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Silver Wheaton Corp. Message Board

  • tobinator00 tobinator00 Feb 23, 2006 7:25 PM Flag

    Do we hear 18.5 million oz this year?

    JC, you took the words right out of my head. Talk about left field! I suppose they'll issue 20-30 million shares to GG for the 3.5 million oz Goldcorp is getting from Barrick/PDG. At 18.5 million ounces, just think of the earnings and cash flow from 2006 production almost doubling last year's 9.7 million ounces!

    I take exception with the present value cost calculations of this acquisition. I'm an engineer by trade and not a bean counter. SLW is paying with US dollars. The Fed through the M3 stats is increasing the dollar money supply by an annual rate of easily over 10%. If we figure an annual rate of 6% (or more) inflation over the 20 year term, SLW is getting this silver stream a lot cheaper than the headline number.

    I own Coeur (CDE) and have come up with an after tax EPS of $0.03 for the 4th Q. They got two nice silver streams right out from under Silver Wheaton's noses (cash costs of around $1.90 and $2.90). They'll do 14 million ounces for 2005, but a new mine in 2007 they are developing will bring them over 20 million ounces. I am not saying Coeur is even in the same league, but it's a good second place.

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    • is anyone figuring production may need to ramp up the first 2 or 3 years, and while that will be recaptured, the first couple years could be less.
      Not that that is a bad thing. If silver continues to go up as I expect, better ultimately to get above target levels of silver in year 3 and 4 when prices are much higher.
      Question is how far the market will look ahead and discount future cash flow as cost of capital is still crucial for this company to use its currency once it gets fully valued, as well as to head off a hostile takeover.

      • 1 Reply to aaaaarb
      • Not sure we would see a takeover of SLW since GG most likely would not tender their shares. IMHO

        All in all this should prove very profitable for SLW and as time goes by SLW may write a fantastic story for its shareholders. Ala 1980's when PM stocks saw such unbelievable highs. If SLW and the PM bull reaches the heights of the previous bull SLW could easily sell for more then say NEM does today. It seems as though the debt will not be a problem other than they can no longer claim to be debt free. Their debt will be less than 10% of the value of the company. Couple that with such a wise use of the debt and I would say worry not. BCM alone is worth more than the debt and they could easily liquidate it if they needed to although I do not see that happening just trying to draw some perspective. Telfer said sooner rather than later last Monday and he was right. This is another sweetheart deal even if the cost of the Silver ends up being $7 per in a year or two that may represent about 1/3 of the PoS or less. Miners on the other hand will have ever increasing costs to remove / truck ore that any low cost producer comparisons may be out the window.

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