Silver Wheaton: Good third quarter results
Monday, November 3, 2008 at 08:44PM
Silver Prices in Silver Mining Companies
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The third quarter results for the Silver Wheaton Corporation have been released and are highlighted below, but first we draw your attention to the commentary made by Peter Barnes, President and Chief Executive Officer of Silver Wheaton who said the following:

“In September, we raised in excess of C$120 million of cash from the early exercise of warrants which was applied against our debt facility. In a challenging economic environment, our balance sheet remains strong and debt repayment remains a priority,” said Peter Barnes, President and Chief Executive Officer of Silver Wheaton. “Although operating results for the last several quarters have been disappointing, primarily as a result of weaker than expected silver deliveries from the San Dimas mine in Mexico, I am confident that the worst is now behind us. With production from Peñasquito now underway, we expect organic silver sales growth of approximately 40% over the next year, and approximately 150% by 2013. Despite these very challenging economic times, Silver Wheaton remains well positioned for the future.”

It gives us some comfort that the CEO is confident that the worst is behind them and that silver production will generate organic silver sales growth over the coming year. The figures below provide a financial sketch of the company’s position:

· Net earnings of US$20.2 million (US$0.09 per share) from the sale of 2.7 million ounces of silver, compared to US$19.2 million (US$0.09 per share) from the sale of 3.1 million ounces of silver in 2007.

· Operating cash flows of US$26.7 million (US$0.12 per share) compared with US$27.1 million (US$0.12 per share) in 2007.

Silver Wheaton is one of our core holdings, which has taken a real battering as silver prices have more than halved recently, however we will continue to hold this stock and to look for the turn around in silver prices before increasing our exposure on this one.

Silver Wheaton Corporation trades on the New York Stock Exchange under the symbol of SLW and closed yesterday at $3.70 having briefly popped above the $4.00 level. The company has a market capitalisation of $828.27 million, a P/E ratio of 9.69, with 223.86 million shares outstanding.

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