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Silver Wheaton (SLW) is an exciting story in the metals market, but not just because it's the largest precious metals streaming company in the world today. The reason is the excellent growth profile, which I feel is underappreciated by the market as per the declining share price and P/E ratio over the past several months. Silver production reached record production in 2012, but this is just the start of more to come. In the recent Q4 2012 conference call, Randy Salwood, SLW's President and CEO, stated:

...we now forecast production of 33.5 million silver equivalent ounces in 2013 and by 2017 we will reach 53 million ounces of silver equivalent production, an increase of nearly 80% from 2012.

In 2012, the company posted 29.6 million ounces of silver production. This means production will increase by 13% in 2013 to 33.5 M ounces, then accelerate from there. Then as if 80% didn't sound upbeat enough, Randy hinted at the possibility for upside to this amazing statistic, when he said:

"While our organic growth profile now forecasts roughly an 80% increase of silver equivalent production over the next five years, we firmly believe there are yet more accretive opportunities for us to further add to our world-class portfolio of precious metals streams."

These are big growth projections from this already large streamer ... perhaps $65/share by 2023 is practically a no brainer?

Growth Driven By Diversity and Big Partners:

SLW currently has contracts with 19 mines in operation, and 4 more in developmental stages allowing diversification into varying regions of the world. However, the acquisition of the Salobo and Sudbury gold streams from Vale S.A. (VALE) are the most exciting, since these assets are expected to increase gold exposure by doubling production of the yellow metal over the next five years. The Vale Deal combined with Hudbay's 777 mine will be mostly responsible for driving the company's production growth over the near term.

Dividend Policy:

Most investors require some sort of dividend, but dividend growth is even more sought after. At a glance, SLW's paltry trailing .9% dividend leaves much to be desired. However, the dividend has increased by 95% in 2012 over 2011's payouts, thanks to SLW's dividend policy, which calls for 20% of the previous quarter's operating cash flow to be distributed in the form of a quarterly dividend. SLW's most recent dividend of $.14, or 1.8% on an annual forward looking basis, is a sign dividend growth should continue to compliment production growth, permitting commodity prices do not drastically fall.

Summary:

2012's record results prove SLW can grow production meaningfully. This success combined with a new relationship with Vale makes Randy's 80% production growth projections believable. However, just as noteworthy is how SLW grew revenues despite lower commodity pricing. This shows how intense production growth can outweigh some disadvantageous pricing declines going forward, as long as they are not too extreme.

Source: Silver Wheaton: 80% Production Growth By 2017, With Dividend Boosts

Additional disclosure: I am long SLW via Calender Bull Call Spreads