Thursday, February 7, 2013

Silver Wheaton's (SLW) Smallwood Says Vale Deal Not a Strategy Change

Immediately after the announcement by Silver Wheaton (NYSE: SLW) of the gold streaming deal with Vale (NYSE: VALE), questions arose on whether or not the company's focus in the future would migrate more towards gold.

CEO Rand Smallwood quickly put speculation to rest, as he said the deal shouldn't be construed as an attempt to change the priority of silver towards a balance of gold and silver.

“This isn’t a change in focus for us. We’ve always been interested in broader precious metals so I still call us a silver-focused streaming company,” Smallwood said. “We do focus on silver and will still focus on silver but we don’t ignore the broader precious market, mainly because of the same reasons we invest in silver apply to gold.

“We’re not scared to step into the gold space when there’s top-quality assets and top-quality partners,” Smallwood added. “It’s worth stepping into the gold space when there are opportunities like this.”

One of the several aspects the market likes about this deal is who it was done with. Overall, Silver Wheaton has a good track record of putting together deals with larger and safer companies, which have helped build the foundation of its current success.

Production on an annual basis for gold will jump to 110,000 ounces, equal to about 5.9 million ounces silver equivalent.

For that, Silver Wheaton paid $1.9 billion and 10 million company warrants with a strike price of $65 and a 10-year duration.

Silver Wheaton was trading at $37.01, up $0.22, or 0.60 percent, as of 12:16 PM EST.

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