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Silver Wheaton Corp. Message Board

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  • bridgeboy bridgeboy Nov 1, 2006 9:21 PM Flag

    silver wheaton becoming the darling

    I could be wrong on any or all of the following, but I believe that in the previous deals (at least the ones I've checked) SLW has paid $3/oz up front and then has to pay $3.90/oz at the time it is delivered. Why does anyone see anything different happening now? I mean the latest deal/addendum was in March '06 which wasn't exactly a low point for the price of silver!

    So if SLW is going to write a contract with GG/GLG for 300 million ounces, they would need to come up with $900 million up front. They should have close to $100 mil in cash and cash equivalents ($78 mil as of the end of September and they've been making more in the current quarter as well). They can issue about a 12% dilution of current shares to GG which will boost their holdings to about 70%, which should be the equivalent of $350 mil. They can write promissory notes to GG (which they did in the previous deal) for another $100 mil or so. They can then borrow/get a line of credit for $250 mil to make up the remainder. I hope that the $350 mil in up front cash would be enough for GG to cover start up of the Penasquitos mine and then everyone is heading straight to the bank with the proceeds!

    This deal will double SLW's silver sales so I would be quite alright with a 12% dilution and $350 mil in debt (that would take, what a year or two for SLW to pay off the way it makes money with double the number of ounces per year??).

    So hit me with that 'D' word, if it means instead of making $.11/share on 238 million shares (per quarter) instead we make $.20/share on 266 million shares (per quarter)! This is just straight math with NO appreciation in the price of silver.


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