QUOTE AND NEWS
Benzinga  Jul 24  Comment 
Below are the silver stocks on the NYSE in terms of revenue. The trailing-twelve-month revenue at Coeur Mining (NYSE: CDE) is $733.83 million. Coeur Mining's EBITDA for the same period is $44.32 million. The trailing-twelve-month revenue at...
Motley Fool  Jul 22  Comment 
Here are three challenges for Silver Wheaton investors to consider.
SeekingAlpha  Jul 20  Comment 
By ONeil Trader: A lot has happened since my last update on Silver Wheaton (NYSE:SLW). Not much on the company-specific level, but very much on the broader level related to gold (NYSEARCA:GLD) and silver prices (NYSEARCA:SLV). The inflation...
Motley Fool  Jul 10  Comment 
Silver Wheaton, Hecla Mining, and Silver Standard Resources moved into gold in the last one and a half years.
Motley Fool  Jul 3  Comment 
Shares of Silver Wheaton Corp have outperformed the price of silver. What could explain this?
Motley Fool  Jun 23  Comment 
As gold and silver hold on to their respective gains after the Fed decision, some mining stocks are doing even better.
SeekingAlpha  Jun 20  Comment 
By David Alton Clark: Overview Silver Wheaton's (SLW) stock has risen sharply over the last month and 6% on Thursday alone. The stock is up nearly 10% since early May. I wrote an article on May 7th titled, 'Silver Wheaton: A Diamond In The...
Motley Fool  Jun 18  Comment 
How does Silver Wheaton Corp measure up to other silver investments? Here are three reasons to consider Silver Wheaton over the iShares Silver Trust.
Market Intelligence Center  Jun 3  Comment 
Silver Wheaton (SLW) is a good candidate for a covered call at the $20.00 level. The Aug. '14 call at that price should fetch a credit of about $1.38, which means the entire position has a net debit of about $19.14. This trade has 4.87% downside...
SeekingAlpha  Jun 2  Comment 
By Canadian Dividend Growth Investor: I'm primarily a dividend growth investor, but occasionally will take capital gain opportunities. Silver Wheaton (SLW) now presents this opportunity. About Silver Wheaton Silver Wheaton is the biggest...




 

Silver Wheaton Corp (NYSE:SLW) is the world's only pure play silver middle man.[1] SLW does not own or operate its own mines, but instead the company buys silver at below market prices via long-term contracts with eleven mining companies the largest of which are Barrick Gold, Goldcorp, Lundin Mining, Hellas Gold, and Glencore. Although many of the contracts are for a certain percentage of the silver mined (25% of the largest mine it has a deal with Barrick Gold for) and for a specific length of time some last the length of the mine's life (Penasquito) and/or the total amount of silver supplied by the mine. SLW then sells the silver to major industrial customers at a markup (in 2009 the price it agreed to pay producers averaged around $4 an ounce).[2]

Silver prices are the single largest determinant of the company's profitability. SLW's contracts, while indexed for inflation, allow the company to pay a fixed rate for the silver it purchases, regardless of silver price fluctuations. When silver prices rise significantly, the company is able to pocket the difference. When silver prices fall, the company still has to pay the same fixed price. Moreover, the company has no control over how much silver its mining partners produce. SLW is not compensated in any way if the mines miss production expectations.

Trends and Forces

Silver Wheaton has No Control Over the Silver Mines

Silver Wheaton does not own, operate, or control the mines with which it is partnered. If the mines miss production expectations, temporarily halt production, or shut down then SLW is not compensated in any way. Silver Wheaton buys its silver from 6 different mines which combine to record 344.6M oz of proven and probable reserves. [3] Glencore’s Yauliyacu mine is located in Peru and is vulnerable to the political instability in that region. SLW’s largest reserve source is the Penasquito mine owned by Goldcorp.

Silver Wheaton Pays No Income Taxes

Silver Wheaton operates through its wholly owned subsidiary Silver Wheaton Caymans. Silver Wheaton Caymans is based in the Cayman Islands where the company is exempt from income tax laws. A change in this law could significantly decrease earnings if Silver Wheaton has to pay income taxes.

Production

Due to increasing business with Barrick Gold (specifically the Pacua Lama mine that when operational in 2013 will be the largest contributor of silver among the 4 Barrick Gold mines) Silver Wheaton's exposure to gold has risen (in terms of the primary metal mined at the mines from which it receives silver, has gone up from 41% in 2009 to 67% by 2013).[4]

Silver by mine '000 oz 1hfy08[5] 2hfy08[5] 1hfy09[6] 2hfy09[6] 1hfy10[6] 9M10[6]
San Dimas 2764 2497 2587 2507 2316 3571
Zinkgruvan 950 745 941 920 865 1373
Yauliyacu 1685 1499 1609 1533 1429 2062
Peñasquito 28 311 322 606 1320 2337
Minto 0 0 37 135 111 157
Cozamin 0 0 262 754 687 1068
Barrick 0 0 0 979 1477 2159
Other 540 896 1309 1762 2076 3099
Total 5967 5948 7,067 9,196 10,281 15,826

Competition

Silver Wheaton is the largest public mining company with all of its revenue from silver. Silver Wheaton competes most closely with non-producing mining companies like Silver Standard Resources (SSRI). Other close competitors include Pan American Silver (PAAS), Bear Creek Mining Corporation (BCM) and Endeavour Silver (EXK).

References

  1. Silver Wheaton Homepage
  2. Silver Wheaton (SLW) (2009-12-16).
  3. SLW 2007 Annual Report, pg.23
  4. November Corporate Presentation (2009-11-12).
  5. 5.0 5.1 2009 annual report (March 2010).
  6. 6.0 6.1 6.2 6.3 third quarter 2010 (2010).
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