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Following up on a previous article discussing the Pascua-Luma deal with Barrick Gold (NYSE:ABX), more good news keeps rolling in, but this time through a few streams previously in their pipeline. Aside from continuing to seek out additional acquisitions ( which they will succeed in doing yet again), they have the rights to purchase considerable portions from one of the largest undeveloped silver mines.

1) The Navidad project (Argentina), currently under construction by Aquiline Resources, is among the top 5 undeveloped silver mines in the world. It is comprised of seven zones, one of which Silver Wheaton (NYSE:SLW) has the right to purchase 12.5% of the silver produced over the life of the mine. This may not sound all that big, but this zone is expected to produce 16 million ounces of silver per annum, with a potential expansion project that will increase this to between 20-22m oz. Though this will likely only add about 3m oz to Silver Wheaton, it has already been paid for (less the $3.90 cost of purchasing the silver. This may prove to have substantial upside as the seven zones already have a resource base exceeding 750 million ounces and operations have yet to commence.

2) Corani Project -Bear Creek Mining - (Peru) - 16.8% ownership on a fully diluted basis, which has implications for the future. Bear Creek recently appointed the COO for two large silver mines in Peru, which Silver Wheaton may already be in talks to acquire - as Bear Creek will likely be unable to finance the capital requirements needed to develop these projects. They have also acquired shares in Sabina Silver and Revett Minerals. Based on the percentage ownership of these three interests, an additional 5-7m attributable ounces to Silver Wheaton is possible.

3) Neves Corto - Lundin Mining - Though not a silver stream, Silver Wheaton has the right to purchase the entirety of the zinc mined as well should prices begin to firm. The resource base of 140m oz is excluded from SLW's resource base yet still may be a valuable asset down the road.

4) Aljustrel - Silver Wheaton has the right to purchase this silver-zinc stream, but due to suppressed zinc prices, the mine is currently idle, with only basic maintenance being performed. Like Neves Corto, this may prove to be a valuable asset down the road.

I expect one or several of these assets to come online within the next five years or be sold off to strengthen their capital base for their pursuit of another acquisition. They will undoubtedly become a 50m oz producer before all is said and done, which is even more spectacular as they have the lowest operational (mining, input costs, diversified portfolio) relative to all the others in the complex. For those who are unfamiliar with the transformational year Silver Wheaton has seen so far in 2009, below is a brief rundown.

2009 production forecasts that were released last year projected Silver Wheaton to reach peak production by 2013-2014 and 31m ounces of attributable production.

Q1) Acquired what is basically their only competitor (Silver Stone) which increased cash flow immediately, bringing 5-6m ounces online (on an annualized basis) divided up into three streams. This not only added to the NAV, but also further diversified operational risks. They did this at a slight cost to the common shareholder via dilution, but is profitable when silver is about $9/oz (give or take).

Q2) Good news from the Penasquito mine, with Goldcorp (NYSE:GG) having minimal startup difficulties for this world class mine. The ramp up is well under way, ahead of schedule and should add 4-5m attributable ounces in 2010 and between 7-9m in 2011. Silver prices also started to firm up considerably, allowing Silver Wheaton to pay down debt more quickly than expected and accessing a new, cheaper revolving credit facility if need be.

Q3) Silver Prices remained very strong, providing large amounts of cash flow Silver Wheaton allocated both by paying down their original debt obligation and helped fund the first upfront payment to Barrick Gold for the Pascua-Luma deal.

Q3) Silver Wheaton added a third conerstone royalty stream to their portfolio, this time courtesy of the world's largest gold producer. Three annual payments of 210 million bought them the right to purchase 25% of silver production throughout the life of the mine at a cost of $3.90/oz with a 1% inflation adjustment (which doesn't kick in till 2013). Like all world class mines, the original estimates prove to be rather conservative, so I would look to the upper range of 10m ounces as the more likely scenario. Meanwhile, until Pascua-Luma commences production in 2013-2014, Silver Wheaton has the right to purchase approx 4m oz from three other Barrick mines. (Silver Wheaton's all in costs came out to $8.18/oz - so who wouldn't buy silver at half price.)

Q4) I can almost guarantee Silver Wheaton makes one more moderate to large acquisition by the end of the year, or the first quarter of next year at the latest. Management has indicated they are actively looking and have been in talks with a few companies.

Q4, Q1 2010 - Any Thoughts?

Disclosure: Long SLW.