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Silver Wheaton Corp. Message Board

  • chemaes44 chemaes44 May 13, 2008 11:10 AM Flag

    The new silver reserves

    With SLW having acquired an extra 1 million ounces per year, I guess 250,000 ounces this year, and the potential for 75% of this property, SLW will be a laugher next year, laughing all the way to bank.

    Don't ask me why, I just get the feeling this is a final shakeout today before bigger things.

    I think SLW might finish positive for the day, as crazy as that sounds

    Cheer up guys & girls!


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    • Chemaes,

      I hope youre right in that this is the final shakeout before SLW starts heading north again. I'm getting the same feeling.

      It seems the only real problem with SLW is the delivery schedule from the mines. Is there anyway SLW can write into their agreements some kind of minimum annual delivery amounts...since most contracts are of 18-20 years in length, the mines have no pressure to provide 1/18th or 1/20th of the agreed upon production level, every year. I guess in an environment where the price of silver is expected to increase well into the future, this might be fine, but most bull markets aren't going to run for 18-20 years. Any ideas to possible solutions to this timing problem SLW is having every quarter?

      The more of these deals SLW signs the less dependant SLW is on any one mine...which should flatten the impact of these delivery problems. There just doesn't seem to be any incentive for the mines to meet these production shedules....especially if everyone is of the belief that the price of silver will be higher this time next year, and higher the next year etc.

      • 1 Reply to hbrown412
      • cash flow and EPS is a major incentive to the producers, their investors look at cf and EPS, not the balance sheet.

        SLW has minimums in place but the risk is the mine is delayed going into production or production drops or is halted, which is why SLW is not the 30s today. As more of these mines come on stream, SLW will lower its risk profile and its leverage will scale to its earnings.

    • Penasguito ?sp reports pouring the first gold. If I read correctly they expect 30 million ounces of silver a year... which makes SLW's share 7.5 mil.. correct me if I'm wrong.

      • 1 Reply to talanharding
      • I was checking SLW's webb and the Penasquito mine represent's around 60% of SLW's share of silver reserves of all the mine's that SLW has a stake in. It is good that the Penasquito mine is now starting to produce and that fixed 4 dollar cost for each ounce of silver that SLW receives is sure looking sweet with the current price of siver 4 times their fixed cost! Does anyone know the fixed cost of the other mine's that SLW has a stake in?

    • Slw is doing it on the cheap. While prices are low-thats when you want to accumulate as many shares as you can of slw, if your an ivestor. Silver is much more attractive metal than gold.
      So many more uses of silver. The smart ones are buying big right now. Inflation isn't going away. Oil will be 200 dollars a barrel at the end of 2009. Food will be much higher like everything else after the election. Does
      anyone really believe that with all the printing going on in washington and around the world that the dollar will be higher in value? No way.
      Load up the truck and smile as the price of slw goes over 20 and won't be looking back.
      To bad for the reasons why, but you have to protect yourself against the new world order.
      I have noticed that youtube no longer lets me post any comments anymore; after I started talking about "Zeitgeist"

    • OK. Your point is a very good.

      I will counter that with ALL metals prices higher, miners will tend to mine the lower grade portions that will extend the life of the mine or just were not profitably mined before.

      This brings in lower metal but extends the life of the mine.

      Hence you see many miners having good profits but lower oz mined.

      You would probably do the same thing if it was a "mine" in your backyard.

      If I had to own a silver miner, it would be SLW. With SLV out there and no risk, I'd rather just stay with that.

      Now if SLW instituted a dividend, that would completely change the story.


      look at the price of SLW options for expiry next month. The $10 options (deep in the money) are bid $4.40 when the price of the stock is $14.40 == no leverage

      The out of the money options can be bought for pennies == great leverage

    • If I understand you correctly, you prefer SLV because it is lower risk than a miner. How do you counter the argument that SLV is paper silver that is manipulated on the COMEX by the silver shorts (i.e. Ted Butlers arguments)? I am very interested in owning silver metal that doesn't carry counter party risk. Other than bullion itself, I have concluded that SLW is the safest way to invest in silver. I would be interested to hear your arguments why you percieve SLV as the safest way to in silver.

    • I prefer SLW over miners because it is lower risk

      I prefer SLV because it is lower risk over SLW with virtually the same performance.

      I prefer silver in my hand to all the above. I have way more physical than SLV.

      The Ted Butler arguments all make sense and may be true but seem to only come into play in the worst case scenario == the scenario no one wants. In that scenario, I'd rather have physical than SLV than SLW, than a miner.

      so if you are going to play the paper game and assume the Ted Butler scenario just won't pass, then own SLV. IF the Ted Butler scenario happens, you may fnd all your accounts frozen for a bank holiday. In that case, it doesn't matter if you own SLV, SLW, IBM, whatever.

    • Not sure we are comparing apples to apples here. Looks to me like the leverage comes from the time component, that is, betting on a certain price move in a short time.

    • Your points are well taken.

      Miners will, when ALL METAL prices are high, concentrate on previously less profitable ores to extend the life of the mine.

      And yes, the ozs mined will therefore be less as the profits however continue to roll in.

      I guess I just continue to dream of a dividend and silver prices substantially higher than today.

      Good trading

    • Just some quick bullets (I'm swamped at work):

      - Nice thread to all participating. It is nice to see respectful, insightful dialogue for a change from varying perspectives.

      - If I understand the arguements being made "con" SLW leverage to POS due to the $3.90/oz. compensation offered for extraction, then wouldn't it be true that a miner would actually have more incentive to get that silver out now before energy costs make the extraction impossible/cost prohibitive?

      -Each mine(r) has it's own formula as to which ore is most profitable to mine based on the deals they have made for the ore(s), the concentrations of those particular ores & their locations & extraction costs. This being said, the previous arguments seem far too general in nature to be used as a measuring stick for SLW's leverage to POS since it is expanding it's supply base.
      (to be cont.)

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