keno Hill, Mineral Park,
      Neves-Corvo, Stratoni, Campo Morado, Minto, Aljustrel and Loma de La Plata
      silver interests and the Rosemont silver and gold
  interest.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

The value allocated to reserves is classified as depletable
upon a mining operation achieving commercial production and is depleted on a
unit-of-sale basis over the estimated recoverable proven and probable reserves
at the mine. The value associated with resources and exploration potential is
allocated at acquisition and is classified as non-depletable until such time as
it is transferred to the depletable category, generally as a result of the
conversion of resources or exploration potential into reserves.

|                 |   | December
      31, 2012 |  |   | December 31, 2011 | 
|---------------- | - | ----------------------- |  | - | ----------------- | 
|                 |   |                         |  |   | Non-              | 
|(in thousands)   |   | Depletable              |  |   | Depletable        | 
|Silver interests |   |                         |  |   |                   | 
|San Dimas        | $ | 22,127                  |  | $ | 140,809           | 
|Zinkgruvan       |   | 34,429                  |  |   | 19,646            | 
|Yauliyacu        |   | 24,722                  |  |   | 190,573           | 
|Peñasquito       |   | 380,145                 |  |   | 107,127           | 
|Cozamin          |   | 19,135                  |  |   | -                 | 
|Barrick 1, 2     |   | 13,422                  |  |   | 584,314           | 
|Other
      3    |   | 169,364                 |  |   | 212,103           | 
|                 | $ | 663,344                 |  | $ | 1,254,572         | 
|Gold interests   |   |                         |  |   |                   | 
|Minto            | $ | 22,281                  |  | $ | 8,305             | 
|777              |   | 281,344                 |  |   | 51,388            | 
|                 | $ | 303,625                 |  | $ | 59,693            | 
|                 | $ | 966,969                 |  | $ | 1,314,265         | 

|1) | Comprised of the Pascua-Lama, Lagunas Norte, Pierina and
    Veladero silver interests.                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | The amount reflected as depletable is based on the value
      of the reserves relating to the Lagunas Norte, Pierina and Veladero silver
    interests.                                                                    
|3) | Comprised of the Los Filos, Keno Hill, Mineral Park,
      Neves-Corvo, Stratoni, Campo Morado, Minto, 777, Aljustrel, Loma de La
      Plata and Constancia silver interests and the Rosemont silver and gold
    interest.

777

On August 8, 2012, the Company entered into an agreement with
Hudbay Minerals Inc. (Hudbay) to acquire an amount equal to 100% of the life
of mine silver and gold production from its currently producing 777 mine,
located in Canada. Silver Wheatons share of gold production at 777 will remain
at 100% until the later of the end of 2016 or the satisfaction of a completion
test relating to Hudbays Constancia project, after which it will be reduced to
50% for the remainder of the mine life. Silver Wheaton made an upfront cash
payment of $455.1 million on the closing date of September 28, 2012 and, in
addition, will make ongoing payments of the lesser of $5.90 per ounce of silver
and $400 per ounce of gold (both subject to an inflationary adjustment of 1%
beginning in the fourth year) or the prevailing market price per ounce of silver
and gold delivered. Hudbay has granted Silver Wheaton a right of first refusal
on any future streaming agreement, royalty agreement, or similar transaction
related to the production of silver or gold from 777.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

The allocation of the cost of the asset acquisition is
summarized in the table below:

|(in thousands)        |   |         | 
|--------------------- | - | ------- | 
|Cost:                 |   |         | 
|Cash                  | $ | 455,100 | 
|Acquisition costs     |   | 1,798   | 
|                      | $ | 456,898 | 
|Allocated as follows: |   |         | 
|Silver interest 1     | $ | 102,444 | 
|Gold interest         |   | 354,454 | 
|                      | $ | 456,898 | 

|1) | The cost of the 777 silver interest is included under
    Other silver interests.
|-- | ---------------------------------------------------------------------------------

Constancia

On August 8, 2012, the Company entered into an agreement with
Hudbay to acquire an amount equal to 100% of the life of mine silver production
from the Constancia project in Peru. Silver Wheaton will pay Hudbay total cash
consideration of $294.9 million, of which $44.9 million was paid on the closing
date of September 28, 2012, with two further payments of $125 million to be made
once capital expenditures of $500 million and $1 billion have been incurred at
Constancia. In addition, Silver Wheaton will make ongoing payments of the lesser
of $5.90 per ounce of silver (subject to an inflationary adjustment of 1%
beginning in the fourth year) or the prevailing market price per ounce of silver
delivered.

If the Constancia processing plant fails to achieve at least
90% of expected throughput and recovery by December 31, 2020, Silver Wheaton
would be entitled to a proportionate return of the $250 million upfront cash
consideration relating to Constancia. Hudbay has granted Silver Wheaton a right
of first refusal on any future streaming agreement, royalty agreement, or
similar transaction related to the production of silver from Constancia.

10.    Bank Debt

The Company has a $200 million non-revolving term loan (the
Term Loan), of which $50.1 million was outstanding as at December 31, 2012,
and a $400 million revolving term loan (the Revolving Loan), which was undrawn
as at December 31, 2012. The Term Loan and the Revolving Loan both mature on
July 20, 2014 with the Term Loan requiring equal quarterly principal repayments
of approximately $7 million (together with accrued interest). Silver Wheaton has
committed to pay down the Revolving Loan, within 61 days after the end of each
fiscal quarter, by an amount equal to 90% of the increase in cash balances
reported for the quarter. The Revolving Loan can be drawn down at any time to
finance acquisitions, investments or for general corporate purposes.

Amounts drawn incur interest at LIBOR plus 0.875% to 1.75% per
annum dependent upon the Companys leverage ratio. Undrawn amounts are subject
to a commitment fee of 0.2% to 0.45% per annum, dependent on the Companys
leverage ratio. Under the credit agreement, the Company is required to maintain
a debt service coverage ratio greater than or equal to 1.25:1 (1.50:1 in order
to be eligible to pay dividends), a leverage ratio less than or equal to 3.5:1,
and a tangible net worth greater than 80% of the tangible net worth at June 30,
2007 plus 50% of net earnings for each fiscal quarter thereafter. Both the Term
Loan and the Revolving Loan are secured against the Companys assets, including
the Companys silver and gold interests and long-term investments.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

During the year ended December 31, 2012, the Company repaid
$28.6 million (2011 - $28.6 million) of the balance outstanding on the Term
Loan.

The Company is in compliance with the debt covenants described
above.

|                                     |   | December
      31, 2012 | 
|------------------------------------ | - | ----------------------- | 
|(in thousands)                       |   | Term
      Loan         | 
|                                     |   |                         | 
|Current portion                      | $ | 28,560                  | 
|Long-term portion                    |   | 21,500                  | 
|                                     | $ | 50,060                  | 
|                                     |   |                         | 
|Interest capitalized during the year | $ | 714                     | 
|Effective interest rate              |   | 1.12%                   | 

|                                     |   | December 31, 2011 | 
|------------------------------------ | - | ----------------- | 
|(in thousands)                       |   | Term
      Loan   | 
|                                     |   |                   | 
|Current portion                      | $ | 28,560            | 
|Long-term portion                    |   | 50,060            | 
|                                     | $ | 78,620            | 
|                                     |   |                   | 
|Interest capitalized during the year | $ | 1,044             | 
|Effective interest rate              |   | 1.13%             | 

The Companys bank debt is classified as a financial liability
and reported at amortized cost using the effective interest method.

The required principal payments under the Term Loan and the
Revolving Loan over the remaining terms are as follows:

|            |   | Term Loan |  |   | Revolving Loan |  |   | Total   | 
|----------- | - | --------- |  | - | -------------- |  | - | ------- | 
|Fiscal Year |   | (000's)   |  |   | (000's)        |  |   | (000's) | 
|            |   |           |  |   |                |  |   |         | 
|2013        | $ | 28,560    |  | $ | -              |  | $ | 28,560  | 
|2014        |   | 21,500    |  |   | -              |  |   | 21,500  | 
|            | $ | 50,060    |  | $ | -              |  | $ | 50,060  | 

On February 28, 2013, the Company entered into two new
unsecured credit facilities, comprised of (i) a $1 billion revolving credit
facility having a 5 year term; and (ii) a $1.5 billion bridge financing facility
having a 1 year term, as more fully described in Note 22. These facilities
replaced the Term Loan and the Revolving Loan.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

11.    Silver
  Interest Payments

On September 8, 2009, the Company entered into an agreement
with Barrick Gold Corporation (Barrick) to acquire an amount equal to 25% of
the life of mine silver production from its Pascua-Lama project, as well as 100%
of the silver production from its Lagunas Norte, Pierina and Veladero mines
until the end of 2013. The total upfront cash payments of $625 million were
payable in installments, with the final payment of $137.5 million having been
made in September 2012. The financial liability relating to the future payments
were discounted using an annual discount rate of 6.9%, which represents
managements best estimate of the market rate of interest at which the Company
could borrow money under similar terms and conditions at the time the agreement
was entered into. The silver interest payments previously due were reported at
amortized cost using the effective interest method. Total interest costs of $51
million accreted over the term of this obligation and were capitalized to the
cost of the Barrick silver interest. Of the total interest costs accreted to the
Barrick silver interest, $6.7 million were capitalized during the year ended
December 31, 2012 (2011  $15.2 million).

12.    Issued
  Capital

|                                                                                                                                               |  |      |  |   | **December 31** |  |  | December 31 | 
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | - | --------------- |  |  | ----------- | 
|(US dollars in
      thousands)                                                                                                                |  | Note |  |   | 2012            |  |  | 2011        | 
|Issued capital                                                                                                                                 |  |      |  |   |                 |  |  |             | 
|Share capital issued
      and outstanding: 354,375,852 common
      shares               (December
      31, 2011: 353,499,816 common shares) |  | 12.1 |  | $ | 1,811,577       |  |  | 1,793,772   | 

12.1.    Shares Issued

The Company is authorized to issue an unlimited number of
common shares having no par value and an unlimited number of preference shares
issuable in series. As at December 31, 2012, the Company had no preference
shares outstanding.

A continuity schedule of the Companys issued and outstanding
common shares from January 1, 2011 to December 31, 2012 is presented below:

|                                  |  | Number of   |  |  | Weighted Average | 
|--------------------------------- |  | ----------- |  |  | ---------------- | 
|                                  |  | Shares      |  |  | Price            | 
|At January 1, 2011                |  | 352,785,382 |  |  |                  | 
|Share purchase options exercised  |  | 642,173     |  |  | Cdn$11.96        | 
|Share purchase warrants exercised |  | 4,968       |  |  | US$20.00         | 
|Restricted share units released   |  | 67,293      |  |  | $0.00            | 
|At December 31, 2011              |  | 353,499,816 |  |  |                  | 
|Share purchase options exercised  |  | 721,632     |  |  | Cdn$15.17        | 
|Share purchase warrants exercised |  | 93,897      |  |  | US$20.00         | 
|Restricted share units released   |  | 60,507      |  |  | $0.00            | 
|At December 31, 2012              |  | 354,375,852 |  |  |                  | 

12.2.    Dividends
Declared

During the year ended December 31, 2012, the Company declared
and paid to its shareholders dividends in the amount of $0.35 per common share
for total dividends of $123.9 million (2011 - $0.18 per common share for total
dividends of $63.6 million).

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

13.     Reserves

|                                                     |  |      |  |   | **December 31** |   |   | December 31 | 
|---------------------------------------------------- |  | ---- |  | - | --------------- | - | - | ----------- | 
|(in thousands)                                       |  | Note |  |   | 2012            |   |   | 2011        | 
|Reserves                                             |  |      |  |   |                 |   |   |             | 
|Share purchase warrants                              |  | 13.1 |  | $ | 7,201           |   | $ | 7,457       | 
|Share purchase options                               |  | 13.2 |  |   | 14,050          |   |   | 12,314      | 
|Restricted share units                               |  | 13.3 |  |   | 2,553           |   |   | 2,510       | 
|Long-term investment revaluation reserve, net of tax |  | 13.4 |  |   | (25,514         | ) |   | 3,141       | 
|Total reserves                                       |  |      |  | $ | (1,710          | ) | $ | 25,422      | 

13.1.    Share Purchase
Warrants

A continuity schedule of the Companys US dollar denominated
share purchase warrants (warrants) from January 1, 2011 to December 31, 2012
is presented below:

|                           |  |             |   |   | Weighted |  |  |          |  |   |                  |  
|-------------------------- |  | ----------- | - | - | -------- |  |  | -------- |  | - | ---------------- | -
|                           |  |             |   |   | Average  |  |  |          |  |   |                  |  
|                           |  | Warrants    |   |   | Exercise |  |  | Exchange |  |   | Share Purchase   |  
|                           |  | Outstanding |   |   | Price    |  |  | Ratio    |  |   | Warrants Reserve |  
|At January 1, 2011         |  | 2,718,205   |   | $ | 20.00    |  |  | 1.00     |  | $ | 7,471            |  
|Exercised                  |  | (4,968      | ) |   | 20.00    |  |  | 1.00     |  |   | (14              | )
|At December 31, 2011       |  | 2,713,237   |   | $ | 20.00    |  |  | 1.00     |  | $ | 7,457            |  
|Exercised                  |  | (93,897     | ) |   | 20.00    |  |  | 1.00     |  |   | (256             | )
|At December 31,
      2012 |  | 2,619,340   |   | $ | 20.00    |  |  | 1.00     |  | $ | 7,201            |  

The warrants, which expire on September 5, 2013, trade on the
TSX under the symbol SLW.WT.U. Each warrant entitles the holder the right to
purchase one of the Companys common shares.

13.2.    Share Purchase
Options

The Company has established an equity settled share purchase
option plan whereby the Companys Board of Directors may, from time to time,
grant options to employees or consultants. The maximum term of any share
purchase option may be ten years, but generally options are granted for five
years. The exercise price of an option is not less than the closing price on the
TSX on the last trading day preceding the grant date. The vesting period of the
options is determined at the discretion of the Companys Board of Directors at
the time the options are granted, but generally vest over a period of two
years.

Each share purchase option converts into one ordinary share of
Silver Wheaton on exercise. No amounts are paid or payable by the recipient on
receipt of the option. The options do not carry rights to dividends or voting
rights. Options may be exercised at any time from the date of vesting to the
date of their expiry, subject to certain black-out periods.

The Company expenses the fair value of share purchase options
that are expected to vest on a straight-line basis over the vesting period using
the Black-Scholes option pricing model to estimate the fair value for each
option at the date of grant. The Black-Scholes model was developed for use in
estimating the fair value of traded options that have no vesting restrictions.
The model requires the use of subjective assumptions, including expected stock
price volatility; historical data has been considered in setting the
assumptions. Expected volatility is determined by considering the trailing
30-month historic average share price volatility. The weighted average fair
value of share purchase options granted and principal assumptions used in
applying the Black-Scholes option pricing model are as follows:

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

|                                                     |  | Years Ended December 31 | 
|---------------------------------------------------- |  | ----------------------- | 
|                                                     |  | 2012                    | 
|Black-Scholes weighted average assumptions           |  |                         | 
|Grant date share price and
      exercise price      |  | Cdn$32.29               | 
|Expected dividend yield                              |  | 1.21%                   | 
|Expected volatility                                  |  | 45%                     | 
|Risk-free interest rate                              |  | 1.20%                   | 
|Expected option life, in
      years                 |  | 2.5                     | 
|Weighted average
      fair value per option granted |  | Cdn$8.66                | 

A continuity schedule of the Companys share purchase options
reserve from January 1, 2011 to December 31, 2012 is presented below:

|                                                                  |   | Share Purchase  |  
|----------------------------------------------------------------- | - | --------------- | -
|(in thousands)                                                    |   | Options Reserve |  
|At January 1, 2011                                                | $ | 9,853           |  
|Amortization of fair
      value of share purchase options issued |   | 4,674           |  
|Share purchase options exercised                                  |   | (2,213          | )
|At December 31, 2011                                              | $ | 12,314          |  
|Amortization of fair value
      of share purchase options issued |   | 5,191           |  
|Share purchase options exercised                                  |   | (3,455          | )
|At December 31,
      2012                                        | $ | 14,050          |  

During the year ended December 31, 2012, the Company issued
591,000 share purchase options with a weighted average exercise price of
Cdn$32.29 per option and a fair value of $5.1 million or Cdn$8.66 per option.
For the same period in 2011, the Company issued 626,000 share purchase options
with a weighted average exercise price of Cdn$37.37 and a fair value of $7.2
million or Cdn$11.28 per option.

Equity settled stock based compensation expense during the year
ended December 31, 2012 included $5.2 million of amortization of the fair value
of the share purchase options issued, compared to $4.7 million during the
comparable period in 2011.

At December 31, 2012, there were 2,331,695 share purchase
options outstanding with a weighted average exercise price of Cdn$23.91 per
option. For the comparable period in 2011, there were 2,561,127 share purchase
options outstanding with a weighted average exercise price of Cdn$19.60 per
option.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

The following table summarizes information about the options
outstanding and exercisable at December 31, 2012:

|               |  |             |  |  |                 |  |  |               |  |  | Weighted Average | 
|-------------- |  | ----------- |  |  | --------------- |  |  | ------------- |  |  | ---------------- | 
|Exercise Price |  | Exercisable |  |  | Non-Exercisable |  |  | Total Options |  |  | Remaining        | 
|(Cdn$)         |  | Options     |  |  | Options         |  |  | Outstanding   |  |  | Contractual Life | 
|$9.08          |  | 280,965     |  |  | -               |  |  | 280,965       |  |  | 1.1 years        | 
|$12.97         |  | 18,500      |  |  | -               |  |  | 18,500        |  |  | 0.3 years        | 
|$15.89         |  | 755,497     |  |  | -               |  |  | 755,497       |  |  | 2.2 years        | 
|$15.95         |  | 33,333      |  |  | -               |  |  | 33,333        |  |  | 2.2 years        | 
|$16.63         |  | 156,000     |  |  | -               |  |  | 156,000       |  |  | 0.2 years        | 
|$28.14         |  | -           |  |  | 80,000          |  |  | 80,000        |  |  | 4.5 years        | 
|$28.59         |  | -           |  |  | 80,000          |  |  | 80,000        |  |  | 4.4 years        | 
|$29.50         |  | 50,000      |  |  | 50,000          |  |  | 100,000       |  |  | 4.0 years        | 
|$30.51         |  | -           |  |  | 15,000          |  |  | 15,000        |  |  | 4.6 years        | 
|$33.03         |  | 5,000       |  |  | 5,000           |  |  | 10,000        |  |  | 3.4 years        | 
|$33.71         |  | -           |  |  | 360,700         |  |  | 360,700       |  |  | 4.2 years        | 
|$34.17         |  | 59,550      |  |  | 60,550          |  |  | 120,100       |  |  | 3.4 years        | 
|$34.55         |  | -           |  |  | 10,000          |  |  | 10,000        |  |  | 5.0 years        | 
|$39.25         |  | -           |  |  | 10,000          |  |  | 10,000        |  |  | 4.9 years        | 
|$41.58         |  | 150,800     |  |  | 150,800         |  |  | 301,600       |  |  | 3.2 years        | 
|               |  | 1,509,645   |  |  | 822,050         |  |  | 2,331,695     |  |  | 2.4 years        | 

A continuity schedule of the Companys outstanding share
purchase options from January 1, 2011 to December 31, 2012 is presented below:

|                                                                  |  | Number of   |   |   | Weighted Average | 
|----------------------------------------------------------------- |  | ----------- | - | - | ---------------- | 
|                                                                  |  | Options     |   |   | Exercise Price   | 
|                                                                  |  | Outstanding |   |   | (Cdn$)           | 
|At January 1, 2011                                                |  | 2,603,822   |   | $ | 13.91            | 
|Granted
      (fair value - $7.2 million or Cdn$11.28 per option) |  | 626,000     |   |   | 37.37            | 
|Exercised                                                         |  | (642,173    | ) |   | 11.96            | 
|Forfeited                                                         |  | (26,522     | ) |   | 25.23            | 
|At December 31, 2011                                              |  | 2,561,127   |   | $ | 19.60            | 
|Granted
      (fair value - $5.1 million or Cdn$8.66 per option)  |  | 591,000     |   |   | 32.29            | 
|Exercised                                                         |  | (721,632    | ) |   | 15.17            | 
|Forfeited                                                         |  | (98,800     | ) |   | 35.76            | 
|At December 31, 2012                                              |  | 2,331,695   |   | $ | 23.91            | 

As it relates to share purchase options, during the year ended
December 31, 2012, the weighted average share price at the time of exercise was
Cdn$34.49 per share, as compared to Cdn$41.34 per share during the comparable
period in 2011.

13.3.    Restricted Share
Units (RSUs)

RSUs give the holder the right to receive a specified number of
common shares at the specified vesting date. RSUs generally vest over a period
of two years. Compensation expense related to RSUs is recognized over the
vesting period based upon the fair value of the Companys common shares on the
grant date and the awards that are expected to vest. The fair value is
calculated with reference to the closing price of the Companys common shares on
the TSX on the business day prior to the date of grant.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

RSU holders receive a cash payment based on the dividends paid
on the Companys common shares in the event that the holder of a vested RSU has
elected to defer the release of the RSU to a future date. This cash payment is
reflected as a component of net earnings under the classification General and
Administrative.

A continuity schedule of the Companys restricted share units
reserve from January 1, 2011 to December 31, 2012 is presented below:

|                                                |   | Restricted  |  
|----------------------------------------------- | - | ----------- | -
|                                                |   | Share Units |  
|(in thousands)                                  |   | Reserve     |  
|At January 1, 2011                              | $ | 1,952       |  
|Amortization of fair
      value of RSUs issued |   | 1,655       |  
|Restricted share units released                 |   | (1,097      | )
|At December 31, 2011                            | $ | 2,510       |  
|Amortization of fair value
      of RSUs issued |   | 1,229       |  
|Restricted share units released                 |   | (1,186      | )
|At December 31,
      2012                      | $ | 2,553       |  

During the year ended December 31, 2012, the Company issued
33,500 RSUs with a fair value of $1.1 million or Cdn$33.71 per RSU. For the same
period in 2011, the Company issued 33,500 RSUs with a fair value of $1.5 million
or Cdn$43.74 per RSU.

Equity settled stock based compensation expense during the year
ended December 31, 2012 included $1.2 million of amortization of the fair value
of RSUs issued, compared to $1.6 million during the comparable period in
2011.

At December 31, 2012, there were 130,191 (December 31, 2011 
157,198) RSUs outstanding.

13.4.    Long-Term
Investment Revaluation Reserve

The Companys long-term investments in common shares (Note 8)
are held for long-term strategic purposes and not for trading purposes. Upon the
application of IFRS 9, Financial Instruments, the Company has chosen to
designate these long-term investments in common shares as financial assets with
fair value adjustments being recorded as a component of OCI as it believes that
this provides a more meaningful presentation for long-term strategic
investments, rather than reflecting changes in fair value as a component of net
earnings. As some of these long-term investments are denominated in Canadian
dollars, changes in their fair value is affected by both the change in share
price in addition to changes in the Cdn$ / US$ exchange rate.

Where the fair value of a long-term investment in common shares
held exceeds its tax cost, the Company recognizes a deferred tax liability. To
the extent that the value of the long-term investment subsequently declines, the
deferred tax liability is reduced. However, where the fair value of the
long-term investment decreases below the tax cost, the Company does not
recognize a deferred tax asset on the unrealized capital loss unless it is
probable that the Company will generate future capital gains to offset the loss.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

A continuity schedule of the Companys long-term investment
revaluation reserve from January 1, 2011 to December 31, 2012 is presented
below:

|                                        |   | Change in Fair |   |   |          |   |   |                  |  
|--------------------------------------- | - | -------------- | - | - | -------- | - | - | ---------------- | -
|                                        |   | Value due to:  |   |   |          |   |   |                  |  
|                                        |   |                |   |   | Foreign  |   |   |                  |  
|(in thousands)                          |   | Share Price    |   |   | Exchange |   |   | Tax
      Effect |  
|At January 1, 2011                      | $ | 106,795        |   | $ | 23,715   |   | $ | (14,422          | )
|Unrealized loss on LTI's
      1        |   | (118,962       | ) |   | (152     | ) |   | -                |  
|Deferred income tax recovery            |   | -              |   |   | -        |   |   | 10,699           |  
|Realized gain on disposal of LTI's 1    |   | (2,695         | ) |   | (1,837   | ) |   | -                |  
|At December 31, 2011                    | $ | (14,862        | ) | $ | 21,726   |   | $ | (3,723           | )
|Unrealized (loss) gain on
      LTI's 1 |   | (34,806        | ) |   | 3,672    |   |   | -                |  
|Deferred income tax recovery            |   | -              |   |   | -        |   |   | 2,479            |  
|At December 31,
      2012              | $ | (49,668        | ) | $ | 25,398   |   | $ | (1,244           | )

|1) | LTIs refers to long-term investments in common shares
    held.
|-- | ----------------------------------------------------------------

14.     Stock
  Based Compensation

The Companys stock based compensation consists of share
purchase options (Note 13.2), restricted share units (Note 13.3) and performance
share units (Note 14.1) . The accrued value of share purchase options and
restricted share units are reflected as reserves in the shareholders equity
section of the Companys balance sheet while the accrued value associated with
performance share units is reflected as an accrued liability.

14.1.    Performance
Share Units (PSUs)

The Company has established a Performance Share Unit Plan (the
PSU plan) whereby PSUs will be issued to eligible employees as determined by
the Companys Board of Directors or the Companys Compensation Committee. PSUs
issued under the PSU plan entitle the holder to a cash payment at the end of a
three year performance period equal to the number of PSUs granted, multiplied by
a performance factor and multiplied by the fair market value of a Silver Wheaton
common share on the expiry of the performance period. The performance factor can
range from 0% to 200% and is determined by comparing the Companys total
shareholder return to those achieved by various peer companies, the price of
silver and the Philadelphia Gold and Silver Index.

The PSUs accumulate dividend equivalents in the form of
additional units based on the dividends paid on the Companys common shares.
Compensation expense for the PSUs is recorded on a straight-line basis over the
three year vesting period. The amount of compensation expense is adjusted at the
end of each reporting period to reflect (i) the fair market value of common
shares; (ii) the number of PSUs anticipated to vest; and (iii) the anticipated
performance factor.

During the year ended December 31, 2012, the Company issued
76,700 PSUs. During the comparable period of 2011, the Company issued 62,800
PSUs.

General and administrative expense during the year ended
December 31, 2012 included a $1.7 million accrual related to the anticipated
fair value of the PSUs issued using an average performance factor of 145%,
compared to a $0.4 million accrual using a performance factor of 117% during the
comparable period in 2011.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

A continuity schedule of the Companys outstanding PSUs
(assuming a performance factor of 100% is achieved over the performance period)
from January 1, 2011 to December 31, 2012 is presented below:

|                                  |  | Number of PSUs |  
|--------------------------------- |  | -------------- | -
|                                  |  | outstanding    |  
|At January 1, 2011                |  | -              |  
|Granted                           |  | 62,800         |  
|Forfeited                         |  | (21,115        | )
|Dividend equivalent participation |  | 228            |  
|At December 31, 2011              |  | 41,913         |  
|Granted                           |  | 76,700         |  
|Forfeited                         |  | (10,774        | )
|Dividend equivalent participation |  | 1,172          |  
|At December 31,
      2012        |  | 109,011        |  

15.     Earnings
  Per Share (EPS) and Diluted Earnings Per Share (Diluted EPS)

Diluted earnings per share is calculated using the treasury
method which requires the calculation of diluted earnings per share by assuming
that outstanding share purchase options and warrants, with exercise prices that
are lower than the average market price for the relevant period, are exercised
and the proceeds are used to repurchase shares of the Company at the average
market price of the common shares for the relevant period.

Diluted EPS is calculated based on the following weighted
average number of shares outstanding:

|                                                            |  | Years Ended December 31 | 
|----------------------------------------------------------- |  | ----------------------- | 
|(in thousands)                                              |  | 2012                    | 
|                                                            |  |                         | 
|Basic weighted average number of shares outstanding         |  | 353,874                 | 
|Effect of dilutive securities                               |  |                         | 
|Share purchase options                                      |  | 934                     | 
|Share purchase warrants                                     |  | 1,061                   | 
|Restricted share units                                      |  | 139                     | 
|                                                            |  |                         | 
|Diluted weighted
      average number of shares outstanding |  | 356,008                 | 

The following table lists the share purchase options and share
purchase warrants excluded from the computation of diluted earnings per share
because the exercise prices exceeded the average market value of the common
shares of Cdn$32.95, compared to Cdn$35.50 for the comparable period in 2011.

|                        |  | Years Ended December 31 | 
|----------------------- |  | ----------------------- | 
|(in thousands)          |  | 2012                    | 
|Share purchase options  |  | 812                     | 
|Share purchase warrants |  | -                       | 
|Total                   |  | 812                     | 

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

16.     Supplemental
  Cash Flow Information

|                                               |   | Years Ended December 31 |  
|---------------------------------------------- | - | ----------------------- | -
|(in thousands)                                 |   | 2012                    |  
|Change in non-cash working capital             |   |                         |  
|Accounts receivable                            | $ | (2,307                  | )
|Accounts payable and accrued
      liabilities |   | 12,418                  |  
|Other                                          |   | 255                     |  
|Total change in non-cash
      working capital | $ | 10,366                  |  

17.     Related
  Party Transactions

Compensation of Key Management Personnel

Key management personnel compensation, including directors, is
as follows:

|                                                                   |   | Years Ended December 31 | 
|------------------------------------------------------------------ | - | ----------------------- | 
|(in thousands)                                                     |   | 2012                    | 
|Short-term benefits 1                                              | $ | 6,678                   | 
|Post-employment benefits                                           |   | 57                      | 
|Cash settled stock based compensation                              |   | 1,311                   | 
|Equity settled stock
      based compensation (a non-cash expense) |   | 4,232                   | 
|Total executive
      compensation                                 | $ | 12,278                  | 

|1) | Short-term employee benefits include salaries, bonuses
      payable within twelve months of the balance sheet date and other annual
    employee benefits.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

18.     Post
  Employment Benefit Costs

The Company sponsors a Group Registered Retirement Savings Plan
(RRSP) for all qualified employees. Participants in the plan can elect to
contribute up to the lesser of (i) 50% of the RRSP contribution limit as
established under the Canadian Income Tax Act or (ii) 9% of their annual base
salary, and the Company will match this contribution. The assets of the Group
RRSP are held separately from those of the Company in independently administered
funds.

General and administrative expense during 2012 included
$197,000 of contributions to the Group RRSP plan made by the Company, as
compared to $171,000 during 2011.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

19.     Income
  Taxes

Income tax recognized in net earnings is comprised of the
following:

|                                                                  |   | Years Ended December 31 | 
|----------------------------------------------------------------- | - | ----------------------- | 
|(in thousands)                                                    |   | 2012                    | 
|Current income tax
      expense related to foreign jurisdictions | $ | 725                     | 
|Deferred income tax expense                                       |   |                         | 
|Origination and reversal of temporary differences                 | $ | 11,614                  | 
|Write
      down of previously recognized temporary differences   |   | 2,416                   | 
|                                                                  | $ | 14,030                  | 
|Income tax expense
      recognized in net earnings               | $ | 14,755                  | 

Income tax recognized in OCI is comprised of the following:

|                                                                                                             |   | Years Ended December 31 |  
|------------------------------------------------------------------------------------------------------------ | - | ----------------------- | -
|(in thousands)                                                                                               |   | 2012                    |  
|Deferred income tax
      recovery related to the losses on long-term investments - common shares
      held | $ | (2,479                  | )

The provision for income taxes differs from the amount that
would be obtained by applying the statutory income tax rate to consolidated
earnings before income taxes due to the following:

|                                                                                   |   | Years Ended December 31 |  
|---------------------------------------------------------------------------------- | - | ----------------------- | -
|(in thousands)                                                                     |   | 2012                    |  
|                                                                                   |   |                         |  
|Earnings before income taxes                                                       | $ | 600,791                 |  
|Canadian federal and
      provincial income tax rates                             |   | 25.00%                  |  
|Income tax expense based on above rates                                            | $ | 150,198                 |  
|Canadian functional currency election1                                             |   | -                       |  
|(Non taxable) non-deductible portion of capital gains, net
      of capital losses |   | (62                     | )
|Non-deductible stock based compensation and other                                  |   | 1,639                   |  
|Differences in tax rates in foreign jurisdictions                                  |   | (139,436                | )
|Impact of future income tax rate applied versus current statutory
      rate       |   | -                       |  
|Change in unrecognized
      temporary differences                                 |   | 2,416                   |  
|Income tax expense                                                                 | $ | 14,755                  |  

|1) | The Company elected to prepare its Canadian tax returns
      using US dollar functional currency, effective January 1, 2011. The
      election resulted in a one-time benefit of $3.6
million.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The majority of the Companys income generating activities,
including the sale of silver and gold, is conducted by its 100% owned
subsidiaries, SW Caymans and SST Barbados. SW Caymans operates in the Cayman
Islands and is subject to a statutory tax rate of 0% and SST Barbados operates
in Barbados and is subject to a statutory tax rate of between 0.5% and 2.5%
..

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

The movement in deferred tax assets and liabilities for the
year ended December 31, 2012 and the year ended December 31, 2011 is shown
below:

|                                                               |   | Year Ended December 31, 2012 |  
|-------------------------------------------------------------- | - | ---------------------------- | -
|                                                               |   |                              |  
|                                                               |   |                              |  
|                                                               |   |                              |  
|                                                               |   |                              |  
|                                                               |   | Opening                      |  
|Recognized deferred
      tax assets and liabilities           |   | Balance                      |  
|                                                               |   |                              |  
|Deferred tax assets                                            |   |                              |  
|Non-capital losses                                             | $ | 12,738                       |  
|Financing fees                                                 |   | 2,695                        |  
|Capital losses                                                 |   | 4,846                        |  
|Other                                                          |   | 290                          |  
|Deferred tax liabilities                                       |   |                              |  
|Interest capitalized for
      accounting but deducted for tax |   | (10,129                      | )
|Foreign exchange on debt                                       |   | (421                         | )
|Long-term investments                                          |   | (4,425                       | )
|Silver and gold interests                                      |   | (3,293                       | )
|                                                               |   |                              |  
|Total                                                          | $ | 2,301                        |  

|                                                                                         |   | Year Ended December
      31, 2011 |  
|---------------------------------------------------------------------------------------- | - | ---------------------------------- | -
|                                                                                         |   |                                    |  
|                                                                                         |   |                                    |  
|                                                                                         |   |                                    |  
|                                                                                         |   |                                    |  
|                                                                                         |   |                                    |  
|                                                                                         |   | Opening                            |  
|Recognized deferred
      tax assets and liabilities                                     |   | Balance                            |  
|                                                                                         |   |                                    |  
|Deferred tax assets                                                                      |   |                                    |  
|Non-capital losses                                                                       | $ | 16,153                             |  
|Long-term investments                                                                    |   | 366                                |  
|Financing fees                                                                           |   | 4,467                              |  
|Capital losses                                                                           |   | 8,775                              |  
|Foreign exchange on investments                                                          |   | 792                                |  
|Other                                                                                    |   | 184                                |  
|Deferred tax liabilities                                                                 |   |                                    |  
|Interest capitalized for
      accounting 
                    
    but deducted for tax |   | (10,758                            | )
|Foreign exchange on debt                                                                 |   | (575                               | )
|Long-term investments                                                                    |   | (16,230                            | )
|Silver and gold interests                                                                |   | (3,996                             | )
|                                                                                         |   |                                    |  
|Total                                                                                    | $ | (822                               | )

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

The recognized deferred tax assets and liabilities are offset
on the balance sheet. Deferred tax assets in Canada not recognized are shown
below:

|                                                 |   | December 31 |  |   | December 31 | 
|------------------------------------------------ | - | ----------- |  | - | ----------- | 
|                                                 |   | 2012        |  |   | 2011        | 
|Capital losses                                   | $ | 6,386       |  | $ | 3,971       | 
|Unrealized foreign exchange                      |   | -           |  |   | 27          | 
|Unrealized losses
      on long-term investments |   | 5,712       |  |   | 4,272       | 
|Total                                            | $ | 12,098      |  | $ | 8,270       | 

The temporary difference relating to investments in foreign
subsidiaries that would be taxable on repatriation is $27 million. As the
Company can control the timing of and manner in which funds are repatriated and
it does not plan to repatriate funds to Canada in the foreseeable future that
would be subject to tax, no deferred tax liability has been recognized.

At December 31, 2012, the Company has available non-capital
losses for Canadian income tax purposes which may be carried forward to reduce
taxable income in future years. If not utilized, the non-capital losses in the
amount of $37.7 million will expire as follows: 2028  $28.3 million, 2029 -
$9.4 million. In addition, the Company has available net capital losses of $34.8
million for Canadian income tax purposes which may be carried forward
indefinitely to reduce taxable capital gains in future years.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

20.     Commitments
  and Contingencies

The following table summarizes the Companys commitments to pay
for silver and gold to which it has the contractual right pursuant to the
precious metal purchase agreements:

|                          | Attributable
      Payable |                      |        |      
|------------------------- | -------------------------- | -------------------- | ------ | -----
|                          | Production to be           | Per
      Ounce Cash |        |      
|                          | Purchased                  | Payment1,2           |        |      
|                          |                            |                      |        |      
|Silver and Gold Interests | Silver                     | Gold                 | Silver | Gold 
|San Dimas                 | 100% 3                     | -                    | $ 4.12 | n/a  
|Zinkgruvan                | 100%                       | -                    | $ 4.18 | n/a  
|Yauliyacu                 | 100% 4                     | -                    | $ 4.08 | n/a  
|Peñasquito                | 25%                        | -                    | $ 3.99 | n/a  
|Minto                     | 100%                       | 100% 5               | $ 3.94 | $ 303
|Cozamin                   | 100%                       | -                    | $ 4.12 | n/a  
|777                       | 100%                       | 100%/50% 6           | $ 5.90 | $ 400
|Salobo(Note 22)           | -                          | 25%                  | n/a    | $ 400
|Sudbury(Note 22)          | -                          | 70%                  | n/a    | $ 400
|Barrick                   |                            |                      |        |      
|Pascua-Lama               | 25%                        | -                    | $ 3.90 | n/a  
|Lagunas Norte             | 100%                       | -                    | $ 3.90 | n/a  
|Pierina                   | 100%                       | -                    | $ 3.90 | n/a  
|Veladero                  | 100% 8                     | -                    | $ 3.90 | n/a  
|Other                     |                            |                      |        |      
|Los Filos 3               | 100%                       | -                    | $ 4.17 | n/a  
|Keno Hill                 | 25%                        | -                    | $ 3.90 | n/a  
|Mineral Park              | 100%                       | -                    | $ 3.90 | n/a  
|Neves-Corvo               | 100%                       | -                    | $ 4.02 | n/a  
|Stratoni                  | 100%                       | -                    | $ 4.02 | n/a  
|Campo Morado              | 75%                        | -                    | $ 3.94 | n/a  
|Aljustrel                 | 100%                       | -                    | $ 3.98 | n/a  
|Loma de La Plata          | 12.5%                      | -                    | $ 4.00 | n/a  
|Rosemont                  | 100%                       | 100%                 | $ 3.90 | $ 450
|Constancia                | 100%                       | -                    | $ 5.90 | n/a  

|1) | Subject to an annual inflationary adjustment with the
    exception of Loma de La Plata and Sudbury.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Should the prevailing market price for silver or gold be
      lower than this amount, the per ounce cash payment will be reduced to the
    prevailing market price, with the exception of Yauliyacu.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3) | Until August 6, 2014, Silver Wheaton is committed to
      purchase from Primero 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 is committed to purchase an additional 1.5 million ounces
      of silver per annum to be delivered by Goldcorp for a per ounce cash
      payment equal to that applicable under the Los Filos silver purchase
      agreement. After August 6, 2014, Silver Wheaton is committed to purchase
      from Primero a per annum amount equal to the first 6 million ounces of
    payable silver produced at San Dimas and 50% of any excess.
|4) | To a maximum of 4.75 million ounces per annum. In the
      event that silver sold and delivered to Silver Wheaton in any year totals
      less than 4.75 million ounces, the amount sold and delivered to Silver
      Wheaton in subsequent years will be increased to make up for any
      cumulative shortfall, to the extent production permits. The cumulative
      shortfall as at March 23, 2012, representing the six year anniversary, was
    13.0 million ounces.                                                                                                                                                                                                    
|5) | The Company is committed to acquire 100% of the first
    30,000 ounces of gold produced per annum and 50% thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6) | The Companys share of gold production at 777 will remain
      at 100% until the later of the end of 2016 or the satisfaction of a
      completion test relating to Hudbays Constancia project, after which it
    will be reduced to 50% for the remainder of the mine life.                                                                                                                                                                                                                                                                                                                                                                                                    
|7) | The Company is committed to purchase silver production
      from the currently producing mines until December 31, 2013. In addition,
      during 2014 and 2015, the Company is committed to purchase all or a
      portion of the silver production from these mines to the extent of any
      production shortfall at Pascua-Lama relative to the completion guarantee
      provided by Barrick, until such time as the completion guarantee is
    satisfied.                                                                                                                                                                                                                
|8) | Silver Wheaton's attributable silver production is
      subject to a maximum of 8% of the silver contained in the ore mined at
    Veladero during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|9) | Terms of the agreement not yet
  finalized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

Other Contractual Obligations and
Contingencies

|                                    |   | Obligations With Scheduled Payment Dates |  |   |                   |  |   |                   | 
|----------------------------------- | - | ---------------------------------------- |  | - | ----------------- |  | - | ----------------- | 
|                                    |   |                                          |  |   |                   |  |   |                   | 
|(in thousands)                      |   | 2013                                     |  |   | 2014
      - 2016 |  |   | 2017
      - 2018 | 
|                                    |   |                                          |  |   |                   |  |   |                   | 
|Bank debt 1                         | $ | 28,560                                   |  | $ | 21,500            |  | $ | -                 | 
|Interest on bank debt 2             |   | 472                                      |  |   | 145               |  |   | -                 | 
|Silver and gold interest payments 3 |   |                                          |  |   |                   |  |   |                   | 
|Rosemont                            |   | -                                        |  |   | -                 |  |   | -                 | 
|Loma de La Plata                    |   | -                                        |  |   | -                 |  |   | -                 | 
|Constancia                          |   | -                                        |  |   | -                 |  |   | -                 | 
|Operating leases                    |   | 507                                      |  |   | 1,520             |  |   | 132               | 
|Total contractual
      obligations | $ | 29,539                                   |  | $ | 23,165            |  | $ | 132               | 

|1) | As more fully disclosed in Note 22, the bank debt was
    repaid in full on February 22, 2013.                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | As the applicable interest rates are floating in nature,
      the interest charges are estimated based on market-based forward interest
    rate curves at the end of the reporting period.
|3) | Does not reflect the contingent payment due related to
    the Salobo gold purchase agreement.                                                                                              

Rosemont

In connection with the Rosemont precious metals purchase
agreement, the Company is committed to pay Augusta total upfront cash payments
of $230 million, payable on an installment basis to partially fund construction
of the Rosemont mine once certain milestones are achieved, including the receipt
of key permits and securing the necessary financing to complete construction of
the mine.

Loma de La Plata

In connection with the Companys election to convert the
debenture with Pan American into a silver purchase agreement, the Company is
committed to pay Pan American total upfront cash payments of $32.4 million
following the satisfaction of certain conditions, including Pan American
receiving all necessary permits to proceed with the mine construction.

Constancia

In connection with the Constancia silver purchase agreement,
the Company is committed to pay Hudbay two further payments of $125 million to
be made once capital expenditures of $500 million and $1 billion have been
incurred at Constancia.

Salobo

Vale S.A. ("Vale") is in the process of expanding the mill
throughput capacity at the Salobo mine (Note 22) to 24 million tonnes per annum
(Mtpa) from its current 12 Mtpa. If throughput capacity is expanded above 28
Mtpa within a predetermined period, Silver Wheaton will be required to make an
additional payment to Vale based on a set fee schedule ranging from $67 million
up to $400 million, dependent on the timing and scale of any expansion.

Other

Due to the size, complexity and nature of the Companys
operations, various legal and tax matters are outstanding from time to time,
including an audit by the Canada Revenue Agency of the Companys international
transactions covering the 2005 to 2010 taxation years, which is currently
ongoing. By their nature, contingencies will only be resolved when one or more
future events occur or fail to occur. The assessment of contingencies inherently
involves the exercise of significant judgment and estimates of the outcome of
future events. Based on information available to management at March 21, 2013,
the outstanding legal and tax matters are not expected to have a material
adverse effect on the Company. However, if the Company is unable to resolve any
of these matters favorably, there may be a material adverse impact on the Companys financial performance,
cash flows or results of operations. In the event that managements estimate of
the future resolution of these matters changes, the Company will recognize the
effects of the changes in its consolidated financial statements in the
appropriate period relative to when such changes occur.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

21.     Segmented
Information

Operating Segments

The Companys reportable operating segments, which are the
components of the Companys business where separate financial information is
available and which are evaluated on a regular basis by the Companys CEO, who
is the Companys chief operating decision maker, for the purpose of assessing
performance, are summarized in the tables below:

|                           |   |         |  |   |                     |  |   |           |  |   |              |   |   | Year
      Ended December 31, 2012
|-------------------------- | - | ------- |  | - | ------------------- |  | - | --------- |  | - | ------------ | - | - | ----------------------------------
|                           |   |         |  |   |                     |  |   |           |  |   |              |   |   | Cash Flow                         
|                           |   |         |  |   |                     |  |   |           |  |   |              |   |   | From                              
|(in thousands)             |   | Sales   |  |   | Cost
      of Sales |  |   | Depletion |  |   | Net Earnings |   |   | Operations                        
|Silver                     |   |         |  |   |                     |  |   |           |  |   |              |   |   |                                   
|San Dimas 1                | $ | 181,906 |  | $ | 23,846              |  | $ | 4,591     |  | $ | 153,469      |   | $ | 158,060                           
|Zinkgruvan                 |   | 65,914  |  |   | 8,797               |  |   | 3,564     |  |   | 53,553       |   |   | 55,855                            
|Yauliyacu                  |   | 86,185  |  |   | 11,937              |  |   | 14,717    |  |   | 59,531       |   |   | 80,077                            
|Peñasquito                 |   | 186,085 |  |   | 23,860              |  |   | 17,701    |  |   | 144,524      |   |   | 162,225                           
|Cozamin                    |   | 46,601  |  |   | 6,069               |  |   | 5,980     |  |   | 34,552       |   |   | 40,143                            
|Barrick 2                  |   | 78,359  |  |   | 9,670               |  |   | 10,763    |  |   | 57,926       |   |   | 69,504                            
|Other
      3              |   | 126,118 |  |   | 16,619              |  |   | 19,118    |  |   | 90,381       |   |   | 108,208                           
|                           | $ | 771,168 |  | $ | 100,798             |  | $ | 76,434    |  | $ | 593,936      |   | $ | 674,072                           
|Gold                       |   |         |  |   |                     |  |   |           |  |   |              |   |   |                                   
|Minto                      |   | 30,624  |  | $ | 5,457               |  | $ | 3,073     |  | $ | 22,094       |   | $ | 25,059                            
|777                        |   | 47,768  |  |   | 11,234              |  |   | 21,722    |  |   | 14,812       |   |   | 40,507                            
|                           | $ | 78,392  |  | $ | 16,691              |  | $ | 24,795    |  | $ | 36,906       |   | $ | 65,566                            
|Total silver and gold      |   |         |  |   |                     |  |   |           |  |   |              |   |   |                                   
|interests                  | $ | 849,560 |  | $ | 117,489             |  | $ | 101,229   |  | $ | 630,842      |   | $ | 739,638                           
|Corporate                  |   |         |  |   |                     |  |   |           |  |   |              |   |   |                                   
|General and administrative |   |         |  |   |                     |  |   |           |  | $ | (30,839      | ) |   |                                   
|Other                      |   |         |  |   |                     |  |   |           |  |   | (13,967      | ) |   |                                   
|Total corporate            |   |         |  |   |                     |  |   |           |  | $ | (44,806      | ) | $ | (20,234                           
|Consolidated               | $ | 849,560 |  | $ | 117,489             |  | $ | 101,229   |  | $ | 586,036      |   | $ | 719,404                           

|1) | Results for San Dimas include 1.5 million ounces received
      from Goldcorp in connection with Goldcorps four year commitment to
      deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting
      from their sale of San Dimas to Primero.                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Comprised of the operating Lagunas Norte, Pierina and
      Veladero silver interests in addition to the non-operating Pascua-Lama
      silver interest.                                                                                                                                 
|3) | Comprised of the operating Los Filos, Keno Hill, Mineral
      Park, Neves-Corvo, Stratoni, Campo Morado, Minto, 777 and Aljustrel silver
      interests in addition to the non-operating Rosemont silver and gold
      interest and Loma de La Plata and Constancia silver
  interests.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

|                                      |   |         |  |   |                     |  |   |           |  |   |              |   |   | Year
      Ended December 31, 2011
|------------------------------------- | - | ------- |  | - | ------------------- |  | - | --------- |  | - | ------------ | - | - | ----------------------------------
|                                      |   |         |  |   |                     |  |   |           |  |   |              |   |   | Cash Flow                         
|                                      |   |         |  |   |                     |  |   |           |  |   |              |   |   | From                              
|(in thousands)                        |   | Sales   |  |   | Cost
      of Sales |  |   | Depletion |  |   | Net Earnings |   |   | Operations                        
|Silver                                |   |         |  |   |                     |  |   |           |  |   |              |   |   |                                   
|San Dimas 1                           | $ | 188,377 |  | $ | 22,826              |  | $ | 3,997     |  | $ | 161,554      |   | $ | 164,453                           
|Zinkgruvan                            |   | 52,974  |  |   | 5,988               |  |   | 2,483     |  |   | 44,503       |   |   | 49,377                            
|Yauliyacu                             |   | 43,911  |  |   | 5,048               |  |   | 6,308     |  |   | 32,555       |   |   | 38,863                            
|Peñasquito                            |   | 143,069 |  |   | 16,257              |  |   | 9,957     |  |   | 116,855      |   |   | 126,812                           
|Cozamin                               |   | 43,990  |  |   | 5,138               |  |   | 5,834     |  |   | 33,018       |   |   | 40,586                            
|Barrick 2                             |   | 102,454 |  |   | 11,343              |  |   | 10,419    |  |   | 80,692       |   |   | 89,554                            
|Other
      3                         |   | 125,854 |  |   | 14,185              |  |   | 15,371    |  |   | 96,298       |   |   | 112,414                           
|                                      | $ | 700,629 |  | $ | 80,785              |  | $ | 54,369    |  | $ | 565,475      |   | $ | 622,059                           
|Gold                                  |   |         |  |   |                     |  |   |           |  |   |              |   |   |                                   
|Minto                                 |   | 29,368  |  |   | 5,481               |  |   | 3,088     |  |   | 20,799       |   |   | 24,240                            
|Total silver and gold
      interests | $ | 729,997 |  | $ | 86,266              |  | $ | 57,457    |  | $ | 586,274      |   | $ | 646,299                           
|Corporate                             |   |         |  |   |                     |  |   |           |  |   |              |   |   |                                   
|General and administrative            |   |         |  |   |                     |  |   |           |  | $ | (25,180      | ) |   |                                   
|Other                                 |   |         |  |   |                     |  |   |           |  |   | (11,066      | ) |   |                                   
|Total corporate                       |   |         |  |   |                     |  |   |           |  | $ | (36,246      | ) | $ | (19,872                           
|Consolidated                          | $ | 729,997 |  | $ | 86,266              |  | $ | 57,457    |  | $ | 550,028      |   | $ | 626,427                           

|1) | Results for San Dimas include 1.5 million ounces received
      from Goldcorp in connection with Goldcorps four year commitment to
      deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting
    from their sale of San Dimas to Primero.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Comprised of the operating Lagunas Norte, Pierina and
      Veladero silver interests in addition to the non-operating Pascua-Lama
    silver interest.                                                                                                          
|3) | Comprised of the operating Los Filos, Keno Hill, Mineral
      Park, Neves-Corvo, Stratoni, Campo Morado, Minto and Aljustrel silver
      interests in addition to the non-operating Rosemont silver and gold
    interest and Loma de La Plata silver interest.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

Geographic Segments

The Companys geographical segments, which are based on the
location of the mining operations to which the silver or gold interests relate,
are summarized in the tables below:

|                    |   | Year
      Ended December 31, 2012 | 
|------------------- | - | ---------------------------------- | 
|                    |   |                                    | 
|                    |   |                                    | 
|(in thousands)      |   | Sales                              | 
|North America       |   |                                    | 
|Canada              | $ | 108,390                            | 
|United States       |   | 17,650                             | 
|Mexico              |   | 450,394                            | 
|Europe              |   |                                    | 
|Greece              |   | 25,962                             | 
|Portugal            |   | 16,707                             | 
|Sweden              |   | 65,914                             | 
|South America       |   |                                    | 
|Argentina / Chile 1 |   | 39,106                             | 
|Peru                |   | 125,437                            | 
|Consolidated        | $ | 849,560                            | 

|1) | Includes the Pascua-Lama project, which straddles the
    border of Chile and Argentina.
|-- | ----------------------------------------------------------------------------------------

|                    |   | Year
      Ended December 31, 2011 | 
|------------------- | - | ---------------------------------- | 
|                    |   |                                    | 
|                    |   |                                    | 
|(in thousands)      |   | Sales                              | 
|North America       |   |                                    | 
|Canada              | $ | 48,278                             | 
|United States       |   | 21,100                             | 
|Mexico              |   | 414,902                            | 
|Europe              |   |                                    | 
|Greece              |   | 24,773                             | 
|Portugal            |   | 21,605                             | 
|Sweden              |   | 52,974                             | 
|South America       |   |                                    | 
|Argentina / Chile 1 |   | 53,853                             | 
|Peru                |   | 92,512                             | 
|Consolidated        | $ | 729,997                            | 

|1) | Includes the Pascua-Lama project, which straddles the
    border of Chile and Argentina.
|-- | ----------------------------------------------------------------------------------------

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

22.    Subsequent
  Events

Declaration of Dividend

On March 21, 2013, the Board of Directors declared a dividend
in the amount of $0.14 per common share, representing 20% of the cash generated
by operating activities during the three months ended December 31, 2012, payable
to shareholders of record on April 2, 2013. This dividend is expected to be
distributed on or about April 12, 2013.

Acquisition of New Gold Interests

Salobo

On February 28, 2013, the Company entered into an agreement to
acquire from Vale an amount of gold equal to 25% of the life of mine gold
production from its currently producing Salobo mine, located in Brazil. Silver
Wheaton made a total upfront cash payment of $1.33 billion on March 12, 2013
and, in addition, will make ongoing payments of the lesser of $400 per ounce of
gold (subject to an inflationary adjustment of 1% beginning in the fourth year)
or the prevailing market price per ounce of gold delivered. Vale is in the
process of expanding the mill throughput at the Salobo mine to 24 million tonnes
per annum (Mtpa) from its current 12 Mtpa. If the expansion to 24 Mtpa is not
completed by December 31, 2016, Silver Wheaton would be entitled to a gross up
(a temporary increased percentage of gold production) based on the pro-rata
achievement of the target production. If throughput capacity is expanded above
28 Mtpa within a predetermined period, Silver Wheaton will be required to make
an additional payment to Vale based on a set fee schedule ranging from $67
million up to $400 million, dependent on the timing and scale of any expansion.

Sudbury

On February 28, 2013, the Company entered into an agreement to
acquire from Vale an amount of gold equal to 70% of the gold production from
certain of its currently producing Sudbury mines located in Canada, including
the Coleman mine, Copper Cliff mine, Garson mine, Stobie mine, Creighton mine,
Totten mine and the Victor project for a period of 20 years. Silver Wheaton made
a total upfront cash payment on March 12, 2013 of $570 million plus warrants to
purchase 10 million shares of Silver Wheaton common stock at a strike price of
$65, with a term of 10 years. In addition, Silver Wheaton will make ongoing
payments of the lesser of $400 per ounce of gold or the prevailing market price
per ounce of gold delivered.

New Credit Facilities

On February 28, 2013, the Company entered into two new
unsecured credit facilities, comprised of (i) a $1 billion revolving credit
facility having a 5 year term (the Revolving Facility); and (ii) a $1.5
billion bridge financing facility having a 1 year term (the Bridge Facility).
The Revolving Facility and Bridge Facility replaced the $400 million Revolver
Loan and the Term Loan, with the latter being repaid in full on February 22,
2013. Silver Wheaton has committed to use 100% of the net proceeds from the
issuance of equity securities or debt securities to repay the Bridge Facility.
The Bridge Facility is available for up to two drawdowns until May 31, 2013,
after which the amount available under the Bridge Facility shall be reduced to
the then outstanding balance. The Revolving Facility can be drawn down at any
time to finance acquisitions, investments or for general corporate purposes.

Until June 30, 2013, at the Companys option, amounts drawn
under the Bridge Facility incur interest at either (i) LIBOR plus 1.70% or; (ii)
the Bank of Nova Scotias Base Rate plus 0.70% . After June 30, 2013, at the
Companys option, amounts drawn under the Bridge Facility incur interest based
on the Companys leverage ratio at either (i) LIBOR plus 1.20% to 2.20% or; (ii)
the Bank of Nova Scotias Base Rate plus 0.20% to 1.20% . The interest rates
applicable to any amounts outstanding under the Bridge Facility will increase by
0.25% on each 90 day anniversary of the date of execution of the Bridge
Facility. A funding fee of 0.25% is applicable to both the principal amount of
either drawdown under the Bridge Facility as well as to any amounts outstanding
under the Bridge Facility at April 30, 2013. In addition, any amounts
outstanding under the Bridge Facility on May 29, 2013, August 27, 2013 and
November 25, 2013 are subject to a duration fee of 0.50%, 0.75% and 1.00%,
respectively.

At the Companys option, amounts drawn under the Revolving
Facility incur interest based on the Companys leverage ratio at either (i)
LIBOR plus 1.20% to 2.20% or; (ii) the Bank of Nova Scotias Base Rate plus
0.20% to 1.20% . Undrawn amounts under both facilities are subject to a stand-by
fee of 0.24% to 0.44% per annum, dependent on the Companys leverage ratio.

2012 ANNUAL REPORT


---

Notes to the Consolidated Financial Statements
  Years Ended December 31, 2012 and 2011 (US Dollars)

Under the new credit facilities, the Company is required to maintain a leverage ratio less than or equal to 3.5:1 (4.5:1 during the six month period following any acquisition greater than $400 million) and a tangible net worth greater than 80%
of the tangible net worth at September 30, 2012 plus 50% of the positive net earnings for each fiscal quarter thereafter.

On March 11, 2013, the Company made a drawdown on the Bridge Facility of $1.09 billion to partially fund the upfront cash payment on the Sudbury and Salobo gold interests.

2012 ANNUAL REPORT


---

CORPORATEINFORMATION

|CANADA  HEAD OFFICE                    | TRANSFER AGENT                            
|--------------------------------------- | ------------------------------------------
|Silver Wheaton Corp.                    | CIBC Mellon Trust Company                 
|Park Place, Suite 3150                  | 1600 - 1066 West Hastings Street          
|666 Burrard Street                      | Vancouver, BC V6E 3X1                     
|Vancouver, BC V6C 2X8                   |                                           
|Canada                                  | Toll-free in Canada and the United States:
|T: 1 604 684 9648                       | 1 800 387 0825                            
|F: 1 604 684 3123                       |                                           
|                                        | Outside of Canada and the United States:  
|CAYMAN ISLANDS OFFICE                   | 1 416 682 3860                            
|Silver Wheaton (Caymans) Ltd.           |                                           
|Unit #5 - 201 Governors Square          | E: inquiries@canstockta.com               
|23 Lime Tree Bay Avenue                 |                                           
|P.O. Box 1791 George Town, Grand Cayman | AUDITORS                                  
|Cayman Islands KY1-1109                 | Deloitte LLP                              
|                                        | Vancouver, BC                             
|STOCK EXCHANGE LISTING                  |                                           
|Toronto Stock Exchange: SLW             | INVESTOR RELATIONS                        
|New York Stock Exchange: SLW            | Patrick Drouin                            
|                                        | Vice President,                           
|DIRECTORS                               | Investor Relations                        
|Lawrence Bell                           | T:   1 604 684 9648                       
|George Brack                            | TF: 1 800 380 8687                        
|John Brough                             | E:   info@silverwheaton.com               
|Peter Gillin                            |                                           
|Douglas Holtby, Chairman                |                                           
|Eduardo Luna                            |                                           
|Wade Nesmith                            |                                           
|Randy Smallwood                         |                                           
|                                        |                                           
|OFFICERS                                |                                           
|Randy Smallwood                         |                                           
|President & Chief Executive Officer     |                                           
|                                        |                                           
|Curt Bernardi                           |                                           
|Senior Vice President,                  |                                           
|Legal & Corporate Secretary             |                                           
|                                        |                                           
|Gary Brown                              |                                           
|Senior Vice President &                 |                                           
|Chief Financial Officer                 |                                           
|                                        |                                           
|Haytham Hodaly                          |                                           
|Senior Vice President,                  |                                           
|Corporate Development                   |                                           

---















SILVER WHEATON CORP.666 BURRARD STREET, SUITE 3150,
      VANCOUVER, BC V6C 2X8, CANADAT: 1 604 684
      9648      F: 1 604 684
      3123     
  WWW.SILVERWHEATON.COM


---