February 26th, 2009:
Silver Wheaton Corp (SLW)
Current Price: $6.74
www.silverwheaton.com
SLW is the largest public mining company with 100% of its operating revenue from silver production. Silver Wheaton expects, based upon its current contracts, to have silver sales of approximately 17- 23 million ounces in 2009 and approximately 30 million ounces in 2013, without any capital expenditures being required to generate that growth.
SLW has long term contracts to purchase all or a portion of the silver production from mines in Mexico, Sweden, Peru, Greece and the United States, at a low fixed cost. Silver Wheaton’s unique and simple business model is designed to create long term shareholder value, providing the best leverage to increases in the silver price while mitigating downside risks. Silver Wheaton is unhedged and well positioned for further growth.
We believe we could soon see the Gold to Silver ratio start to correct itself and return to historical levels. SLW is positioned perfectly to capitalize on this trend.
SLW grew revenues from $70.9 million in 2005, to $158.5 million in 2006 and $175.4 million in 2007. Revenues were down slightly in 2008 to $166.7 million. Analysts are projecting revenues to reach $188.1 million in 2009 and $270.8 million in 2010.
SLW is one of the only silver companies we are aware of that is profitable and has positive cash flow right now even with silver down to $13 per ounce. SLW's net income in 2008, exclusing a non-cash write-down of long term investments, was $82.3 million.
In our opinion, SLW is a great way to invest into the silver market and once silver starts to get the valuation it deserves we could see SLW significantly appreciate.
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