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« Silver Wheaton Corporation on BNN Today | Main | Debtflation »

Silver Wheaton Corporation: A Takeover Target?

SLW Chart 01 October 2010.JPG

Exploration activity is moving at a fair old pace, however, the results are no longer startling, in fact discoveries of any significance are few and far between. In order for a producer to add to their pipeline of gold and silver reserves a friendly or even a hostile takeover appears to be the way go.

As an example we have just witnessed, Kinross Gold Corporation's (KGC) all paper merger of around $7.00 billion dollars for the acquisition Red Back Mining. There are a few other notably large takeovers of late which demonstrates the willingness of companies to come up with the big bucks in order to lock in supplies for the future. So, as these predators scan the horizon for suitable targets Silver Wheaton could well fit the bill. With a current market capitalization of $9.17 billion it will require a company of some substance, however, it would be securing a supply of silver which is ramping up as follows:

Forecast 2010 production, based upon the company's current agreements, is 22.2 million ounces of silver and 20,000 ounces of gold, for total production of 23.5 million silver equivalent ounces. By 2013, annual production is anticipated to increase significantly to approximately 40 million silver equivalent ounces. No ongoing capital expenditures are required to generate this growth and Silver Wheaton does not hedge its silver production.

Its not too hard to imagine that there is a smoke filled board room somewhere, where a lot of thinking, debate, pacing of the floor is going on right now. It would be a shame to see it go as its one of our favourite stocks. If silver prices are heading to the $30.00/oz level and beyond as we anticipate then SLW would do wonders for the cash flow of one of the majors, but which one? Don't ask us, we have no idea, other than making a wild guess at one of the usual suspects.

Now, if we consider that there are no takers and SLW goes from strength to strength, there could come a time when the target becomes the predator and decides to branch out by adding a major mining company to its own portfolio.

Just our musings of course, but stranger things have happened.

In the mean time Silver Wheaton Corporation have informed us that Peter Barnes has won the Ernst & Young Entrepreneur Of The Year(R) 2010 Mining and Metals award:

Peter Barnes 01 October 2010.JPG
Peter Barnes

On September 28th, 2010, Ernst & Young (Canada) announced the winners of the Entrepreneur Of The Year Pacific region awards. We are extremely pleased to announce that Peter Barnes, Silver Wheaton's CEO, was honored as the Mining and Metals category winner.

The Entrepreneur of the Year Award recognizes high-achieving entrepreneurs in Canada and around the world who drive growth, transform industries and build communities. In its 17th year of operation, the award is structured around an independent panel of regional judges determining which nominees deserve recognition as category award finalists, and then selecting the entrepreneur who best demonstrates excellence in that category.

"This award highlights the power of our unique business model and the quality of our people. I am honoured to accept the award on behalf of the entire Silver Wheaton team," said Peter Barnes.

He has come a long way since his student days in Hull.

Over in our options trading den they have updated the chart to show all the closed trades as of today, so you can see exactly how it is going, please click this link.

OptionTrader Profits

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

On Friday, 27th August 2010, we closed another successful trade banking a profit of 79.46% on Call Options on Silver Wheaton.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09. On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days, with more positions opened yesterday. Drop by and take a look.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

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Reader Comments (2)

Now that some cash has become available, is it poor timing to get into SLW now, or better to wait for a retraction which might be in the cards for the precious metals.

I value your opinion.


October 1, 2010 | Unregistered CommenterJohn Ell

Hi John,

Glad to see that you have some cash, you must have sold the cat!

We have just watched the trading come to a close in US and are having a knock about session this morning. For silver to do so well and SLW not to take part has given us cause to stop and think. End of the week, month, qtr, window dressing, book squaring, profit taking?

We are not sellers at this point but we are not buyers either. Also note that the HUI only managed to gain 4.5 points.

When we have gone over weight on this stock we are reluctant to say hold off as we think that silver will keep going, dragging the stocks along with it, however, you might want to observe for a week or so before jumping in or use a layering strategy and acquire slowly over a short period of time.

Sorry we cant be of more help, but stay tuned as we will stay on top of this one.


Bob K

October 1, 2010 | Unregistered CommenterSilver Prices

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