Silver Wheaton Corp. (USA) (NYSE:SLW)

CAPS Rating: 4 out of 5

A mining company which operates its revenue from the sale of silver. The Corporation is actively pursuing further growth opportunities, primarily by way of entering into long-term silver purchase contract.


Player Avatar XMFSinchiruna (27.12) Submitted: 11/25/2006 9:45:31 AM : Outperform Start Price: $10.93 SLW Score: +30.78

Silver Wheaton is a sleeping giant, and one which has already seen robust earnings here in the early stages of silver's unavoidable ascent. Silver is bound to correct upwards as its dual attraction as currency and industrial metal combine with limited supply. SLW is ideally poised to gain from this correction since it is totally unhedged. I see SLW at $15 in 2007, perhaps $20 or higher by 2008.

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Member Avatar XMFSinchiruna (27.12) Submitted: 3/29/2009 11:21:22 AM
Recs: 3

I enjoy coming back to look at my stock pitches from so long ago. :) I was close with those predictions... SLW did take out $15 in 2007, and looked poised to approach $20 when the big correction hit precious metals in March 2008. Incredibly, a panic-stricken market absorbing trillions of dollars in forced liquidations managed to sink shares to $2.51 on November 25, 2008 while silver also touched some incredible lows. On that date, I published this article on Silver Wheaton:Silver Selling for $1 per Ounce: quickly became my best call for 2008 as the market came to its senses: despite having more than tripled since that time ridiculous low, SLW remains the breakfast of champions. Long SLW since about 2005, and intending to remain long for years to come. SLW will remain my second largest equity holding after CEF.

Member Avatar XMFSinchiruna (27.12) Submitted: 8/14/2009 2:55:47 PM
Recs: 2

Silver Wheaton is looking absolutely incredible, and remains this Fools #1 choice for silver by a wide margin.

Please see my analysis of earnings results from Q2 2009:

This is my broader analysis of the silver sector from April 2009, highlighting Silver Wheaton as a top choice:

"My top pick among silver miners conducts no mining at all. Instead, Silver Wheaton (NYSE: SLW) purchases silver streams -- contractual rights to purchase silver -- in exchange for up-front capital which miners use to develop their operations. The shares have come a very long way from their multiyear low, struck on Nov. 25, 2008. After reporting this week that attributable reserves grew in 2008 by 24% to 429.7 million ounces, due mainly to exploration success at Goldcorp's (NYSE: GG) massive Penasquito mine, Silver Wheaton continues to look significantly undervalued. In fact, I find shares trading at the equivalent of about $3.30 per ounce of silver in the ground. With a stable all-in cost of production of about $5.89 per ounce, the margins for Silver Wheaton at today's price near $13 remain extremely robust."

Here are first quarter results from May 2009:

"Returning to profitability after a $65 million hemorrhage of investment revaluation in the fourth quarter, Silver Wheaton has only grown stronger during this prolonged correction in precious metal prices. The company has paid down debt and is poised for further dealmaking with an untapped $400 revolving credit facility. Despite a 31% reduction in realized sales prices for silver compared to the first quarter of 2008, Silver Wheaton's stable all-in cost of production below $6 per ounce of silver positions the company extremely well for a silver price recovery just as production ramps up further during 2009."

With major silver miner Pan American Silver reporting all-in cost of production of $10.10 per ounce in Q2, consider the sweeping implication for Silver Wheaton, which still enjoys that relatively fixed all-in cost of production below $6 per ounce. While we need confirmation from other silver miners to confirm the significance of the $10 mark, that all-in cost represents a solid floor beneath long-term silver prices that c an not be sustainably breached under that cost structure (since miners would curtail production dramatically below that level). My use of all-in costs of about $700 per ounce for gold corresponded beautifully to the bottom of the correction in gold prices, and I think Fools can feel comfortable with the idea that as volatile as silver can be during short-term swings, double-digit prices are here to stay for a very long time.

The upward trend for silver remains uncompromised by the sustained correction, and I believe its resurgence will be dramatic as silver re-approaches more reasonable ratios with the gold price, but still it's nice to know where your floor is at all times. What does that floor mean for Silver Wheaton shareholders? An extra $4 of margin locked into the future vis-a-vis the mining competition.

Fool on!

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