QUOTE AND NEWS
Market Intelligence Center  Aug 18  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artifical Intelligence Center found a trading opportunity with Silver Wheaton (SLW) that should provide a 3.73% return in just 61 days. Sell one Oct. '14 call...
Forbes  Aug 15  Comment 
As expected, lower precious metal prices negatively impacted the company’s results, with higher volumes offsetting some of the impact of lower prices. A 14% year-over-year decline in realized prices per silver equivalent ounce was partially...
SeekingAlpha  Aug 14  Comment 
By SA Transcripts: Silver Wheaton Corporation (NYSE:SLW) Q2 2014 Earnings Conference Call August 14, 2014 11:00 AM ET Executives Patrick Drouin - SVP, IR Randy Smallwood - President and CEO Gary Brown - SVP and CFO Haytham Hodaly...
TheStreet.com  Aug 14  Comment 
NEW YORK (TheStreet) -- Silver Wheaton was fall -5.6% to $25.66 Thursday after missing analysts’ estimates in the second quarter due to low silver prices. For the second quarter Silver Wheaton reported earnings of 18 cents a share, missing...
Forbes  Aug 14  Comment 
(Kitco News) - After reporting its second-quarter earnings after market close Wednesday, Silver Wheaton Corp.’s (TSX:SLW) (NYSE:SLW) Randy Smallwood said silver equivalent production totals were expected to be a little light.
SeekingAlpha  Aug 14  Comment 
By Lior Cohen: Royal Gold (NASDAQ:RGLD) did well in the past quarter, as it showed higher revenue and improved earnings per share. Nonetheless, does the company's current valuation provide an opportunity for bullion bulls? Also, how does the...
SeekingAlpha  Aug 14  Comment 
By Hard Asset Investments: Silver Wheaton (NYSE:SLW) just reported its second quarter 2014 earnings. The company announced that it recorded sales of 8.4 million silver equivalent ounces at $19.83 per silver ounce, giving the company revenues of...
newratings.com  Aug 13  Comment 
OTTAWA (dpa-AFX) - Canadian silver producer Silver Wheaton Corp (SLW, SLW.TO), Wednesday reported a decline in second-quarter profit, mainly hurt by drop in silver prices even as sales volumes climbed, with results falling short of Wall Street...
newratings.com  Aug 13  Comment 
OTTAWA (dpa-AFX) - Silver Wheaton Corp. (SLW.TO, SLW) reported second-quarter net earnings of $63.5 million or $0.18 per share, compared to $71.1 million or $0.20 per share, prior year. Cash flow from operations were $102.5 million or $0.29 per...
Forbes  Aug 11  Comment 
The effect of lower prices will be offset to some extent by higher volumes, particularly from the company's gold streams from the Sudbury and Salobo mines, where production has ramped up over the course of last year.




 

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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