Silver Wheaton’s (TSX: SLW)(NYSE: SLW) precious metals streaming model enables it to buy the silver or gold production of a mine it doesn’t own or operate in exchange for an upfront payment. Here are 10 reasons to consider Silver Wheaton.
1. Its agreements
Silver Wheaton’s family of assets include precious metal streams on Goldcorp’s (TSX: G)(NYSE: GG) Penasquito mine and HudBay Minerals’ (TSX: HBM)(NYSE: HBM) flagship 777 mine and Constancia project. It also includes Barrick’s (TSX: ABX)(NYSE: ABX) Pascua-Lama Project and Vale’s (NYSE: VALE) Salobo and Sudbury mines.
2. Its major streams
In 2013, the company’s cornerstone assets included the San Dimas and Penasquito mines. Primero Mining’s (TSX: P) (NYSE: PPP) San Dimas mine contributed 6.5 million ounces to Silver Wheaton in 2013. Goldcorp’s Penasquito mine produced more than 6.2 million ounces of silver for Silver Wheaton in 2013.
3. Its track record
The company had a record year in 2013. Its production and sales volumes increased 22% and 10%, respectively. Its attributable production increased for the fifth consecutive year, to 35.8 million silver equivalent ounces.
4. Its Q1 2014 production
Silver Wheaton had attributable silver equivalent production for Q1 2014 of 9 million ounces (6.9 million ounces of silver and 33,800 ounces of gold). This represents an increase of 8% over Q1 2013.
5. A first-rate portfolio
Silver Wheaton has the right to purchase all or a portion of the precious metals production from a high-quality portfolio at a low fixed cost. This portfolio consists of 19 operating mines and five development projects. In 2013, Silver Wheaton entered into an agreement with Vale to acquire 25% of the gold produced from its Salobo mine for the life of the mine, and 70% of gold production from some of Vale’s Sudbury mines for a term of 20 years.
6. Geographic diversity
The company’s geographic breakdown of attributable silver and gold reserves and resources, as of December 31, 2013, included Canada, the U.S., Mexico, Sweden, Portugal, Guyana, Brazil, Greece, Chile, Argentina, and Peru.
7. Its capital and operating cost certainty
Silver Wheaton has no ongoing capital or exploration costs. It does not contribute to future capital expenditures or exploration costs invested by a mine. However, Silver Wheaton profits from the production and exploration growth that results from these expenditures.
8. Its top management
President and CEO Randy Smallwood is a founding member of Silver Wheaton. He originally began as an exploration geologist with Wheaton River Minerals Ltd. He has a geological engineering degree from the University of British Columbia and was an important part of the team that built Wheaton River/Goldcorp into one of the largest and most profitable gold companies globally.
9. Its forecast
Its 2014 forecast attributable production is roughly 36 million silver equivalent ounces. This includes 155,000 ounces of gold. By 2018, the expectation is that annual attributable production will grow to approximately 48 million silver equivalent ounces. This includes 250,000 ounces of gold.
Last month, the company declared a quarterly dividend of $0.07 per common share. Its current dividend yield is 1.24%.
Consider Silver Wheaton as a way to add silver and gold to your portfolio via the company’s various streams. Its business paradigm can create steady returns for you.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Michael Ugulini has no positions in any of the companies mentioned in this article. Silver Wheaton is a recommendation of Stock Advisor Canada.