Silver Wheaton: Good third quarter results
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| Topic: Silver Mining Companies — November 4th, 2008
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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There performance, like all mining stocks, is tied to silver prices, as well as their financial strength and operations. Right now silver prices are deflationary, in a year or two they wil be inflationary and then we may get back to August levels.
Sorry, but everyone just got ahead of themselves, including myself.
Comment by SG — November 4, 2008 @ 5:03 pm
BNN chats with Peter Barnes, president and CEO, Silver Wheaton;
http://watch.bnn.ca/#clip108971
Go to the 11 minute mark - well worth your time.
Comment by Silver Prices — November 4, 2008 @ 8:15 pm
The thing that scares me about SLW and SST.V is that 70% of all silver is the byproduct of Zn/PB mining. BWR just shutdown ALL it’s plants. Other silver miners especially in Mexico are curtailing their production of silver via Zn production.
What I am trying to find out, and SLW won’t comment, is what happens to the silver purchase contracts when the companies don’t produce Zn and as such silver? Does SLW get their upfrnot $ back? Does the miner have to pay $ instead of silver? And then of course does SLW/SST have any revenue? If you could do an article on this or answer these questions for me, I would gratly appreciate it.
I am long SLW,SST,PAAS,SSRI, AUY - you get the picture.
Comment by bulletbob — November 5, 2008 @ 3:25 pm
bulletbob, Good question, leave it with us.
Brad Kopp, Director, Investor Relations, SILVER WHEATON
is out of the office until the 12th November, so we hope to get a few questions answered shortly after that date and we will post our findings.
Comment by Silver Prices — November 5, 2008 @ 9:44 pm
I tried to email you some more info at wordprocess@slver-net but got it back from ATT. I’ll try to paraphrase it again here. SST.V paid Lundin Mining for lom silver from the Aljustral mine in Portugal. Lundin Mining just shut down this mine[ or more app-never opened it due to low zn prices]. I will bew calling Silverstone this AM to find out how this may or may not affect the contract. I’ll let you know if I get any info. Bulletbob
Comment by bulletbob — November 10, 2008 @ 5:03 pm
bulletbob, Look forward to it!
Comment by Silver Prices — November 11, 2008 @ 12:40 am
Any update on HL would be greatly helpfull.
Comment by HL — November 11, 2008 @ 1:09 am
OK-Silver newsletter he is the story. After more than an hour on the phone with SST>V[silversstone], it was the BEST talk I’ve ever had with a mining co., the contracts used to be written for 3-5 yrs. of silver production. However they are now written for lom because the money[the upfront $] is LOST if the mining co doesn’t deliver the metal.
But by doing lom contracts. if metals are ever produced from that mine, then SLW/SST.V will get it at the agreed upon price[mostly $4 or $3.90]. The key of course to all this is that the people paying the money MUST be pretty damn sure that the deliverying party will actually deliver.
So the upfront $ from Silverstone to Lundin for the Aljustrel Zn production, and Ag oz., is temporaily LOST.
Hope this helps you and your readers. Keep up the good work and until the next crisis, buy silver[physical]. Bulletbob
Comment by bulletbob — November 12, 2008 @ 6:20 pm