Silver Wheaton
Encyclopedia
Silver Wheaton is a pure play
silver mining company, the largest in the business of silver streaming
. It produces over 23 million ounces and sells over 20 million ounces of silver mined by other companies as a by product (including Barrick Gold
and Goldcorp
). Because business is routed through a Cayman Islands subsidiary (Silver Wheaton Caymans Ltd.) it is able to avoid paying income tax; large silver streaming contracts have also meant that growth doesn't require capital expenditure (low risk). Although most agreements it makes are short term contracts at least one with the Penasquito mine in Mexico lasts the length of the mine's life. Most of the gold it sells comes from the Minto Mine in the Yukon
, acquired in mid 2009 following the Cdn $190 million acquisition of Silverstone Resources Corp.
In total there are 15 agreements with 11 different companies; being able to pay a large portion of the contract price in cash initially and having already developed, extensive relationships with mining companies helps it gain access to the commodity. As of late 2009 it was paying an average of $3.98 for each ounce of silver through the agreements it had. Penasquito (the largest silver deposit in the world, Silver Wheaton's 25% interest would rank in the top 25 silver mines in the world) will give the company an average of 7 million ounces annually for 22 years (begins early production in 2010-2011). Like over half of the world's silver producing mines, the Penasquito mine also produces lead, copper and zinc. In 2010 it produced 23.865 million ounces of silver (37.2% from 2009) and sold 20.483 million ounces (up 29.5%) at an average price per ounce of $20.67 (though it paid the same unit price for the silver, $4.04 per ounce it sold each ounce for 36.6% more). In the first quarter of 2011 it received 56% more for each ounce of silver than it did during the entire 2010 year.
until December 7, 2006 when Goldcorp's sale of 18 million shares reduced its ownership to 48%. On February 14, 2008 Goldcorp divested itself completely of Silver Wheaton, selling 108 million shares for C$1.566 billion.
Silverstone Resources, acquired in 2009 previously traded on the TSX Venture Exchange
under the symbol SST (delisted May 25, 2009 just after the takever) as a Tier 1 stock (the exchanges premier tier).
, Barrick (made up of five parts), Yauliyacu, Zinkgruvan
, Cozamin
and Minto. In addition there are six other smaller mines that contribute about 22% of the total.
The San Dimas mine was sold by Goldcorp in the summer of 2010 to Mala Noche Resources Corp. (later renamed Primero Mining) for half a billion dollars complicating things for Silver Wheaton which had already made an agreement with Goldcorp for the silver. In response Silver Wheaton agreed to a new contract agreement. The Penasquito mine which began producing in September 2010 (and has a mine life of 22 years) is Mexico's largest open pit mine.
- The agreement it has with Barrick Gold involves the silver produced at 4 mines; Pascua Lama
, Lagunas Norte (Peru), Pierina (Peru) and Valadero (Argentina). The deal involving the Lagunas Norte, Pierina and Valadero mines was made in September 2009, required an initial deposit of $212.2 million, gives Silver Wheaton 100% of the silver produced and ends at the conclusion of 2013. The Pascua-Lama mine (at the border of Chili and Argentina) contract gives Silver Wheaton access to a quarter of the silver produced there from 2013 to 2017 and could raise silver sales by 30%.
- Subsidiary Silverstone Resources Corp. owns 100% of the life of mine silver produced at mines in Neves-Corvo
and Aljustrel
, Portugal. The Lundin Mining
owned Neves-Corvo mine located near the Iberian Pyrite Belt
is primarily a copper and zinc producer.
Pure play
In financial management, a pure play is a company whose shares are publicly traded and that either has, or is very close to having, a single business focus. Coca-Cola is an example of a pure play in this context because it retails only beverages...
silver mining company, the largest in the business of silver streaming
Silver streaming
Silver streaming is the term often used when a company makes an agreement with a mining company to purchase all or part of their silver production at a low, fixed, predetermined price to which both parties agree. The silver is usually a by-product of the mineral the mining company's business is...
. It produces over 23 million ounces and sells over 20 million ounces of silver mined by other companies as a by product (including Barrick Gold
Barrick Gold
Barrick Gold Corporation is the largest pure gold mining company in the world, with its headquarters in Toronto, Ontario, Canada; and four regional business units located in Australia, Africa, North America and South America...
and Goldcorp
Goldcorp
Goldcorp Inc. is a gold producer headquartered in Vancouver, British Columbia, Canada. Goldcorp has 16 operations and development projects in 6 countries across the Americas....
). Because business is routed through a Cayman Islands subsidiary (Silver Wheaton Caymans Ltd.) it is able to avoid paying income tax; large silver streaming contracts have also meant that growth doesn't require capital expenditure (low risk). Although most agreements it makes are short term contracts at least one with the Penasquito mine in Mexico lasts the length of the mine's life. Most of the gold it sells comes from the Minto Mine in the Yukon
Yukon
Yukon is the westernmost and smallest of Canada's three federal territories. It was named after the Yukon River. The word Yukon means "Great River" in Gwich’in....
, acquired in mid 2009 following the Cdn $190 million acquisition of Silverstone Resources Corp.
In total there are 15 agreements with 11 different companies; being able to pay a large portion of the contract price in cash initially and having already developed, extensive relationships with mining companies helps it gain access to the commodity. As of late 2009 it was paying an average of $3.98 for each ounce of silver through the agreements it had. Penasquito (the largest silver deposit in the world, Silver Wheaton's 25% interest would rank in the top 25 silver mines in the world) will give the company an average of 7 million ounces annually for 22 years (begins early production in 2010-2011). Like over half of the world's silver producing mines, the Penasquito mine also produces lead, copper and zinc. In 2010 it produced 23.865 million ounces of silver (37.2% from 2009) and sold 20.483 million ounces (up 29.5%) at an average price per ounce of $20.67 (though it paid the same unit price for the silver, $4.04 per ounce it sold each ounce for 36.6% more). In the first quarter of 2011 it received 56% more for each ounce of silver than it did during the entire 2010 year.
History
Silver Wheaton was established in 2004. It was previously controlled by GoldcorpGoldcorp
Goldcorp Inc. is a gold producer headquartered in Vancouver, British Columbia, Canada. Goldcorp has 16 operations and development projects in 6 countries across the Americas....
until December 7, 2006 when Goldcorp's sale of 18 million shares reduced its ownership to 48%. On February 14, 2008 Goldcorp divested itself completely of Silver Wheaton, selling 108 million shares for C$1.566 billion.
Silverstone Resources, acquired in 2009 previously traded on the TSX Venture Exchange
TSX Venture Exchange
The TSX Venture Exchange is a stock exchange in Canada. It is headquartered in Calgary, Alberta and has offices in Toronto, Vancouver, and Montreal. All trading through the Exchange is done electronically, so the Exchange does not have a "trading floor"...
under the symbol SST (delisted May 25, 2009 just after the takever) as a Tier 1 stock (the exchanges premier tier).
Mines
The silver it has agreed to purchase is in Mexico (40%), Portugal (20%), USA (10%), Chile (9%), Peru (9%), Argentina (7%), Sweden (4%), Greece and Canada (about 1%). Silver Wheaton doesn't own or operate the mines but the contracts it has with their owners gives it full access to any silver (gold at the Minto Mine) mined there. The six mines from which the company gets most of its silver are : San Dimas, PenasquitoZacatecas
Zacatecas officially Estado Libre y Soberano de Zacatecas is one of the 31 states which, with the Federal District, comprise the 32 Federal Entities of Mexico. It is divided in 58 municipalities and its capital city is Zacatecas....
, Barrick (made up of five parts), Yauliyacu, Zinkgruvan
Zinkgruvan
Zinkgruvan is a locality situated in Askersund Municipality, Örebro County, Sweden with 383 inhabitants in 2005.It is situated close to Sweden's second largest lake, Vättern. The village is famous for its mining industry started by the belgian company Vieille Montagne in 1857, hence the name...
, Cozamin
Zacatecas
Zacatecas officially Estado Libre y Soberano de Zacatecas is one of the 31 states which, with the Federal District, comprise the 32 Federal Entities of Mexico. It is divided in 58 municipalities and its capital city is Zacatecas....
and Minto. In addition there are six other smaller mines that contribute about 22% of the total.
The San Dimas mine was sold by Goldcorp in the summer of 2010 to Mala Noche Resources Corp. (later renamed Primero Mining) for half a billion dollars complicating things for Silver Wheaton which had already made an agreement with Goldcorp for the silver. In response Silver Wheaton agreed to a new contract agreement. The Penasquito mine which began producing in September 2010 (and has a mine life of 22 years) is Mexico's largest open pit mine.
- The agreement it has with Barrick Gold involves the silver produced at 4 mines; Pascua Lama
Pascua Lama
Pascua-Lama is an open pit mining project of gold, silver, copper and other minerals. Pascua Lama is located in the Andes mountains, south of Atacama, straddling the border between Chile and Argentina at an altitude of over 4,500 metres. Toronto-based Barrick Gold, the world's largest gold mining...
, Lagunas Norte (Peru), Pierina (Peru) and Valadero (Argentina). The deal involving the Lagunas Norte, Pierina and Valadero mines was made in September 2009, required an initial deposit of $212.2 million, gives Silver Wheaton 100% of the silver produced and ends at the conclusion of 2013. The Pascua-Lama mine (at the border of Chili and Argentina) contract gives Silver Wheaton access to a quarter of the silver produced there from 2013 to 2017 and could raise silver sales by 30%.
- Subsidiary Silverstone Resources Corp. owns 100% of the life of mine silver produced at mines in Neves-Corvo
Neves-Corvo mine
Neves-Corvo mine is a zinc-copper mine in Castro Verde Municipality, Portugal. The deposit was discovered in 1977 and the mine opened in 1988.- References:**]...
and Aljustrel
Aljustrel
Aljustrel is a municipality in Portugal with a total area of 458.3 km² and a total population of 9,940 inhabitants.During the Roman era, Aljustrel was known as Metallum Vispascense....
, Portugal. The Lundin Mining
Lundin Mining
Lundin Mining is a multinational minerals company with operations in Sweden, Ireland, Spain, Portugal, the Democratic Republic of Congo, and Russia. Lundin Mining is headquartered in Toronto, Ontario and trades on the Toronto Stock Exchange as part of the S&P/TSX 60 index...
owned Neves-Corvo mine located near the Iberian Pyrite Belt
Iberian Pyrite Belt
The Iberian Pyrite Belt is a vast geographical area with particular geological features that stretches along much of the south of the Iberian Peninsula, from Portugal to Spain. It is about 250 km long and 30–50 km wide, running northwest to southeast from Alcácer do Sal to Sevilla...
is primarily a copper and zinc producer.