In this issue
Silver
Wheaton
Many of you are
probably
familiar with
Silver Wheaton
but we would
like to shed
more light on
the company and
bring to your
attention that
they do have
warrants (yes,
more than one)
making this an
interesting play
if you like the
company. The
recently
announced deal
with Barrick
Gold (ABX) only
adds to the
story.
Let’s go over
the unique
business model
of Silver
Wheaton. The
strategic
acquisitions so
far in 2009 have
made SLW one of
the largest
silver
producers. For
those who don't
know much about
the company we
will give a
quick but
efficient break
down of their
operations.
First off, as
one can guess by
the name, its
business is
focused on
silver. But it
is not a miner
but rather a
silver streaming
royalty company
that finances
miners to
accomplish
whatever goal
they have in
exchange for a
portion or
complete silver
royalty stream
now or in the
future. So
basically they
produce an
initial capital
outlay or outlay
to be paid in
the near future
in exchange for
these streams,
where they have
agree to
purchase the
silver produced
for an average
of $3.98/oz with
a maximum 1%
annual inflation
adjustment.
But another
distinguishing
factor between
Silver Wheaton
and the
aforementioned
royalty
companies is
that the former
has an agreement
with the
Canadian
government such
that they are
exempt from
corporate
taxation as long
as they either
pay down their
debt, reinvest
profits, or pay
dividends with
100% of their
excess profit.
So with a rough
explanation of
their business
model, the
following is the
transformation
the company has
gone through
thus far in
2009.
They are set to
have 15-16m
ounces in 2009,
19-22m in 2010,
24-26m oz in
2011 and 26-28m
in 2012. They
eliminated their
more or less
only competition
in Silverstone
which then was
set to produce
18m oz, 24m, 29m
and 33m from
2009-2012. Now
the Barrick
acquisition
which is cited
below has again
bumped up their
production
numbers to 19m
in 2009, 26m in
2010, 33m in
2011, and 35m in
2012 at which
time the Pascua-Lama
mine production
will commence (a
75% completion
is guaranteed an
Silver Wheaton
would be
compensated with
silver from
other mines if
it should be
delayed) and
production will
then jump to
somewhere
between 42-44+ m
oz (depending on
whether proven
reserves are
understated)
thereafter. Of
course this
comes with a
price of a bit
over 600m to be
paid over the
next three
years. This will
be paid through
a combination of
current
unrestricted
cash, shared
dilution and/or
accessing their
400m debt
facility.
TRANSACTION
HIGHLIGHTS
Provides
immediate cash
flow.
Silver Wheaton
will receive
100% of the
silver
production from
three of
Barrick's
currently
producing mines,
effective
September 1,
2009, until the
end of 2013.
This immediately
enhances Silver
Wheaton's
production and
cash flow
profile, by
adding average
annualized
silver
production of
approximately
2.4 million
ounces until
Pascua-Lama
commences
production.
Significantly
increases Long
Term Growth
Profile.
Silver Wheaton
will receive 25%
of the life of
mine silver
production from
Barrick's Pascua-Lama
project,
expected to be
one of the
largest and
lowest cost gold
mines in the
world.
Pascua-Lama is a
key Barrick
growth asset and
is the third
largest silver
deposit in the
world, with an
estimated mine
life of over 25
years.
Silver Wheaton's
25% share of the
estimated
average annual
silver
production for
the first five
years (2013 to
2017) is 9
million ounces,
boosting overall
silver sales by
30%.
Barrick has
provided a
completion
guarantee,
requiring them
to complete
Pascua-Lama to
at least 75% of
design capacity
by December 31,
2015. If Barrick
does not meet
completion by
December 31,
2013, Silver
Wheaton will
continue to
receive silver
production in
2014 and 2015
from the
currently
producing mines,
until Barrick
satisfies the
requirements of
the completion
guarantee.
This acquisition
was brilliant as
long as you
believe in the
silver story and
rampant
inflation in the
not too distant
future. That
being said,
Silver Wheaton
is one of the
best silver
companies
available for
your investment
dollars but as
you might guess,
we would suggest
you take a look
at the warrants
available.
Toronto
Resource
Investment
Conference
We have
recently
received notice
that we will be
presenting a
workshop at this
investment
conference on
September 26th
and 27th. We
hope readers and
subscribers in
the Toronto area
will make plans
to attend this
conference with
many of the
legends of the
business in
attendance.
Check out the
details below:
Toronto Resource
Investment
Conference
RANKING of
ALL Warrants
Our New
Warrants Summary
Page
As you login to
our service and
then go to the
Warrants
Database, the
first page you
see will be our
new Warrants
Summary.
Our new
calculations
using the
Baker-Wilson L/T
Formula allows
us to basically
compare ALL
warrants and
then to RANK
the warrants
according to a
subscribers
investment
expectation.
It is necessary
to read all of
the footnotes at
the bottom of
the Warrants
Summary page.
Actually we have
done our best to
keep this very
simple but yet
provide you will
much more detail
and RANKING
of Warrants
to assist you
with making your
decisions as to
which warrant(s)
to purchase, if
any.
Remember that
all of these
calculations and
RANKINGS will
change each week
as we update the
database with
current prices
for the common
shares and
warrants.
We have laid
this out using 4
different levels
of investor
expectation.
Conservative
Investors:
1. A potential
100% increase in
the underlying
common shares
2. A potential
200% increase in
the underlying
common shares
Aggressive
Investors:
3. A potential
500% increase in
the underlying
common shares
4. A potential
1000% increase
in the
underlying
common shares
Our RANKINGS,
while not
specific
recommendations,
will definitely
get you started
as you just need
to pick your
favorite company
and make sure
there is
sufficient time,
in your opinion,
to achieve your
objectives.
FREE Warrants
Database
We are now
excited to be
able to furnish
visitors to our
website a
FREE Basic
Warrants
Database. This
will show you
all companies
with warrants
trading and all
of the basic
terms and
symbols with
links to quotes
and charts.
This is
available on our
Homepage.
For those
readers and
subscribers
unfamiliar with
all of our
services:
•
PreciousMetalsWarrants.com
provides an
online database
for all warrants
trading on the
natural resource
companies in the
United States
and Canada.
•
InsidersInsights.com
tracks the
buying and
selling of
corporate
insiders with a
focus on the
junior mining
and natural
resource
sectors. Buy and
Sell Alerts are
issued as deemed
relevant based
upon our
analysis.
There are many
great
opportunities
presented in
each of these
services and we
encourage you to
get on board
with us soon.
Dudley
Dudley Pierce
Baker –
Owner/Editor –
Guadalajara/Ajijic,
Mexico
Lorimer Wilson –
Director of
Marketing and
Contributing
Editor –
Toronto, Canada
Bruce Ross –
Webmaster and
Administrative
Assistant –
Phoenix, USA
