Case Study: Silver Wheaton (SLW)
Silver Wheaton (SLW)
The precious metal sector has been in trouble since the last one year. Although the downtrend is continuing since a very long time, the new lows that silver price has made this year are not found anywhere else on the five year chart. It was only during the 2 years after the 2008 crisis when silver last achieved these levels. We can clearly see that like many companies whose fortunes are tied to a particular metal, Silver Wheaton’s stock price generally follows the price of silver. This behaviour indicates something very positive about the stock. When the metal is trading low, investors do lose confidence in the sector and funds fly away from the sector. But on revival of a sector it is important to note how much of the …show more content…
Silver Wheaton Corp. (SLW) is a Canadian metal streaming company, which generates its revenue primarily from the sale of silver. It has about 20 long term silver and gold purchase contracts with relating to 27 various mining assets and holds interests in them. Since the company is not a miner, it is immune to the risks of operation. It is just an investor for its mining partners who gets guaranteed returns in the form of rights to purchase gold and silver by-product at very low prices fixed by the long term contracts. As a result, the company has enjoyed healthy margins despite all the price pressures over last one …show more content…
For the current year, the company has given a guidance of producing approximately 43.5 million silver equivalent ounces, including 230,000 ounces of gold. The company intends to significantly increase this number in the next 4 years and reach approximately 51 million silver equivalent ounces, including 325,000 ounces of gold. The real strength of this company is the extremely low costs at which it can buy gold and silver without getting disturbed much by the operational contingencies that the miners face. At the end of Q2 the company also reported enough liquidity including $72 million of cash and cash equivalents and a revolving facility of $ 2 billion to fund this anticipated growth and enter into more streaming
The precious metal sector has been in trouble since the last one year. Although the downtrend is continuing since a very long time, the new lows that silver price has made this year are not found anywhere else on the five year chart. It was only during the 2 years after the 2008 crisis when silver last achieved these levels. We can clearly see that like many companies whose fortunes are tied to a particular metal, Silver Wheaton’s stock price generally follows the price of silver. This behaviour indicates something very positive about the stock. When the metal is trading low, investors do lose confidence in the sector and funds fly away from the sector. But on revival of a sector it is important to note how much of the …show more content…
Silver Wheaton Corp. (SLW) is a Canadian metal streaming company, which generates its revenue primarily from the sale of silver. It has about 20 long term silver and gold purchase contracts with relating to 27 various mining assets and holds interests in them. Since the company is not a miner, it is immune to the risks of operation. It is just an investor for its mining partners who gets guaranteed returns in the form of rights to purchase gold and silver by-product at very low prices fixed by the long term contracts. As a result, the company has enjoyed healthy margins despite all the price pressures over last one …show more content…
For the current year, the company has given a guidance of producing approximately 43.5 million silver equivalent ounces, including 230,000 ounces of gold. The company intends to significantly increase this number in the next 4 years and reach approximately 51 million silver equivalent ounces, including 325,000 ounces of gold. The real strength of this company is the extremely low costs at which it can buy gold and silver without getting disturbed much by the operational contingencies that the miners face. At the end of Q2 the company also reported enough liquidity including $72 million of cash and cash equivalents and a revolving facility of $ 2 billion to fund this anticipated growth and enter into more streaming