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« Agnico-Eagle Mines Call Options: Bought! | Main | Silver: On the rack! »
Sunday
Oct052008

Silver Wheaton Corporation on the Acquisition Trail!

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Silver Wheaton Corporation has recently announced that they have acquired 25% of the silver production from Alexco’s project in the Yukon, Canada. The news release goes on to give the following details:

Silver Wheaton will pay Alexco US$50 million to acquire 25% of all payable silver produced from the Keno Hill project, for the lesser of US$3.90 (subject to a one percent annual adjustment starting in year four after the achievement of specific operating targets) or the prevailing market price per ounce of silver delivered. The upfront payment will be made in several tranches, with a total payment of US$15 million to fund ongoing underground development made upon the satisfaction of certain conditions, and the remaining US$35 million payment to fund mill construction and mine development costs made on a draw down basis, upon the satisfaction of certain additional requirements, including the receipt of operating permits. Silver Wheaton is not required to contribute to further capital or exploration expenditures and Alexco has provided a completion guarantee with certain minimum production criteria by specific dates. Payment for the transaction will be drawn from Silver Wheaton’s existing credit facilities.

Despite the battering that silver has taken its good to see that some companies are taking advantage of the situation and are prepared to make such acquisitions. The current forecast is for a production start in 2010 with an average annual mine production of 3.3 million ounces of silver.

Peter Barnes, President and Chief Executive Officer of Silver Wheaton commented as follows:

"By partnering with Alexco, Silver Wheaton is strategically positioned within one of the richest silver belts in the world”

We do own this stock and will continue to monitor its performance, which should hopefully improve when silver resumes its trek north.

Silver Wheaton Corporation trades on the New York Stock Exchange under the symbol of SLW and closed on Friday at $7.09.

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