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.
Showing posts with label Randy Smallwood. Show all posts
Showing posts with label Randy Smallwood. Show all posts
Thursday, February 7, 2013
Tuesday, February 5, 2013
Silver Wheaton (SLW) Acquires Gold Rights to Salobo Mine, Sudbury Mines
Silver Wheaton (NYSE: SLW) announced in a press release that it has acquired 25 percent of the gold production for the life of Salobo Mine and 70 percent of gold production of Sudbury Mines for a 20-year period from Vale S.A. (NYSE: VALE).
The terms of the deal per the press release are these:
Combining the production from both mines, Silver Wheaton will boost its gold production by 100 thousands ounces a year, with about 60,000 ounces from Salobo and around 50,000 ounces annually from Sudbury.
Over the next five years, gold revenue from the deal with brnig the percentage of gold exposure of Silver Wheaton to an average of 12 percent, going as high as 25 percent some years.
Including the new streams, Silver Wheaton revised its production guidance, with 2013 now expected to include 33.5 million ounces of silver equivalent production, along with 145,000 ounces of gold. For 2017, silver equivalent production is estimated to come in at 53 million ounces, and gold at 180,000 ounces.
CEO Randy Smallwood said this in the release:
Silver Wheaton closed Tuesday at $36.24, up $0.24, or 0.67 percent.
The terms of the deal per the press release are these:
The Company will pay Vale total cash consideration of US$1.90 billion, plus 10 million Silver Wheaton warrants with a strike price of US$65 and a term of 10 years1. US$1.33 billion will be paid for 25% of the gold production from Salobo, while US$570 million will be paid for 70% of the Sudbury gold production. In addition, Silver Wheaton will make ongoing payments of the lesser of US$400 (subject to a 1% annual inflation adjustment from 2016 for Salobo) and the prevailing market price, for each ounce of gold delivered under the agreement.
Combining the production from both mines, Silver Wheaton will boost its gold production by 100 thousands ounces a year, with about 60,000 ounces from Salobo and around 50,000 ounces annually from Sudbury.
Over the next five years, gold revenue from the deal with brnig the percentage of gold exposure of Silver Wheaton to an average of 12 percent, going as high as 25 percent some years.
Including the new streams, Silver Wheaton revised its production guidance, with 2013 now expected to include 33.5 million ounces of silver equivalent production, along with 145,000 ounces of gold. For 2017, silver equivalent production is estimated to come in at 53 million ounces, and gold at 180,000 ounces.
CEO Randy Smallwood said this in the release:
"Partnering with Vale on two new gold streams represents a significant step forward for Silver Wheaton and for the streaming model as a whole. Not only does Silver Wheaton gain accretive gold ounces to further grow and diversify our company, but the precious metals streaming model has now been further endorsed by another one of the world's preeminent mining companies."Silver Wheaton is a proud Canadian company, and we are also excited to be adding another asset based here in Canada , our second one in less than a year."
"While we have traditionally focused on silver, we have never been averse to strategically adding 'the right' gold streams to our portfolio. The world-class nature of the Sudbury operations and the Salobo mine, with its exciting expansion and exploration potential, along with the quality of Vale as an operating partner, convinced us that these assets would be ideal additions to Silver Wheaton's portfolio. Consistent with the mines underlying our existing streaming portfolio, the precious metal coming from both of these assets is produced as a byproduct and represents only a small fraction of the overall economics of the mining operations. While we will continue to believe there are a significant number of streaming opportunities in the silver space, we are also open to layering more high-quality gold streams into our portfolio."
"Vale has a history of mining success spanning decades, and we are confident that Salobo and Sudbury will deliver substantial long-term value to both companies' shareholders. These gold streams will significantly increase Silver Wheaton's overall growth profile, which, given our unique dividend policy, should also translate directly into dividend growth."
Silver Wheaton closed Tuesday at $36.24, up $0.24, or 0.67 percent.
Thursday, January 31, 2013
Miners Seeking Silver Wheaton (SLW) Financing
With much of the financing drying up for mining companies, Silver Wheaton (SLW) has increasingly become the go to company for capital, with the difference now being that larger companies are seeking financing from the silver streaming company, whereby in the past smaller miners had primarily been those chiefly interested in Silver Wheaton as a way to raise capital.
That has come about largely because of the weak banking system in Europe, where banks there had been the major source of loans for the mining industry. Most of that has dried up, so now larger mining companies are scrambling to raise capital in a tough lending environment.
How the streaming company works is Silver Wheaton offers capital to fund projects in exchange for a discount price on the gold and silver production from the specific project being capitalized.
The majority of streams are of silver, which is produced as a byproduct of larger deposits of base metals, which the miners are more interested in.
Recently Silver Wheaton CEO Randy Smallwood said larger companies have been approaching the company for funding needs over the last quarter and longer.
For Silver Wheaton shareholders this is good news for those looking at the company as a long-term investment, because it offers less volatility and lower risk than smaller mining companies. Most of the risk is in relationship to production levels coming short or being disrupted, although most of that is over the short term.
According to Smallwood, Silver Wheaton is positioned to invest over $1 billion in possible deals going forward. The company has $555.1 million in cash on hand, along with a revolving credit facility of $400 million, among other capital resources.
In 2012 Silver Wheaton made one deal, that one with HudBay Minerals Inc. (HBM), where it sought funds for its Constancia copper mine in Peru. Per that deal Silver Wheaton received the right to acquire all the silver and gold produced through 2016 or until the mine is completed. After that, it will be able to acquire all the silver and 50 percent of the gold in the future.
The weak lending markets make this a terrific time for Silver Wheaton to be flush with cash in the midst of rising capital demand.
If done right, Silver Wheaton could easily position itself for a very profitable and predictable future.
That has come about largely because of the weak banking system in Europe, where banks there had been the major source of loans for the mining industry. Most of that has dried up, so now larger mining companies are scrambling to raise capital in a tough lending environment.
How the streaming company works is Silver Wheaton offers capital to fund projects in exchange for a discount price on the gold and silver production from the specific project being capitalized.
The majority of streams are of silver, which is produced as a byproduct of larger deposits of base metals, which the miners are more interested in.
Recently Silver Wheaton CEO Randy Smallwood said larger companies have been approaching the company for funding needs over the last quarter and longer.
For Silver Wheaton shareholders this is good news for those looking at the company as a long-term investment, because it offers less volatility and lower risk than smaller mining companies. Most of the risk is in relationship to production levels coming short or being disrupted, although most of that is over the short term.
According to Smallwood, Silver Wheaton is positioned to invest over $1 billion in possible deals going forward. The company has $555.1 million in cash on hand, along with a revolving credit facility of $400 million, among other capital resources.
In 2012 Silver Wheaton made one deal, that one with HudBay Minerals Inc. (HBM), where it sought funds for its Constancia copper mine in Peru. Per that deal Silver Wheaton received the right to acquire all the silver and gold produced through 2016 or until the mine is completed. After that, it will be able to acquire all the silver and 50 percent of the gold in the future.
The weak lending markets make this a terrific time for Silver Wheaton to be flush with cash in the midst of rising capital demand.
If done right, Silver Wheaton could easily position itself for a very profitable and predictable future.
Tuesday, June 12, 2012
Silver Wheaton (SLW) CEO Says Silver Will See More Pressure
In an interview, Silver Wheaton (NYSE: SLW) CEO Randy Smallwood said he believes precious metals, including silver, should remain under pressure over the short term because of the ongoing economic crisis in Europe.
“Any strength that comes into the dollar impacts silver." Consequently, over the short term they will “probably see a bit of pressure in the short term,” concluded Smallwood.
Because commodities are acquired in U.S. dollars, those residing outside the United States will pay more for precious metals when the dollar strengthens.
Commenting on the financial health of silver miners, Smallwood added that they're having difficulty acquiring capital because of the fall in price of silver.
The problem is the type of capital being made available via loans would dilute the equity of the miners, something they don't want to participate in.
Smallwood didn't say anything in regard to this, but it does make one wonder if this is an excellent time for Silver Wheaton to enter into more streaming agreements with the miners because of the tight lending market.
The faltering euro zone is also connected to this, as European banks were the top lenders to the miners, and with the challenges there they've tightened up their lending.
Over the long term, because of the growing industrial demand and uses of silver, along with the lower recycling rates, Smallwood says he's extremely "bullish" on the metal over the long haul.
Silver Wheaton closed Tuesday at $27.92, climbing $1.03, or 3.83 percent.
“Any strength that comes into the dollar impacts silver." Consequently, over the short term they will “probably see a bit of pressure in the short term,” concluded Smallwood.
Because commodities are acquired in U.S. dollars, those residing outside the United States will pay more for precious metals when the dollar strengthens.
Commenting on the financial health of silver miners, Smallwood added that they're having difficulty acquiring capital because of the fall in price of silver.
The problem is the type of capital being made available via loans would dilute the equity of the miners, something they don't want to participate in.
Smallwood didn't say anything in regard to this, but it does make one wonder if this is an excellent time for Silver Wheaton to enter into more streaming agreements with the miners because of the tight lending market.
The faltering euro zone is also connected to this, as European banks were the top lenders to the miners, and with the challenges there they've tightened up their lending.
Over the long term, because of the growing industrial demand and uses of silver, along with the lower recycling rates, Smallwood says he's extremely "bullish" on the metal over the long haul.
Silver Wheaton closed Tuesday at $27.92, climbing $1.03, or 3.83 percent.
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