Vancouver — Silver Wheaton Corp. is in talks with “many different companies” about acquiring long-term silver purchase contracts and silver assets, the company said Tuesday.
“Discussions are at all sorts of different stages, but I would say there's a lot of interest in the Silver Wheaton model,” chief executive officer Peter Barnes told a conference call with analysts.
Barnes said Silver Wheaton's model of acquiring silver production from mining companies focused on other metals or gold can give those companies an opportunity to grow without diluting their stock base or taking on bank debt.
“More than half of the silver production comes from base-metal mines and they're not focused on the silver. Fifteen per cent of silver production comes from gold mines and they're not focused so much on the silver either,” he said.
“So I think that gives us a huge opportunities to partner up with people and help them reduce their risk by giving them money toward their capital expenditures to build a mine.”
Silver Wheaton, spun off from Wheaton River Minerals in 2004 as a pure-play silver company, said it expects silver sales to reach 20 million ounces by 2009 “without any further capital expenditures, and assuming no further acquisitions.”
Last year, Silver Wheaton acquired the right of first refusal on future silver production from the Penasquito project from Goldcorp Inc., the company's largest shareholder, when it comes into production.
Penasquito is forecast to produce more than 20 million ounces of silver a year when it hits full stride in 2009.
In 2006, Silver Wheaton earned $85.2-million or 37 cents per diluted share, on revenue of $158.5- million. That compared with a profit of $25.3-million, or 15 cents per diluted share, on revenue of $70.9- million in 2005.
Silver sales were 13.5 million ounces last year, up from 9.7 million ounces in 2005, while the average realized price increased to $11.72 an ounce, up from $7.31.
Goldcorp gave up its majority stake in Silver Wheaton late last year in a secondary offer of 18 million of its shares in the silver company worth $228.6-million.
Under the deal, Goldcorp saw its stake in Silver Wheaton fall from 57 per cent to roughly 49 per cent.
