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Silver Wheaton Corp. Message Board

kazansky_98 30 posts  |  Last Activity: Aug 26, 2015 11:46 AM Member since: Apr 19, 1999
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  • Reply to

    Any answer for this drop?

    by filmtarget Aug 26, 2015 10:43 AM
    kazansky_98 kazansky_98 Aug 26, 2015 11:46 AM Flag

    Just trying to find the bottom of Silver which looks like it is headed below 10 in the short term. SLW is pricing Silver in around $8-9 oz. here. At that price SLW is fair value here. Just get short some silver here and pick up the $5-6 a contract, that's $25k per contract

  • kazansky_98 kazansky_98 Aug 14, 2015 12:58 PM Flag

    Not even close to how this works.

  • Reply to

    interesting point, if miner goes belly up

    by billhopen Aug 14, 2015 12:20 PM
    kazansky_98 kazansky_98 Aug 14, 2015 12:56 PM Flag

    Price of silver does not matter as silver is a byproduct. The silver price could be $5 an ounce and would not factor into the operations of the mine. They invest in Copper and ion ore mines and only those in the lowest cost quartile of the mining operations themselves. This means these are the last mines they would close and if they did, all world production would cease. At that point the last thing on your mind would be the state of this company or the mines themselves as the entire equity market globally would cease to exist.

  • Reply to

    Any idea what is happening today?

    by fattrader7 Aug 5, 2015 11:50 AM
    kazansky_98 kazansky_98 Aug 5, 2015 3:16 PM Flag

    It's good to keep getting rid of old shareholders here. If you are a long, you should desire a lower price to buy more. I would hope we can break the lows this week and get some in the 11's or maybe even in the $10 handle.

  • Reply to

    What is going on

    by sunbrookplace Jul 23, 2015 3:24 PM
    kazansky_98 kazansky_98 Jul 27, 2015 1:02 AM Flag

    I agree. I love taking a large position in SLW here against short metals in the feeling that the trade is epic at these levels. Bring the metals down I say, any time I can buy an ounce of silver forward for less than spot I will take it. I hope they drive an ounce of silver under the cost of a fast food lunch. About even right now which is completely insane yet a beautiful thing.

  • Reply to

    Silver Wheaton

    by sawyers.eddie Jul 15, 2015 10:01 PM
    kazansky_98 kazansky_98 Jul 15, 2015 11:38 PM Flag

    They do not have a claim on the mine. They have had a couple small miners mot fulfill the contracts due to commodity pricing and they have to write off those investments. This is why they concentrate on the lowest cost producers. They ran mines originally, so understand the economics of the business. Commodity prices are always the risk. They will remain profitable at $5 silver, but only to the tune of $55M a year minus costs. Since silver is a byproduct metal, they don't run much risk of the cost of silver influencing the mines ability to remain in business. Copper and Iron ore pricing is more important. The interesting part is that they drastically reduce the mines operating costs because they eliminate the interest expense the mine would typically incur, thus helping their own cause in protecting their very investment.

  • Reply to

    Price of silver

    by widjj Jul 15, 2015 4:39 PM
    kazansky_98 kazansky_98 Jul 15, 2015 5:50 PM Flag

    They are mixing in gold because that's where the big deals are currently and they want to dampen volatility a bit in there stock. They are obviously failing at this currently, but not much you can do about market reactions. The tax news has been public for 3 years so most of it was thought to have been built into the price and why it had a lower p/e than it's peers in the past. The tax news should be a positive one way or the other as it has been an overhang on the stock for years and will not change their model or drastically impact their profitability beyond margin pressure to the tune of the tax rate. Still a long shot it passes as they would have basically set a precedence and reassess every company in Canada that does business outside of Canada in a similar manner, which is everyone. The court battle will drag out for years and SLW won't have to pay anyone until it is resolved, besides the $100 million which they can pay with cash.

  • Reply to

    Price of silver

    by widjj Jul 15, 2015 4:39 PM
    kazansky_98 kazansky_98 Jul 15, 2015 4:54 PM Flag

    It's only down 72 cents in 2015

  • kazansky_98 kazansky_98 Jul 14, 2015 7:51 PM Flag

    While I agree with the chart, they would have more cash flow per year than market cap at that point. So sometimes, you have to use math when figuring out the value of a business. Math is hard though and charts are easier on the brain.

  • kazansky_98 by kazansky_98 Jul 14, 2015 5:28 PM Flag

    If we can pick up some speed to the downside toward 14 , there will be a good bid in the Aug. options to create another spread. Will look to buy another piece around 14 and sell the 14 puts and calls for a cost basis in Aug. of 12.50. I will add this to the Aug spread at 15 sold with a cost basis of 13.50. That would be two tranches at an avg. cost basis of $13 on both buys. Below 13 by Aug expiration and will have a chance to get another piece and move the basis down to 12 by September. Great premiums out there in this one and hopefully the institutions can drive it a bit lower over the next few months to build out a nice position against some short gold. I think another 15% down would be extreme and a good spot to take an unhedged long position into 2016 with a 19 p/e after assumed tax hits to earnings and a 20% growth rate. May not get a chance, but looking to get the trade built prior to a move to 14 so I don't miss it. If the tax does not pass, the 2016 p/e stands at 17 today at $15.50 silver and a 13.5 p/e for 2017 with a 20% organic growth rate assuming no more deal are done for two years and no expansion in production is accomplished at any current property. Tax implications at 25% raise the p/e to 19 and 15 respectively, though they won't hit until 2018. I assume they would build a reserve equal to the amount owed over the course of the next two years though, so mine as well build it into the forward p/e. Good luck, should be getting another good trade this week, hopefully no news for a while to keep the selling going and the correlation to silver negative. Only 4 trades in 10 years to purchase the forward stream under spot prices, attributing no value to forward production and the current stream is priced under spot. Each time the move has been huge following. This is the downside to no hedging in a bear market, but any move higher in the metals and their p/e will quickly fall into single digits here.

  • Reply to

    c'mon SLW play hardball with the gov

    by sugarsail42 Jul 10, 2015 1:41 PM
    kazansky_98 kazansky_98 Jul 10, 2015 3:56 PM Flag

    Yes, great time to add. Weak hands are wringing and that makes great opportunity. Hopefully it goes lower, will be an even better buy. A lot of option premium as well, so many ways to pick it up around 14 here. I bought today some in the 14's and sold puts and calls for a cost basis of $13.45 by August, what's not to like. People always panic, they buy high and sell low. Hopefully the short interest moves a lot higher to create upside panic on a gap when the news is released. Either way the tax assessment shakes out we go higher as cash flow is king regardless of the marginal tax rate. If people don't want the cash flow, I'll take it. The lower the stock goes, the larger percentage of cash flow I get. Bring this thing to $5 I say!

  • Reply to

    Some reality

    by kazansky_98 Jul 9, 2015 3:10 PM
    kazansky_98 kazansky_98 Jul 9, 2015 4:33 PM Flag

    Could you be more specific? Not sure what you mean by the forest for the trees. Please lay out your risk reward trade and scenario I would love to have an idea of what you are thinking. Thanks

  • Reply to

    Some reality

    by kazansky_98 Jul 9, 2015 3:10 PM
    kazansky_98 kazansky_98 Jul 9, 2015 3:29 PM Flag

    Continued....

    11. If Silver prices were to head higher, there cash flows would increase dramatically off of these figures, I based them off $15.50 silver for 2015 avg and thereafter.

    12. Their lines of credit are based off of their cash flows, not the cash on their books as they routinely use hundreds of millions to pay of and roll credit lines and recently to secure funding for the VALE deal, otherwise they would be sitting on $350 million in cash.

    13. Paying taxes would decrease margins, but there leverage remains the same to the upside of silver and gold prices as their margins would only shrink my 26%. Or currently they would have 33% margins at current silver prices, still an envious position. At

    14. So everyone needs to relax a bit use the opportunity to scale in for the long term while taking advantage of the lack of information in the short term. Markets always over react in both directions which is the essence of opportunity.

    15. Assuming they pay taxes, their p/e currently stands at 23 for next year at current silver prices. Each dollar higher or lower in the price of silver will add or subtract $50M a year to earnings.

    16. With these facts in hand, I hope it goes lower as it merely gets cheaper and that is what you want when you are buying something. Hell, you can buy the stock here at 15.25, sell the Aug. 15 puts and 16 calls and have a cost basis of $14.10. Now that is a no brainer. If it trades down to 14.10 by Aug. exp. Vol. will be higher and you can sell the 14.50 calls in Sep. and have a cost basis of 13.40. Ladder in this way and it is high reward little risk play, even with silver at $13 an ounce. If it closes Aug. after earnings above 16 you make $2, or a 13% return in 1 month.

  • kazansky_98 by kazansky_98 Jul 9, 2015 3:10 PM Flag

    This tax issue will drag on for a lot longer than most people believe, probably a couple of years if they try to actually reassess and charge them.
    1. SLW can cover the $100 million they would need to post without a problem. They only have to post 50% even if they receive an actually request. The balance would not be due for years to come. They will have over $150 million in cash by next month.
    2. By the time the bill would be due, they would have plenty of cash on hand to make the payment.
    3. The CRA's case is still a long shot as they would have to draft a precedence that would then hit many companies in Canada, thus closing the door on a lot of business both present and especially in the future.
    4. The future tax issue of paying 26% would hit margins, but they could in fact move their headquarters out of Canada. All they have there is a small corporate office with 30 some employees.
    5. If they settle in the middle and draft a new proposal with a new tax structure for these types of transactions with the industry or if the CRA loses it's case, SLW stock would absolutely explode back and above fair value, probably closer to $30 as the overhang for the last 3 years would be completely removed for good.
    6. The market needs time to figure out all of the scenarios and is trading off of very little information, which it hates.
    7. The risk reward is weighted to the upside by a wide margin.
    8. I wish they would eliminate the dividend and stock pile cash, which they could do. The dividend is paltry anyways, but it is still $80 million a year at current prices. They could reinstate it later.
    9. Yes, it could fall $2 ( or further if Silver dropped to further) but it can jump $15 on clarification and even more if Silver were to rally.
    10. Even if the tax is implemented and they remain in Canada, they would still have cash flows of $500,000,000 for 2015 after taxes with cash flows increasing by at least $50,000,000 a year after that without adding any new business.

  • Reply to

    Buying opportunity?

    by dupontsr Jul 8, 2015 9:41 AM
    kazansky_98 kazansky_98 Jul 9, 2015 2:44 PM Flag

    They are producing almost triple what they were producing in 2009

  • Reply to

    I Need to Know.....

    by nicknordby Jul 8, 2015 12:52 PM
    kazansky_98 kazansky_98 Jul 8, 2015 1:31 PM Flag

    The tax bill most likely be much higher than $200 Million, they will probably have another $300 million for years 2011-present. They will have to reduce margins by 26% going forward to comply with ongoing taxes. They would still remain profitable but the question becomes where do they get the money to pay the taxes? At roughly $500 million, they won't have anywhere near the cash to pay and will have to work a deal with creditors to finance the bill and pay it off over time, or work with the CRA to issue credits on a quarterly basis over a period of time, say 5-10 years plus interest. Either way this is going to dramatically impact their balance sheet and profitability going forward. The market is trying to value their business model on a much less profitable basis going forward. It is important to understand that they have 90 days to issue a rebuttal on the proposal. If they are rejected they have to post $100 million immediately, which they can easily do. They will probably take all 90 days to build up more cash. After that they will appeal which will take years in court as this is a decision from the CRA that will impact many companies structure in Canada and set precedence. By that point they will have built up plenty of cash to handle the payment on the balance sheet without impacting cash flows or their ability to extend and build their lines of credit which are based solely on cash flows.

  • Reply to

    SO...nobody cought the web call

    by jwmjohny6 Jul 7, 2015 4:22 PM
    kazansky_98 kazansky_98 Jul 7, 2015 8:10 PM Flag

    That being said, if the CRA wins and demands payment, they will then audit 2011-present and demand another $3-400 million in back taxes, plus taxes going forward which potentially destroys the business model. Tread carefully as this stock probably won't go anywhere for a year or so as they will probably have to shell out $100 million in the next 90 days and then begin a two year long court battle before a resolution is passed. Either way its best to shave 20% off the top of their projected margins going forward to account for the worst case scenario. Also have to account for their losing $100 million which is more cash than they have on their books, though they would probably find a way to use their line of credit, depending on the terms which the banks give them. I suspect they would charge them a hefty interest to draw on their credit line to finance their tax evasion.

  • Reply to

    SO...nobody cought the web call

    by jwmjohny6 Jul 7, 2015 4:22 PM
    kazansky_98 kazansky_98 Jul 7, 2015 7:57 PM Flag

    The CRA has been auditing SLW since 2012, which was public knowledge. The timing of the proposal could have been anytime since the audit began. It has been 3 years.

    The reason SLW said they were happy to finally get this proposal, is because they can finally put this behind them, one way or the other. They obviously disagree with the findings and believe they are in compliance and structured legally to not have to pay foreign transfer tax in his manner.

    This audit has been an overhang for years as an unknown issue.

    So, the CRA has been reviewing this and finally made their proposal and sent a copy to SLW. This is still far from over and will be a while until they find out if they have to pay anything at which point it would initially be 50%.

  • Reply to

    SO...nobody cought the web call

    by jwmjohny6 Jul 7, 2015 4:22 PM
    kazansky_98 kazansky_98 Jul 7, 2015 4:53 PM Flag

    Yes, I listened to the whole call. They just repeated the press release word for word. They couldn't really answer any questions because they have no idea whether or not they can win this argument as their is no precedence for this legally. They still have to draft their response and turn it in over the next 90 days and then the appeals process. If they get turned down right away, they have to post half the money, or $100 million and they would get refunded if they won their case. It's a total #$%$ shoot and you have to assume they lose if you are going to buy. In that case you have to wait to see how they can pay this. they mentioned a payment plan and will try to use their line of credit. Under what terms their creditors would ask for, I don't know. Either way you have to assume that their margins will shrink 20% and then you have to find a bottom in the silver market. I think you could buy this stock perhaps in here and go short the other Canadian streamers that have not fallen yet, as they will be next to get bent over and they have not fallen yet. though most of them have stronger balance sheets and could just pay cash. Either way, there margins will get hit in the same manner and their balance sheets will weaken. looks like trying to side steps the banks on offering financing and the banks have fought back by pushing the CRA to punish them. The banks still find a way to take down their competition. this will be a very interesting legal battle that reshapes the Canadian tax code for years to come, so I assume it takes a long time and goes all the way to the top. Hopefully it drags out for a year and SLW c\an strengthen their balance sheet in the meantime before they have to pay anything. They should cancel the dividend immediately in preparation to build up cash. This would create selling from funds that have to hold stocks that pay a dividend, but could be soaked up by bargain hunters and hedge funds that don't care.

  • Reply to

    What about 2011 - 2014?

    by d_neely Jul 7, 2015 3:56 PM
    kazansky_98 kazansky_98 Jul 7, 2015 4:43 PM Flag

    Yes, that is part of the reason for the huge dive and no bids. The market hates uncertainty and they have no idea how big this could be. All said and done they will probably owe about $400 million in back taxes with only $80 million in cash. They will have to make a payment plan and try to draw on their line of credit to pay this off as part of the plan. They also will lose 20 points on their margins going forward and will probably have to eliminate the dividend to shore up the balance sheet. At present silver prices, their margins will shrink to 32% or so, thus bringing down their profitability by such. It's a hot mess and will take time for the market to decide where the proper risk reward payoff is on the stock. No buyers today at these levels, so I assume it heads lower until the worst scenario is priced in. Today was all panic and tonight firms will be busy trying to price in the worst case scenario to come up with their willing buy points. Let it shake out for a few days or sell puts into the heightened volatility to pick it up in the 14's and then avg. down. A lot depends on the where the bottom is in silver, as that is the main component in trying to figure out their profitability. If silver were stable, it would probably be a good day to buy some into the panic, but Silver still seems to be picking up speed to the downside.

SLW
12.21+0.21(+1.75%)12:04 PMEDT