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Yes I really like SLW for a silver and gold play, plus it pays dividends.
Trying to decide how to play Silver with a multiplyer.
I have a 3X silver ETF and several silver miners.
Thinking, thinking ...
Then I got it.
SLW
I am in AGAIN ( 7 years later ) this morning.
SLW - Fast Money CNBC BUY pick: The "Fast Money" traders share their final trades of the day.
Brian Kelly is a buyer of SLW.
Silver prices have been heavily manipulated down and controlled through the paper market. What we need is for the paper market manipulation to stop so silver can rise again like it should and SLW with it.
Ultra Cool page. Good effort.
We have streaming real time. SLW, AU and AG.
http://pennystockjournal.blogspot.ca/2014/01/silver-wheaton-corp-slwt.html
Well...sometimes its tough to catch bottom. I don't know if this is bottom or not but its real close to a good buy at these levels imo.
No ...
If you could get $21.50 that would be great.
Why under $20? But yes, I have been in and out of SLW below $20, and back in today at $22.05.
Good luck.
Do you think it's going below 20 soon?
SLW top pick article silver/gold play: "Silver Wheaton trades on the NYSE under the symbol SLW and on the TSX under SLW.
Shares Outstanding: 357.4 million
Recent Stock Price: $22.13
Market Cap: $7.93 billion
- Silver Wheaton is perhaps the least risky stock on this list since the company is not a silver miner, but a streamer. In fact, Silver Wheaton is the largest precious metals streaming company in the world, bigger than its competitors Franco-Nevada (FNV), Royal Gold (RGLD) and Sandstorm Gold (SAND). Silver Wheaton is also the only company on this list which pays a dividend.
- Silver Wheaton spreads out its risk around the world at different projects. The company enters into agreements where, in exchange for an upfront cash deposit, the company has a right to purchase at a low fixed cost (typically $4 to $6 an ounce per silver or $400 an ounce per gold), all or a portion of the silver and/or gold production from the project.
Silver Wheaton has 19 of these agreements on assets in production, plus five development stage projects.
- One of the advantages to owning a stock like Silver Wheaton is that the company remains very profitable, even with much lower silver prices. For example, even as silver slumped in 2013, going from $30 to $20 an ounce, Silver Wheaton recorded net earnings (nine months ended 2013) of $281,595,000, with total cash flow from operations of $409.5 million!
- Silver Wheaton's low-cost production profile and solid cash flow has allowed the company to build up its silver and gold resource base very quickly. The company currently boasts a massive proven and probable silver reserves of 891.6 million ounces, in addition to 5.38 million ounces of gold.
This does not include another 529.5 million ounces of silver in the measured and indicated categories, in addition to 290.5 million ounces in inferred, and 1.85 million ounces of gold in M+I.
This resource base is one of the largest in the industry, only second to Fresnillo (OTCPK:FNLPF) and larger than both Pan American Silver (PAAS) and Silver Standard Resources (SSRI).
- Silver Wheaton currently derives around 80 percent of its revenue from the sale of silver and 20 percent of revenue from the sale of gold.
- For 2013, production is estimated to finish at 33.5 million silver equivalent ounces. That number is expected to grow slightly in 2014, but by 2017 it should reach 42.5 million ounces - a five-year production growth of 45 percent.
- As mentioned, Silver Wheaton currently pays a dividend and the current yield is 1.6 percent. The dividend policy is unique - dividends are linked to operating cash flows, with 20 percent of the average of the previous four quarter's operating cash flows are distributed to shareholders. This is a flexible and sustainable dividend policy in my view.
Bottom line? In terms of the best long-term picks in the gold and silver sector, I rank Silver Wheaton right at the top of the list."
http://seekingalpha.com/article/1964221-top-5-silver-stocks-for-2014-part-ii?source=yahoo
Ok so Pascua Lama is a dead thing for Silver Wheaton but more then dead it will become the albatross around SLW's neck.
Now we all know what dead things do when they are close to us they fester and smell and make the rest of the entity sick!
Ask yourselves what value SLW has with 2 times less the value of Pascua Lama in its current share evaluation and you will be close!
If not the bottom, very close. Maybe a 5-1 risk reward ratio over the next year, IMO? I am in. Good luck!
Is this bottom? Hello! Anyone home? Maybe its time to start picking up a few shares over the next few months.
A pickup anywhere under $20.00 looks safe ...
"Earlier this year, Silver Wheaton's $1.9 billion gold agreement with Vale (VALE) increased the company's total debt from $22 million in 2012 to $1.14 billion at the end of second quarter of 2013. However, the company reduced its debt by $143 million in the third quarter, bringing it down to $1.04 billion. With new projects added to Silver Wheaton's portfolio, I expect the company to generate substantial cash flows, helping it to reduce debt and function with increased financial flexibility."
SLW: "One incredibly attractive selling point of Silver Wheaton is that it negotiates all of its contracts over the long term at a low fixed cost. Because of these contracts, Silver Wheaton is able to purchase most of its silver at a fraction more than $4 per ounce and gold at around $400 per ounce, then turn around and profit from the difference between these prices and current silver and gold spot pricing. It would take a huge drop in metal prices for Silver Wheaton not to be wildly profitable.
Silver Wheaton is also absolved from any additional mine costs beyond its up-front payment and perhaps build-out milestone installments. Upkeep and maintenance, as well as future expansion, are fully the responsibility of the mine owner and not Silver Wheaton.
With predictable costs, a decent yield of 1.8%, and long-term built-in cash flow, there aren't too many reasons for short-sellers to be excited here."
http://www.fool.com/investing/general/2013/12/23/shorts-are-piling-into-these-stocks-should-you-be.aspx#.UrmUTfuozSg
You can add to any negativity that SLW will never get the proceeds from a single ounce of silver from Pascua Lama. Rather they will along with ABX be involved with legal penalties in fraudulent claims!
I disagree with SA article in part, as I see a 3-1 risk to reward ratio. In the next 12 months I see the downside being 10% about, or $18, and the upside being about 30%, or at least or $26.
IMO
Happy Holidays to all.
$SLW - Will Silver Wheaton Plummet Further?
http://seekingalpha.com/article/1913531-will-silver-wheaton-plummet-further?source=email_rt_article_readmore
Dec. 23, 2013 2:41 PM ET | About: SLW, Includes: GLD, SIL, SILJ, SLV, SLVP
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Shares of Silver Wheaton Corp. (SLW) have sharply decreased during December: The stock fell by 5.8% since the beginning of the month (up-to-date). The weak silver market, especially after last week's FOMC decision to taper QE3 by $10 billion, is also dragging down Silver Wheaton's stock. Gold and silver ETFs such as iShares Silver Trust (SLV), SPDR Gold Trust (GLD) have also suffered from the weakness of precious metals and sharply declined during December. Will Silver Wheaton continue to plunge? What should we expect from the company's performance in the fourth quarter?
Fourth-quarter report
The company is likely to release its fourth-quarter earnings report during the middle of January 2014. Until then, let's see how the company may have done during the quarter. Based on the company's expectations, production of gold and silver in the first three quarters of 2013, and the changes in the prices of precious metals, I guess the company's revenues will sharply decline in the fourth-quarter compared to the parallel quarter in 2012. The main reason for the drop in revenues is sharp fall in precious metal prices. The fall in prices will offset the expected rise in both gold and silver production. The table below summarizes the changes in the expected revenues of the company in the fourth quarter. It shows a 21% drop in revenues during the fourth-quarter of 2013, year over year.
(click to enlarge)
Let's turn to analyze the company's silver and gold production. Let's start with silver.
As you can see in the table below, the company's silver revenues are likely to decline by roughly 26%.
(click to enlarge)
The plunge in the price of silver will offset the potential rise in silver sales (in ounces).
Moreover, the company's gold production is likely to also rise by over 31%, which will nearly eliminate the 24% decline in the price of gold. Most of the expected rise in gold production is due to Silver Wheaton's acquired Sudbury and Salobo mines at the beginning of the year along with the rise in the company's 777 mine's production.
(click to enlarge)
Keep in mind, these sales volumes could be lower due to the gap between precious metals produced and sold. The delay in delivery could result in a much lower amount of precious metals sold. In particular, in the third-quarter of 2013, the company sold, on average, only 83% of its silver output. During the first nine months of 2013, this ratio was 86%. In the above calculations I assumed the ratio will be 90%; if the company sells sustainably less than its production, this could reduce even further its revenues.
In terms of profitability, in the third-quarter the company's profit margin fell from 72% in 2012 to 47% in 2013. This trend is likely to continue in the fourth-quarter due to thee reasons:
Low gold and silver prices: The sharp drop in precious metals prices will narrow the company's profit margin.
An increase in production costs: The cash cost of silver production rose by over 2% in the third-quarter; cash cost of gold production increased by over 27%. Higher cash costs are also likely to shrink the company's profit margins.
A rise in the share of gold revenues from total revenues: Gold has a lower profit margin than silver; therefore, the rise in share of gold revenues out of total revenues means Silver Wheaton's profitability will contract.
These factors suggest the company is likely to show another drop in profitability in the fourth-quarter. In such a case, this could also cut down Silver Wheaton's dividend payment for the next quarter.
Bottom line
The upcoming fourth-quarter earnings report isn't likely to show an increase in profit margin or revenues. Even Silver Wheaton's higher gold and silver production won't offset the sharp drop in precious metals prices. Further, the potential drop in profitability could result in a reduction in the company's future dividend payment. Finally, the ongoing weakness in the silver market is also likely to keep Silver Wheaton's stock low.
Yes, really good article.
$SLW - Silver Wheaton: A Bargain In Precious Metals
Dec 21 2013, 10:39 | about: SLW, includes: FNV, RGLD, SAND
http://seekingalpha.com/article/1910791-silver-wheaton-a-bargain-in-precious-metals?source=email_rt_article_readmore
Disclosure: I am long SLW. (More...)
... "Silver Wheaton Corp. (SLW) is the world's largest precious metal streaming company. The company was founded in 2004 and is headquartered in Vancouver, Canada. The firm does not own or operate mines, instead entering into contracts with production companies. The metal streaming business did not even exist until Silver Wheaton was created in 2004. I feel that the company is one of several large cap firms within the precious metals and minerals sector that offer a great opportunity for share appreciation in 2014. My positive investment thesis for Silver Wheaton Corp. is based upon nine key criteria, which include:
Key Selection Criteria
1. A large market capitalization.
2. A leadership position within a growing industry.
3. A dominant, or large, market share within its product mix.
4. A strong position internationally.
5. A strong balance sheet and high credit rating.
6. A high free cash flow number.
7. A low historical relative valuation as measured by price/sales and/or price/earnings ratios.
8. A strong dividend growth rate.
9. A catalyst of new revenue opportunities.
Capitalization
Silver Wheaton is a large-cap precious metals and minerals firm with a current capitalization of $7.4 billion.
Leadership
Silver Wheaton has maintained a leadership position in the materials industry, notably in the silver business. As one of the few large cap non-producing mining firms, Silver Wheaton has made itself difficult to compete against. Industry peers include Royal Gold (RGLD), Franco-Nevada (FNV) and Sandstorm (SAND), which are all primarily gold companies. Silver Wheaton's stream mix is roughly 80% silver and 20% gold contracts." ...
$SLW - Silver Wheaton: Where Is The Bottom?
Dec 10 2013, http://seekingalpha.com/article/1887561-silver-wheaton-where-is-the-bottom?source=email_rt_article_readmore
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
I wrote about Silver Wheaton (SLW) in April and May, and warned readers about short-term pressures the company was facing at the time. Silver Wheaton is still facing pressure, with Fed tapering coming closer, which might negatively impact gold (GLD) and silver (SLV) prices. However, when deflation fears abate and when inflation picks up, Silver Wheaton will benefit immensely and I see long-term gains for its shareholders, and the stock might bottom in the next 6 to 18 months, depending on the effects of Fed tapering on the economy and inflation.
Negative earnings cycle continues
Silver Wheaton remains in the fourth stage of the earnings maturation cycle. This stage is reflected by declining earnings and revenue, shrinking margins and negative revisions of analyst consensus estimates. The company is doing everything it can to boost its silver and gold streams, and production and sales of silver equivalent ounces increased in the last couple of quarters, partially offsetting declining spot prices. This was achieved by increased gold production, while silver production remained roughly the same since Q3 2012. Silver equivalent production increased at least 10% over the last 6 quarters, and at an average rate of 20.7% over the same time. This has kept revenue from falling significantly along with spot prices of silver and gold, but the increase in production will not be enough to stop a decline in revenue growth if the spot prices keep falling. TTM earnings per share declined over the last couple of quarters, and a further decline is expected, which is reflected in the falling analyst consensus estimates.
The company maintained its 2013 production goal of 33.5 million of silver equivalent ounces, while the 2017 production goal is now 42.5 million ounces from the previous goal of 49 million. This reduction in 2017 guidance is due to the delay at Pascua-Lama, although it was partially offset by the addition of the gold stream from Hudbay's Constancia project. This means that production will be 25% higher in 2017 than in 2013.
Weak inflation leads to low silver and gold prices
Gold and silver prices are largely dependent on the level of inflation. They perform well when inflation is high, and perform poorly in periods of low inflation and deflation. Gold and silver topped in 2011, coinciding with the top of the highest CPI levels since early 2008. Prior to the breakdown in gold and silver prices in the last two years, many believed that QE will prop up their prices, and this has not been true, because QE did not manage to move inflation higher since mid-2011. Gold and silver moved lower this year also after inflation kept falling, and on fears that the Fed will start tapering, which in turn might lead to even lower inflation or deflation.
This will pressure the price of gold and silver, and at the same time the price of Silver Wheaton, at least until inflation picks up, and when there is evidence that the tapering of QE will not lead to even lower inflation. I do not believe that a reduction of QE will lead to deflation, and the Fed stated that they will not reduce QE until the economy is on solid footing. And I also believe that the massive monetary stimulus all over the world will eventually result in rising inflation, and that is the time Silver Wheaton will benefit. But this is still not visible, and it might take a couple of years, when and if the world economy begins to recover significantly.
(click to enlarge)
Source: October CPI report
Silver Wheaton to outperform once again when gold and silver prices rebound
Silver Wheaton has performed very well since the company was established in 2004. Early investors are still up close to 600%, while gold is up less than 200% over the same time. Silver Wheaton has also performed better than Global X Silver Miners ETF (SIL), Market Vectors Gold Miners (GDX) and spot silver since gold and silver prices peaked in 2011. Only gold performed better, which is to be expected, since gold is down 34% from its peak, while silver is down 60%. While there is a possibility of deflation in the future, the vast monetary expansion across the world is bound to produce inflation down the line, and I believe that Silver Wheaton is well positioned to benefit as gold and silver prices rebound after inflation picks up.
(click to enlarge)
Silver Wheaton price performance versus GLD and SLV since 2004. Source: Yahoo! Finance
(click to enlarge)
Silver Wheaton price performance from GLD peak in September 2011. Source: Yahoo! Finance
Conclusion
Although I believe that Silver Wheaton's price will be pressured in the next 6 to 18 months, as the Fed begins tapering, and as fears of deflation present themselves, I also believe that Silver Wheaton will provide an excellent buying opportunity for long-term investors in the mentioned period of 6 to 18 months. Silver Wheaton will probably find its bottom in that time-frame, if not sooner, depending on the outcome of Fed tapering and inflation expectations. When that happens, Silver Wheaton will once again outperform spot prices of gold and silver, as well as most of its peers. I remain on the sidelines until I see the consequences of Fed tapering, and the effects on the economy and inflation.
SLW favorite silver/gold play article: "Our favorite play in all of those names remains Silver Wheaton due to the risk/reward scenario and our outlook for silver (but the company does have some gold exposure)".
http://seekingalpha.com/article/1871661-commodities-today-is-gold-entering-oversold-territory?source=yahoo
Silver/Gold play w/ Dividends, SLW DD: http://seekingalpha.com/article/1834982-silver-wheaton-price-weakness-presents-long-term-buying-opportunity?source=yaho
Bottom Line? If You Like Silver, SLW is Still The Way to Go
Silver Wheaton's business model is still far superior to mining companies since the company receives precious metals at a fixed cost per ounce. This model allows the company to remain very profitable, even at $21 silver.
http://seekingalpha.com/article/1847901-silver-wheaton-continues-to-grow?source=yahoo
When looking at the cash flow statements, Silver Wheaton recorded an operational cash flow of $120.9M for the first three months of this year, and an even more impressive $413.7M for the first nine months of 2013. The majority of the cash flow was used to repay $103M of debt, which I think is a good move. The company reported a net cash increase of $25.7M, and this is caused by the exercise of warrants, which resulted in a $48.8M cash injection.
http://seekingalpha.com/article/1847292-all-the-more-reason-to-buy-silver-wheaton?source=yahoo
Silver Wheaton (SLW), the largest precious metals streaming company in the world, signs long-term contracts and pays upfront fee to miners for the right to buy all or part of a miner's production at a low fixed cost. The Vancouver, Canada based company recently announced a couple of new gold streaming deals, one with Sandspring Resources (OTC:SSPXF) and the other with Hudbay Minerals (HBM). These new gold streaming agreements will add to already increasing gold contribution to SLW's total revenue. We think the increased percentage of gold in SLW's portfolio provides more stability and this increased diversification is positive for the company.
http://seekingalpha.com/article/1851391-can-silver-wheaton-turn-it-around?source=yahoo
But the company's financial stability and ongoing growth towards new projects are likely to keep Silver Wheaton's revenues rising and partly offset the adverse effect of the price of silver.
All the more reason to buy SLW:
http://seekingalpha.com/article/1847292-all-the-more-reason-to-buy-silver-wheaton
$SLW - Silver Wheaton Continues To Grow
Nov 19 2013, 03:05 http://seekingalpha.com/article/1847901-silver-wheaton-continues-to-grow?source=email_rt_article_readmore
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Introduction
In this article I'll have a closer look at Silver Wheaton's (SLW) third quarter results, which were released last week. Silver Wheaton is by far the largest silver streaming company, and I'll provide my view on the company's financial results and its balance sheet. This will result in my investment thesis at the end of this article wherein I'll also explain a possible option strategy.
My view on the financial results
Silver Wheaton had an attributable production of 8.9 million silver-equivalent ounces (consisting of 6.8Moz of pure silver and 34,800 ounces of gold) and sold 7.8Moz AgEq. This resulted in a revenue of $161.3M, which is a 3% increase compared to the same quarter last year. This is a decent result as the gold and silver price is obviously much lower than in the same period in 2012. Silver Wheaton reported net earnings of $77.1M or $0.22/share. However, as I explained several times in previous articles, it makes more sense to look at the cash flow statements of mining companies instead of at the net profits, as the cash flows give a better impression of the underlying business.
(click to enlarge)
When looking at the cash flow statements, Silver Wheaton recorded an operational cash flow of $120.9M for the first three months of this year, and an even more impressive $413.7M for the first nine months of 2013. The majority of the cash flow was used to repay $103M of debt, which I think is a good move. The company reported a net cash increase of $25.7M, and this is caused by the exercise of warrants, which resulted in a $48.8M cash injection.
Silver Wheaton is trading at 14 times its annualized operational cash flow which seems to be quite expensive. However, the company plans to increase its production rate by 27% by 2017. Using the current silver price, Silver Wheaton is trading at 11 times its 2017 cash flow, which is a more acceptable ratio.
(click to enlarge)
My view on the balance sheet
Moving over to the balance sheet, Silver Wheaton had a working capital position of $48.1M and a current ratio of 3.30, which is very good. Keep in mind a current ratio higher than one means the company has sufficient current assets to cover its current liabilities.
Even after paying down $103M of debt, Silver Wheaton still has $1.04B in outstanding bank debt, compared to just $50M at the same period last year. This might sound bad, but Silver Wheaton's leverage ratio is still quite low, as the company's debt and liabilities are quite small compared to the company's balance sheet. In excess of 75% of the balance sheet consists of equity, so the $1B+ in debt isn't a problem at all, and might be very accretive in the longer term, as this debt issue made it possible for Silver Wheaton to acquire several additional important precious metals streams, such as the stream on Hudbay Minerals' (HBM) Constancia project in Peru.
Investment Thesis
Even though Silver Wheaton is currently quite expensive it might be interesting to take a position now the share price is relatively low, as investors should be prepared for a 27% production growth in just 4 years. On top of that, I've got the impression Silver Wheaton is trying to diversify itself and is now focused on adding more gold to its production mix, as it recently announced a deal with Sandspring Gold (OTC:SSPXF), whereby Silver Wheaton will cough up $148.5M in staged payments in exchange for a gold streaming deal. As per the terms of the agreement, SLW would be entitled to an average 24,600 oz per year at a fixed price of $400/oz (inflation adjusted). This will increase SLW's current gold production by approximately 1/6th, if the deal goes through.
Most of my readers know I prefer to write put options instead of just buying the stock. Fortunately the Silver Wheaton options have a lot of volume, and I'm particularly looking at the January 2014 P20's at $0.62 for an annualized gross yield of 18.6% and a more conservative P16 June 2014 at $0.64. The more aggressive bulls might prefer to write an in-the-money put option such as a P25 January 2014 at $3.50.
I currently have no position in Silver Wheaton, but might initiate one at the right price, and I might write put options as explained in this article.
Additional disclosure: Currently no position, but I might write an out of the money put option as explained in this article
Looks like silver and gold is going to have another run.
It's because gold is up, slw is following gold a lot.
I guess "THEY" liked the earnings call. Silver and SLV down this morning and SLW is up a bit.
Toofuzzy
Conf call transcript
http://www.earningsimpact.com/Transcript/84388/SLW/Q3-2013-Earnings-Call
JUAN ABARCA (jabarca@bnamericas.com) recommends you read the following article from Business News Americas. Personal message from JUAN ABARCA: ABX
Click here to register for a free 2-week trial subscription to Business News Americas, Latin America's leading business information service, covering 11 different industries.Business News Americas
--------------------------------------------------------------------------------
Bárbara Salinas
Lawyer
Legal issues surrounding Canadian miner Barrick Gold's troubled Pascua Lama gold-silver project on the border of Chile and Argentina have been hitting the headlines in the past few months.
In addition to the suspension of work on the project pending construction of a water management system, Pascua Lama is facing two new legal challenges: a criminal lawsuit filed against the company over alleged falsification of public documents, and a new constitutional injunction that was filed in September.
Bárbara Salinas is the lawyer behind both motions, and BNamericas spoke with her to know more details about the criminal lawsuit being pursued.
BNamericas: What is the basis for the lawsuit you filed in June?
Salinas: In 2004, Chile signed a mining cooperation agreement with Argentina in order to move forward with the Pascua Lama project. One of the elements of the signed protocol is that it establishes the properties that are part of the Pascua project [the Chilean portion of the project], and there are a number of properties that Barrick claims are its own. However, a number of these properties are subject to dispute.
The company I represent, Canadian firm Mountain Star Gold, has contended several issues at these properties that have been subject to legal dispute since 2001. That year, a civil court in Santiago issued a ruling prohibiting any transaction on the mining claims and properties that are being disputed. The ruling is still in force.
So what is serious here is how it was possible that, with this limitation in force since 2001, Barrick, as well as the Chilean government, signed a protocol with Argentina. We think it should be declared void.
BNamericas: What is the current situation of the lawsuit?
Salinas: The highly complex crimes division of the prosecutor's office of Santiago's centro-norte district is currently carrying out the investigation. The lawsuit has made slower progress than we would like it to have as the prosecutor has the complete authority to determine the speed with which the investigation takes place.
BNamericas: Are there any time limits as to how long the investigation can go on for?
Salinas: The investigation stage can go on for a long time, one or two years; this stage is called pre-charge investigation. As the plaintiff we can provide the prosecutor's office with additional material for the investigation, and if the merits are there, then the prosecutor's office can proceed to charge Barrick's legal representatives.
If the attorney's office decides to charge the representatives with the crimes we are alleging, which are falsification and malicious use of public documents, then from that moment there's a maximum of two years before it goes to trial.
$SLW - Silver Wheaton expands precious metal stream on the Constancia Project to include gold
http://www.silverwheaton.com/News1/PressReleases/PressReleaseDetails/2013/Silver-Wheaton-expands-precious-metal-stream-on-the-Constancia-Project-to-include-gold/default.aspx
VANCOUVER, Nov. 4, 2013 /CNW/ - Silver Wheaton Corp. ("Silver Wheaton" or the "Company") (TSX: SLW) (NYSE: SLW) is pleased to announce that it has agreed to acquire from Hudbay Minerals Inc. ("Hudbay") (TSX:HBM) (NYSE:HBM) 50% of the life of mine gold production from its Constancia Project ("Constancia"), located in southern Peru, for US$135 million. Silver Wheaton's August 2012 silver stream purchase agreement ("Original Agreement") for 100% of the life of mine silver production from Constancia has now been amended to include 50% of the life of mine gold production ("New Agreement").
TRANSACTION HIGHLIGHTS
Adds to Silver Wheaton's growth profile
Silver Wheaton will receive 50% of the life of mine gold production from Constancia.
Forecast average annual attributable gold production1 from Constancia is anticipated to be approximately 35,000 gold ounces over the first five years, and 18,000 ounces life of mine. The mine life is currently estimated at around 16 years.
Aligns the interests of both companies
Hudbay will retain 50% of gold production.
Timing of the upfront payment is linked to Constancia's capital expenditures.
Maintains conservative balance sheet
Silver Wheaton has the option to make the initial upfront payment in either cash or Silver Wheaton shares, calculated at the time the payment is made2.
Updating production guidance
Silver Wheaton has revised 2017 guidance to reflect recent developments. 2017 guidance is now forecast to be 42.5 million silver equivalent ounces3 including 210 thousand ounces of gold.
2013 silver equivalent production is still expected to exceed 33.5 million ounces3 including 145 thousand ounces of gold.
"We are very encouraged by Constancia's development and the inclusion of Pampacancha into the mine plan," said Randy Smallwood, Silver Wheaton's President and Chief Executive Officer. "Given the higher gold grades present in the Pampacancha deposit, we see this gold stream as an economic opportunity for both parties. Hudbay has proven to be a strong partner both in Canada and in Peru, where we believe they are setting the standard for building strong social license in South America. This gold stream, our second precious metal stream on Constancia, clearly demonstrates the win-win nature of our agreements and further endorses the competitiveness of Silver Wheaton's streaming model."
1 Forecast gold production attributable to Silver Wheaton is based on fixed recoveries as defined in the New Agreement and the most recent mine plan but before payable gold terms.
2 If Silver Wheaton shares are used, the number of common shares will be calculated based on the volume weighted average trading price of the Company on the Toronto Stock Exchange for the ten consecutive trading days immediately prior to the date the consideration is payable.
3Silver equivalent production forecast assumes a gold/silver ratio of 53.3:1.
TRANSACTION DETAILS
Silver Wheaton, through its wholly owned subsidiary Silver Wheaton (Caymans) Ltd., has agreed to acquire 50% of the life of mine gold production from Hudbay's Constancia Project, which includes the recently delineated Pampacancha deposit. The Company will pay a wholly owned subsidiary of Hudbay an initial consideration of US$135 million once US$1.35 billion in capital expenditure has been incurred at Constancia. Silver Wheaton has the option to make the initial consideration in either cash or Silver Wheaton shares, calculated with the number of shares determined at the time the payment is made1. In addition, Silver Wheaton will make ongoing payments of the lesser of US$400 per ounce of gold2 (subject to an inflationary adjustment of 1% beginning in the fourth year after completion is achieved) or the prevailing market price per ounce of gold delivered.
Recovery rates for gold have been fixed given the early nature of the metallurgical test work on gold recoveries from the Pampacancha deposit. Recoveries will be set at 55% for the Constancia deposit and 70% for the Pampacancha deposit until the Company's portion of gold reserves3 has been delivered to Silver Wheaton, after which actual recoveries will be applied.
The gold stream will be subject to the existing completion test that was laid out in the Original Agreement. The Constancia completion test requires Hudbay to complete the Constancia processing plant to at least 90% of expected throughput and silver recovery by December 31, 2016. If Hudbay fails to satisfy the requirements of the completion test, Silver Wheaton will be entitled to continued delivery of 100% of the gold production from Hudbay's 777 mine. If the completion test has not been satisfied by December 31, 2020, Silver Wheaton will be entitled to a proportionate return of the upfront cash consideration relating to Constancia. In addition, Silver Wheaton will be entitled to additional compensation in respect of the gold stream should there be a delay in achieving completion or mining the Pampacancha deposit beyond the end of 2018.
1 If Silver Wheaton shares are used, the number of common shares will be calculated based on the volume weighted average trading price of the Company on the Toronto Stock Exchange for the ten consecutive trading days immediately prior to the date the consideration is payable.
2 Ongoing payment reset after 40 years to $550 per ounce of gold, increasing by 1% per year thereafter.
3 In the New Agreement, recoveries will be fixed until Silver Wheaton receives 265 thousand payable ounces of gold.
UPDATED PRODUCTION GUIDANCE
Silver Wheaton is revising its five year production guidance given recent developments. In 2017, annual attributable production is anticipated to increase by 45% compared to 2012 levels, growing to approximately 42.5 million silver equivalent ounces1, including 210,000 ounces of gold. This is a decrease of 13% from previous 2017 production guidance primarily due to a delay at Barrick Gold Corp.'s Pascua-Lama project partially offset by the additional gold forecast to be received from Constancia.
2013 silver equivalent production is still expected to exceed 33.5 million ounces.
Production guidance is "forward-looking information". See "Cautionary Note Regarding Forward-Looking Statements" for material risks, assumptions and important disclosure relating to such guidance.
ABOUT CONSTANCIA PROJECT
Constancia is located in an established mining district in the province of Chumbivilcas in southern Peru. It is forecast to be a large, low-cost and long-life open pit mine, producing copper, molybdenum, silver and gold. With key environmental permits in place, strong community support, and engineering and design work essentially complete, first production is anticipated in the second half of 2014 and full production in 2015. Forecast average annual gold production attributable to Silver Wheaton2 from Constancia is anticipated to be approximately 35,000 gold ounces over the first five years and 18,000 ounces life of mine. The mine life is currently estimated at around 16 years.
1 Silver equivalent production forecast assumes a gold/silver ratio of 53.3:1
2 Forecast production attributable to Silver Wheaton is based on fixed recoveries as defined in the New Agreement and the most recent mine plan.
Silver Wheaton's Reserves and Resources for Constancia Gold:
ATTRIBUTABLE RESERVES & RESOURCES TO SILVER WHEATON (1,2,3,4,5,6,8,9,10)
Mine Category Tonnage Grade Contained Process Recovery(7)
Mt Au g/t Au Moz %
Constancia (50%) Proven 174.6 0.04 0.24 55%
Pampacancha (50%) 4.9 0.32 0.05 70%
Constancia (50%) Probable 27.0 0.04 0.03 55%
Pampacancha (50%) 18.5 0.28 0.16 70%
Total Proven & Probable 225.0 0.07 0.49 61%
Constancia (50%) Measured 59.6 0.04 0.07
Constancia (50%) Indicated 172.0 0.03 0.19
Total Measured & Indicated 231.7 0.03 0.26
Constancia (50%) Inferred 109.5 0.03 0.11
Pampacancha (50%) 2.0 0.21 0.01
Total Inferred 111.5 0.03 0.13
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. The 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) are Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); Samuel Mah, M.A.Sc., P.Eng. (Senior Director, Project Evaluations), both employees of the Company (the "Company's QPs").
4. The Mineral Resources reported in the above tables are exclusive of Mineral Reserves.
5. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
6. Mineral Reserves and Mineral Resources 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.
a. Resources for the Constancia and Pampacancha deposits are reported as of August 23, 2011 and April 2, 2012, respectively.
b. Reserves for both Constancia and Pampacancha deposits are reported as of August 8, 2012.
7. Process recoveries are the fixed percentages of gold in a saleable product (doré or concentrate) recovered from Constancia and Pampacancha mined ore at the applicable site process plant as per the Company's Precious Metals Purchase Agreement.
8. Mineral Reserves and Resources are estimated using appropriate process recovery rates and commodity prices including $1,150 per ounce gold.
9. The scientific and technical information in this document regarding Constancia and Pampacancha was sourced by the Company from Hudbay's annual information Form filed on SEDAR (www.sedar.com) on March 28, 2013.
10. Gold is produced as a by-product metal; therefore, the economic cut-off applied to the reporting of gold Resources and Reserves will be influenced by changes in the commodity prices of other metals at the time.
Full Reserve and Resource tables are available on the Company's website, www.silverwheaton.com. Updated Reserves and Resources incorporating year-end 2013 estimates will be included in the Company's 2013 AIF.
Mr. Neil Burns, Vice President of Technical Services, is a "qualified person" as such term is defined under National Instrument 43-101, and has reviewed and approved the information on mineral reserves and mineral resources disclosed in this news release.
$SLW - Silver Wheaton sinks on Pascua-Lama suspension
http://seekingalpha.com/currents/post/1375282?source=email_rt_mc_readmore
Barrick Gold's (ABX -5.6%) surprise move to suspend construction at its Pascua-Lama mine in South America also affects Silver Wheaton (SLW -6.7%), which in 2009 bought 25% of the mine's silver production, paying cash in exchange for future silver sales at a discounted price.
SLW says it is now entitled to silver output from three of ABX's currently producing mines - the Lagunas Norte, Pierina and Veladero mines - until the end of 2016 to make up for the production it is losing from Pascua-Lama.
SLW also agrees to extend a completion test deadline on Pascua-Lama until the end of 2017; SLW says it still expects its silver output to top 33.5M silver equiv. oz. this year.
$SLW - Silver Wheaton provides update on Pascua-Lama and extends Barrick silver stream agreements
http://seekingalpha.com/news-article/8020682-silver-wheaton-provides-update-on-pascua-lama-and-extends-barrick-silver-stream-agreements?source=email_portfolio&ifp=0
VANCOUVER, Oct. 31, 2013 /PRNewswire/ - Silver Wheaton Corp. (SLW) ("Silver Wheaton" or the "Company") (TSX:SLW) (NYSE:SLW) today provides an update and announces an amendment to the silver streaming agreement with Barrick Gold Corporation ("Barrick") regarding the Pascua-Lama project.
As stated in Barrick's Third Quarter Financials news release dated October 31, 2013:
"Barrick has decided to temporarily suspend construction activities at Pascua-Lama, except those required for environmental protection and regulatory compliance& The decision to re-start will depend on improved project economics such as go-forward costs, the outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements."
"The ramp down will be carried out in a way that allows for an efficient and effective re-start when conditions warrant. In the meantime, the company will update and refine capital cost estimates and stage the project's remaining development into distinct phases with specific work programs, budgets and objectives. This staged approach will also facilitate more efficient planning and execution, more effective capital deployment, and improved cost control. The company will also continue to explore further opportunities to improve the project's risk-adjusted returns, such as strategic partnerships and royalty or other income streaming agreements. Most importantly, Barrick's decision will maintain the option value of this major world class resource and its potential to generate significant cash flows during its 25 year mine life and beyond."
In Silver Wheaton's original contract with Barrick, throughout 2014 and 2015 Silver Wheaton will be entitled to silver production from three of Barrick's currently producing mines, the Lagunas Norte, Pierina, and Veladero mines (collectively "Barrick's Other Mines"), to the extent of any production shortfall at Pascua-Lama, until Barrick satisfies the completion test.
As part of the newly revised agreement with Barrick, Silver Wheaton will now be entitled to the production from Barrick's Other Mines for an additional year (until the end of 2016) to the extent of any production shortfall at Pascua-Lama.
The original contract with Barrick provided Silver Wheaton with a completion test, requiring Barrick to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015. Silver Wheaton amended the contract earlier this year, as noted in Silver Wheaton's July 1, 2013 news release, to extend the completion test deadline by one year. Given the developments announced today by Barrick and the extra year of silver production to be received from Barrick's Other Mines, Silver Wheaton has agreed to extend the completion test deadline an additional year to December 31, 2017. According to the silver purchase agreement, if the requirements of the completion test have not been satisfied by the amended completion date, 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 any silver delivered up to that date.
"We see Barrick's decision to suspend operations until they have full access to the Pascua-Lama site as a fiscally prudent approach, which under the current circumstances, should enhance the project's capital efficiency and improve the project's economics going forward," said Randy Smallwood, Silver Wheaton's President and Chief Executive Officer. "While we would like to see more certainty regarding Pascua-Lama, we view the additional year of silver revenue from three of Barrick's other mines as adequate compensation to justify extending the outside completion test date by a year. Pascua-Lama is a world class gold and silver project, and we are encouraged by Barrick's approach to ensure better cost containment and continued investment to address social, environmental and regulatory obligations, as we view this strategy as crucial for the project moving forward. We look forward to continuing to work with Barrick."
Silver Wheaton is currently reviewing its 2017 production forecast. Production for 2013 is still expected to exceed 33.5 million silver equivalent ounces.
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 and 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 and gold; the absence of control over mining operations from which Silver Wheaton purchases silver or 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 or 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.
SOURCE Silver Wheaton Corp.
$SLW - Silver Wheaton Remains Overvalued Despite Stock Price Dip
http://seekingalpha.com/article/1756392-silver-wheaton-remains-overvalued-despite-stock-price-dip?source=email_rt_article_readmore
At Valuentum, we think a comprehensive analysis of a firm's discounted cash-flow valuation, relative valuation versus industry peers, as well as an assessment of technical and momentum indicators is the best way to identify the most attractive stocks at the best time to buy. This process culminates in what we call our Valuentum Buying Index, which ranks stocks on a scale from 1 to 10, with 10 being the best.
If a company is undervalued both on a DCF and on a relative valuation basis and is showing improvement in technical and momentum indicators, it scores high on our scale. In Silver Wheaton's (SLW) case, we think the firm is overvalued. We think it is fairly valued at $17 per share, representing about a 25% downside from today's levels based on our fair value estimate. Silver Wheaton posts a VBI score of 4 on our scale, reflecting our 'oveervalued' DCF assessment of the firm, its unattractive relative valuation versus peers, and bullish technicals. In our analysis we compare Silver Wheaton to peers Cliffs Natural (CLF), and Rio Tinto (RIO).
Investment Considerations
Investment Highlights
• Silver Wheaton earns a ValueCreation™ rating of EXCELLENT, the highest possible mark on our scale. The firm has been generating economic value for shareholders for the past few years, a track record we view very positively. Return on invested capital (excluding goodwill) has averaged 24.7% during the past three years.
• Silver Wheaton is the world's largest precious metal streaming company, and the world's second largest silver company. The company does not own or operate any mines; streaming allows the firm to purchase a fixed percentage of silver/gold produced from a mine.
• Silver Wheaton has an excellent combination of strong free cash flow generation and low financial leverage. We expect the firm's free cash flow margin to average about 41.8% in coming years. Total debt-to-EBITDA was 0.1 last year, while debt-to-book capitalization stood at 1.6%.
• Silver Wheaton's operating costs are essentially fixed at approximately $4 per ounce of silver produced and $400 per ounce of gold produced. The company does not hedge its silver or gold production, presenting upside and downside risks.
• Management believes its model allows the firm to consistently generate the highest cash operating margins in the industry, but we're not sure that such hefty margins are sustainable over the long haul (given competition from all profit-seeking entities).
Business Quality
Economic Profit Analysis
The best measure of a firm's ability to create value for shareholders is expressed by comparing its return on invested capital (ROIC) with its weighted average cost of capital (WACC). The gap or difference between ROIC and WACC is called the firm's economic profit spread. Silver Wheaton's 3-year historical return on invested capital (without goodwill) is 24.7%, which is above the estimate of its cost of capital of 10.8%. As such, we assign the firm a ValueCreation™ rating of EXCELLENT. In the chart below, we show the probable path of ROIC in the years ahead based on the estimated volatility of key drivers behind the measure. The solid grey line reflects the most likely outcome, in our opinion, and represents the scenario that results in our fair value estimate.
Cash Flow Analysis
Firms that generate a free cash flow margin (free cash flow divided by total revenue) above 5% are usually considered cash cows. Silver Wheaton's free cash flow margin has averaged about 36.8% during the past 3 years. As such, we think the firm's cash flow generation is relatively STRONG. The free cash flow measure shown above is derived by taking cash flow from operations less capital expenditures and differs from enterprise free cash flow (FCFF), which we use in deriving our fair value estimate for the company. For more information on the differences between these two measures, please visit our website at Valuentum.com. At Silver Wheaton, cash flow from operations increased about 125% from levels registered two years ago, while capital expenditures expanded about 272% over the same time period.
Valuation Analysis
Our discounted cash flow model indicates that Silver Wheaton's shares are worth between $13.00 - $21.00 each. The margin of safety around our fair value estimate is driven by the firm's MEDIUM ValueRisk™ rating, which is derived from the historical volatility of key valuation drivers. The estimated fair value of $17 per share represents a price-to-earnings (P/E) ratio of about 10.3 times last year's earnings and an implied EV/EBITDA multiple of about 7.6 times last year's EBITDA. Our model reflects a compound annual revenue growth rate of 1% during the next five years, a pace that is lower than the firm's 3-year historical compound annual growth rate of 52.6%. Our model reflects a 5-year projected average operating margin of 57.2%, which is below Silver Wheaton's trailing 3-year average. Beyond year 5, we assume free cash flow will grow at an annual rate of 3.4% for the next 15 years and 3% in perpetuity. For Silver Wheaton, we use a 10.8% weighted average cost of capital to discount future free cash flows.
(click to enlarge)
Margin of Safety Analysis
Our discounted cash flow process values each firm on the basis of the present value of all future free cash flows. Although we estimate the firm's fair value at about $17 per share, every company has a range of probable fair values that's created by the uncertainty of key valuation drivers (like future revenue or earnings, for example). After all, if the future was known with certainty, we wouldn't see much volatility in the markets as stocks would trade precisely at their known fair values. Our ValueRisk™ rating sets the margin of safety or the fair value range we assign to each stock. In the graph below, we show this probable range of fair values for Silver Wheaton. We think the firm is attractive below $13 per share (the green line), but quite expensive above $21 per share (the red line). The prices that fall along the yellow line, which includes our fair value estimate, represent a reasonable valuation for the firm, in our opinion.
Future Path of Fair Value
We estimate Silver Wheaton's fair value at this point in time to be about $17 per share. As time passes, however, companies generate cash flow and pay out cash to shareholders in the form of dividends. The chart below compares the firm's current share price with the path of Silver Wheaton's expected equity value per share over the next three years, assuming our long-term projections prove accurate. The range between the resulting downside fair value and upside fair value in Year 3 represents our best estimate of the value of the firm's shares three years hence. This range of potential outcomes is also subject to change over time, should our views on the firm's future cash flow potential change. The expected fair value of $22 per share in Year 3 represents our existing fair value per share of $17 increased at an annual rate of the firm's cost of equity less its dividend yield. The upside and downside ranges are derived in the same way, but from the upper and lower bounds of our fair value estimate range.
Pro Forma Financial Statements
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Additional disclosure: RIO is included in the portfolio of our Best Ideas Newsletter.
Silver run is on the way. Slw will benefit tremendously, short term pt 28 for me.
$30 after earnings. Let the gold and silver price rise.
$SLW - Silver Wheaton to Release 2013 Third Quarter Results on November 11, 2013
http://www.silverwheaton.com/News1/PressReleases/PressReleaseDetails/2013/Silver-Wheaton-to-Release-2013-Third-Quarter-Results-on-November-11-2013/default.aspx
VANCOUVER, Oct. 16, 2013 /CNW/ - Silver Wheaton Corp. (TSX:SLW) (NYSE:SLW) will release 2013 third quarter results on Monday, November 11, 2013, before the market opens.
A conference call will be held Tuesday, November 12, 2013, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call please use one of the following methods:
Dial toll free from Canada or the US:
Dial from outside Canada or the US:
Pass code:
Live audio webcast: (888) 231-8191
(647) 427-7450
86400095
www.silverwheaton.com
Participants should dial in five to ten minutes before the call.
The conference call will be recorded. You can listen to an archive of the call by one of the following methods:
Dial toll free from Canada or the US:
Dial from outside Canada or the US:
Pass code:
Archived audio webcast: 1-855-859-2056
(416) 849-0833
86400095
www.silverwheaton.com
SOURCE Silver Wheaton Corp.
Patrick Drouin
Vice President, Investor Relations
Silver Wheaton Corp.
Tel: 1-800-380-8687
Email: info@silverwheaton.com
Website: www.silverwheaton.com
I am fully invested in mining, let the economy recovery bubble blow.
Just wait until after the holidays when retail sales are crap and the talking heads say, "What, there was no real economic recovery? It's all been fluffed by QE and real estate investors scooping up all the foreclosures? All these asset prices are overvalued?" Then the market dives and you want to be in physical metals and miners. It's coming. Bargain at this price.
Looks like I got in a little early, this may go below 20 before moving up again.
Feels more like a rock being dropped from 10,000 feet
Toofuzzy
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