Silver Wheaton mining at Lusimin Operations in Mexico.
Silver Wheaton was a hot stock when commodity prices took off in early 2011, and it's been able to keep investors interested because there's still a lot of chatter about silver being the new gold of this decade.
This doesn't mean there haven't been some big bumps in the road. From early November to year-end 2011, the stock dropped about 20 per cent -- only to regain all the losses and more, less than two months later.
Even though the stock has since started to slide again, last week's earnings were solid, serving as a reminder that not all is lost for the company. In fact, analysts believe it's in quite good standing.
"With mining companies facing depressed equity valuations and increasing capital cost pressures, we believe these conditions favour the potential for silver-stream acquisitions," CIBC World Markets analyst Cosmos Chiu noted. At the moment, the firm has 14 streaming agreements in place.
Plus, Silver Wheaton has a slew of projects that are either ramping up or coming on stream over the next few years. The biggest source of growth this year is expected to be Gold Corp.'s Peñasquito mine, which should pump out about 7 million silver equivalent ounces. Its other major project is Barrick's Pascua Lama mine, which is on track for 2013 production. Silver Wheaton's production guidance for 2012 is 27 million ounces.
The company also has $840-million of cash on hand, and a credit facility worth $400-million, which means it has the means to tack on new streams.
What doesn't seem to be getting much attention is the stability of silver prices. After crashing down from the stratosphere last April, when silver traded for closed to $50 (U.S.) an ounce, the commodity's price chart has for the most part moved sideways since October. In the past few weeks, however, silver has recently started to come off again, and no one knows if the slide will continue.
Tim Kiladze