Silver Wheaton Says Drop in Silver Price Will Help With Acquisitions
By Craig Wong
20 Apr 2006 at 04:34 PM EDT
VANCOUVER (CP) -- The recent drop in the price of silver is long overdue and will help miner Silver Wheaton [TSX:SLW; AMEX:SLW] in its acquisition strategy, chief executive Peter Barnes said Thursday.
''When it is going straight up it makes it very difficult to do deals because people's expectations go straight up as well,'' Barnes told a conference call with analysts.
''I think a correction just makes people realize that it is a real world out there and I think it makes the opportunities easier for us to capitalize on in the next little while.''
The May contract for silver on the New York Mercantile Exchange was down $1.989 at $12.51 in trading Thursday. The drop in the price in silver weighed on Silver Wheaton's shares, which were down 88 cents at C$12.40 on the Toronto Stock Exchange.
In its outlook, Silver Wheaton, which is owned 62% by Goldcorp [NYSE:GG; TSX:G], said it expects to have annual silver sales of about 15 million ounces this year, increasing to 20 million ounces by 2009.
Silver Wheaton, unhedged and debt-free, has said it is actively looking to add new long-term silver purchase contracts and or silver exploration, development and production assets.
The company signed a deal earlier this year to buy 4.75 million ounces of silver annually for 20 years from Glencore International AG and its Yauliyacu mine in central Peru.
To pay for the $285-million deal, Silver Wheaton used $120 million in cash on hand, $125 million of bank debt and a $40-million promissory note.
Barnes said Thursday the company has since raised $200 million in an equity financing that was used to pay off the debt.
''We are once again basically debt-free, ready to take advantage of the next acquisition opportunity,'' he said.
In addition to Yauliyacu, Silver Wheaton holds the rights to buy all of the silver produced by Goldcorp's Luismin mines in Mexico, and by Lundin Mining's [TSX:LUN] Zinkgruvan mine in Sweden.
The Vancouver-based silver miner, which keeps its books in U.S. dollars, said Wednesday it earned $13.8 million or seven cents per share for the three months ended March 31. That compared with a profit of $5.2 million or three cents per share in the same period a year ago.
Silver sales increased to $25.7 million, up from $16.1 million in the first quarter of 2005.
Silver Wheaton sold 2.6 million ounces at an average realized price of $9.62, compared with a 2.3 million ounces at an average price of $6.92 per ounce a year ago.
© The Canadian Press 2006
