Silver Wheaton Hopes for Big Share of Silver from Penasquito
By Craig Wong 03 Nov 2006 at 09:34 AM EST
VANCOUVER (CP) -- Silver Wheaton Corp. [TSX:SLW] would be ''thrilled'' if the company could acquire half of the silver production from the Penasquito project in Mexico when it comes into production, chief executive Peter Barnes said Friday.
''I'd love to get 100%, but I'm sure that's probably not the most likely scenario,'' Barnes told a conference call with analysts.
Silver Wheaton acquired the right of first refusal on future silver production from the project in September from Goldcorp Inc. [NYSE:GG; TSX:G] following the company's takeover of Glamis Gold Ltd. [NYSE:GLG; TSX:GLG], the owner of the project.
''I think there is a deal to be done there that will be accretive for both sides, but we still have to start discussing it,'' Barnes said.
The Vancouver-based silver company said late Thursday it earned a third-quarter profit of $22.5 million or nine cents per diluted share for the three months ended Sept. 30. That compared with a profit of $6.4 million or four cents per diluted share a year ago.
Revenue in the quarter more than doubled to $41.8 million, up from $18 million in the third quarter of 2005.
RBC Capital Markets analyst Michael Curran, who rated the stock ''sector perform'' with ''average risk,'' suggested the results were below expectations.
''We look for the impact on the shares to be neutral-to-mildly negative, as the company was not able to maintain the ramp up in silver production seen the past three quarters,'' Curran wrote in a note to clients.
''With only 10 million ounces produced thus far this year, our 14.8 million ounce forecast for 2006 looks aggressive.''
Silver Wheaton, which was spun off from Wheaton River Minerals in 2004 as a pure-play silver company, has said it is actively looking to add new long-term silver purchase contracts and or silver exploration, development and production assets.
In addition to the rights to buy all of the silver produced by Goldcorp's Luismin mines in Mexico, Silver Wheaton also holds the rights to buy the silver from Lundin Mining's Zinkgruvan mine in Sweden and 4.75 million ounces of silver annually for 20 years from Glencore International AG and its Yauliyacu mine in central Peru.
The company also recently raised its stake in Bear Creek Mining Corp. to 19.1%.
The company has said it expects to have annual silver sales of approximately 16 million ounces in 2007, increasing to 20 million ounces by 2009.
Shares in the company were up two cents at C$12.27 on the Toronto Stock Exchange.
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