Silver Wheaton Corporation: Lackluster performance of late
Thursday, April 21, 2011 at 10:39PM
Silver Prices in Silver Mining Companies
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We are struggling to understand just why silver prices are doing so well and yet the stock price of Silver Wheaton Corporation (SLW) has been lackluster over recent weeks. One explanation could that the resignation of Peter Barnes has had an effect, as changes at the top of any organization sometimes do. Anyway, we have registered our concerns with Brad Kopp, VP Investors Relations and hope to have an explanation for you soon.

In the meantime we found this piece on BNN that you may find interesting:


Silver Wheaton (SLW-T 40.45 0.67 1.68%) could close new deals within six months as it seeks to become the world's top silver producer, confident that wary miners will seek out its financing model once soaring prices flatten out.
    
Silver Wheaton pioneered a business model where it provides up-front financing to miners to build projects in exchange for the right to buy the silver by-product at the time of production, something known as stream deals.
    
The model has worked well for the company, which has grown from 9.7 million ounces of silver equivalent in 2005 to 23.9 million ounces last year, without mining a single ounce. It was one of the top 2010 performers on the Toronto Stock Exchange.
    
"I see us continuing to strive towards 100 million ounces a year in silver production," Chief Executive Randy Smallwood told Reuters in an interview. "We'll be at about 43 million ounces by 2015 with our current portfolio, so I believe that that's an achievable target."
    
But to keep growing Silver Wheaton needs to secure new deals—a daunting task as rising metal prices prompt mining companies to shun hedging and stream deals and hold on to their silver.
    
Smallwood, who helped found the company in 2004 and took over the top job this month, said interest in stream deals has never been higher.
    
"We're in discussions with quite a few companies right now," he said. "I'm hopeful that we'll close some acquisitions in the next few months, within the next six months or so."
    
"But I won't commit to it," Smallwood quickly added. "Mainly because the silver prices are so volatile."
    
Silver hit a 31-year high of $45.71 US an ounce on Thursday, as worries over the U.S. economic outlook increased the allure of precious metals as safe-haven investments. The price of silver, which also has industrial uses, has more than doubled in the last year and most analysts forecast $50 an ounce by year-end.
    
This rapid rise has translated to huge profits for Silver Wheaton, which pays about $3.90 an ounce for its silver at the time of production.
    
"What we've seen over the last several months, as silver has gone through this dramatic growth, is companies are very interested in stream financing," said Smallwood. "But they want to wait for some stability in the silver price."
    
SECURING STREAMS
    
Smallwood, an avid skier and a geological engineer by trade, said he is bullish on silver, but the price won't keep going up forever.
    
"Every commodity is cyclical—and silver's no different," he said. "We'll see some down cycles in the future.
    
Once silver starts moving down, Smallwood expects a "flurry of deals", as miners try to lock in top value for their by-product rather than hanging on to it.
    
"As long as there's mine construction or mine development going on in the world, there will always be a need for capital to help fund that," he added.

The new CEO is an organic promotion from within who has been with the company for some time, Randy Smallwoood.

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Randy Smallwood

According to Forbes, Mr. Smallwood holds a geological engineering degree from the University of British Columbia. He was previously Director of Project Development for Wheaton River from 1993 through its merger with Goldcorp and until 2007. He has been instrumental in building Wheaton River, Goldcorp and Silver Wheaton over a 12-year period of acquisitions. Prior to joining Wheaton River, Mr. Smallwood worked with Homestake Mining Company, Teck Corp. and Westmin Resources.


We'll be back.




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