Seeking Alpha

Silver Wheaton’s (SLW) $1.9B purchase of Vale (VALE) gold streams should hike revenues...

Silver Wheaton’s (SLW) $1.9B purchase of Vale (VALE) gold streams should hike revenues generated from gold production from an average of 12% to a peak of ~25% in the next five years. The move is expected to immediately boost SLW’s production and cash flow profile by adding expected average gold production of 110K oz./year over the next 20 years, or ~$3.7B at prevailing gold prices, Jon Ogg calculates.
Comments (7)
  • SLW makes a lot of good buys over the years. But $1.9bil seems a bit high for what they expect to recoup. Wonder if there's something more that hasn't been reported on?
    5 Feb 2013, 06:17 PM Reply Like
  • the only thing i can imagine is that the expectations of the mine expanding much greater are very high. otherwise, the time it takes to recoup the money they are putting down kind of defeats the entire purpose because the return is so low and risk of gold staying elevated over 20 years is high. I'm bullish on gold, but something seems strange as far as risk management goes.
    5 Feb 2013, 07:39 PM Reply Like
  • Are they hedging for the coming hyper inflation ?
    5 Feb 2013, 08:53 PM Reply Like
  • SLW is one of my favorite companies, otherwise, i wouldn't buy and sell it so regularly - in and out of my roth IRA. elmer's grandson.
    6 Feb 2013, 02:08 AM Reply Like
  • with the current cash onhand, about 750M, plus another 2.5bn in credit lines and 2013 cash generation of 900M or so, there is sufficient capital to do this deal. question is how market will react to gold vs silver, especially if gold silver ratio will move lower. I do view it as a positive to use debt to purchase a stream. gold will at some point be much higher than todays prices and there's possibly large ounce upside in this deal. if it dips substantially tomorrow, issue some put options and wait for the upside again.
    6 Feb 2013, 04:19 AM Reply Like
  • There is probably tons of silver in the deal too that goes along with the gold.
    6 Feb 2013, 04:24 AM Reply Like
  • I had a ticket written, but had to go with some other pix, see my stock talks today.
    Capt. Brian
    The Lost Navigator
    I have not made my "buy silver" call yet, but durned close. This ole fool from the sea is gettin' real ancy to get more Ag.
    6 Feb 2013, 09:17 AM Reply Like
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