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« Hecla Mining Company Run Comes to an End | Main | Silver has a ‘Popeye’ month »

Silver Wheaton Corporation has a bright future

SLW Chart 03 jun 09.JPG

Chart courtesy of Stockcharts

As we can see from the above chart Silver Wheaton's (SLW) progress has been sparkling over the short term, although this chart suggests that SLW is overbought the future looks good with the added spice of the acquisition of Silverstone Resources Corporation.

Just a gentle reminder that this is a pure silver company with a business model that consists of making upfront payments to mining companies of less then $4.00 per ounce of silver. This approach has benefits for both parties with the miners getting cash upfront to build and operate mines and Silver Wheaton has the benefit of acquiring low cost silver. The other benefits for Silver Wheaton is that they have no direct exposure to the difficulties of mining and no capital expenditure other the upfront payments. So we have an enterprise making a profit from current silver prices less the $4.00 purchase price, which today pushing at $16.00 an ounce. The share price is a little over the NAV at the moment but a year or so ago it was at 2.5 times the NAV, leaving room for further gains.

According to Peter Barnes, Chairman and CEO of Silver Wheaton the acquisition of Silverstone Resources Corporation eliminated the competition for a share dilution of around 7% whilst increasing resources by 40%, which appears to be a terrific move in our humble opinion.

This stock forms part of our core holdings and we expect it to be trading at twice the price by the end of the year.

You can see Peter on BNN discussing the company's future with Amanda Lang, just click here.

Have a sparkling day.

Silver Wheaton Corporation trades on the New York Stock Exchange and the Toronto Stock Exchange under the symbol of SLW and is currently trading at $10.87. The Company has a market capitalization of $3.13 billion, with 287.44 million shares outstanding.

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SLW Logo 03 jun 09.JPG

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