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Silver Wheaton Corp.


Silver Wheaton Corp. is the largest precious metals streaming company in the world. Based upon its current agreements, forecasted annual attributable production for 2014 is approximately 36 Moz Ag eq, including 155 Koz gold. By 2018, annual attributable production is anticipated to increase significantly to approximately 48 Moz Ag eq, including 250 Koz gold. This growth is driven by the company's portfolio of low-cost and long-life assets, including precious metal and gold streams on Hudbay Minerals Inc.'s Constancia project and Vale S.A.'s Salobo and Sudbury mines.

The information provided below is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.

Expert Comments:

Charles Gibson, Edison Investment Research (11/28/14) "Silver Wheaton Corp.'s underlying Q3/14 results were very close to our expectations, with an 18.5% quarter over quarter increase in diluted EPS driven by a 20.5% increase in silver sold despite a 4.2% decline in the average silver price received. While superficially analogous to both miners and royalty companies, the company's streaming business is almost unique, as it offers exposure to exploration success and production expansion without exposure to cost inflation."

Charles Gibson, Edison Investment Research (11/18/14) "Excluding a US$68.2M non-cash, impairment charge, Silver Wheaton Corp.'s third quarter financial results were very close to Edison's expectations, with an 18.5% quarter-on-quarter increase in diluted EPS, driven by a 20.5% increase in silver sold and despite a 4.2% decline in the average received silver price. Yauliyacu performed notably better than expected, while production from Salobo reached a record as a consequence of the ramp-up of Salobo II; at the central level, there was a 19.2% quarter-on-quarter decline in general and administrative costs. . .Silver Wheaton is the world's pre-eminent pure precious metals streaming company."

Ash Guglani, Salman Partners (11/13/14) "Silver Wheaton Corp. reported Q3/14 financial results with adjusted net earnings of $0.20 per share. . .in-line with consensus estimates but slightly below our estimates of $0.22 per share mainly due to lower average realized gold and silver prices of $1,261/oz and $18.98/oz, respectively. . .we remain optimistic on the company's organic growth profile as its development projects remain on track for significant growth by 2018 (approximately 48M Ag eq oz) with capital commitments of just $230M over the next 12 months. . .we believe Silver Wheaton is in an enviable position to potentially add additional streams from strong operators."

Alex Terentiew, Raymond James (11/13/14) "Silver Wheaton Corp. reported a beat on adjusted earnings per share in Q3/14. . .we anticipate the company will have a strong Q4/14, with a start-up at Constancia and further ramp-up at Salobo helping the early 2015 results and likely taking the potential "heat" off a slight miss on 2014 guidance. . .despite the impairments recorded in Q3/14, Mineral Park and Campo Morado have already returned an average of 20% above their respective up-front payments, thus highlighting Silver Wheaton's ability to recover capital even from some of its highest-cost operating assets."

Michael Gray, Macquarie Capital Markets (11/13/14) "Silver Wheaton reported Q3/14 results with adjusted earnings per share of $0.20. . .and cash flow per share of $0.33. . .production of 6.1 Moz Ag (8.4 Moz Ag eq) was in-line with our forecast. Despite silver price dropping 19% in Q3/14, the company maintained a 76% gross margin. We would be buyers of the stock for the company's high-margin streaming model underpinned by cornerstone assets that drive under $5 all-in sustaining costs and 33% growth to 48 Moz Ag eq in 2018. . .we would be buyers of the stock ahead of expected strong Q4/14 results. Silver Wheaton is one of our top picks amongst senior producers."

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Dan Rollins, RBC Capital Markets (11/12/14) "Silver Wheaton Corp. is a preferred precious metal investment given its attractive near-term growth prospects, long-term optionality, underlying asset quality and strong free cash flow potential. . .the company's free cash flow potential remains robust even at spot silver and gold prices. . .we continue to believe Silver Wheaton warrants an Outperform rating."

Andrew Kaip, BMO Capital Markets (11/12/14) "Silver Wheaton Corp. announced Q3/14 headline earnings per share of $0.01. . .and adjusted earnings per share of $0.20, in-line with consensus. . .the company declared a dividend of $0.06 per share. . .the Salobo II operational ramp-up to 24 Mtpa is progressing and Constancia continues to be on target for first production in Q4/14."

The Gold Report Interview with Frank Holmes (11/10/14) "I think royalty companies are the safest plays—Silver Wheaton Corp. is one of the three amigos. They have high-margin businesses and low cost of capital, and there are very smart people running these companies. When you take a look at a company like Silver Wheaton, 30 people are generating $500M in revenue. It's probably the most profitable company per employee in the world." More >

Charles Gibson, Edison Investment Research (11/3/14) "Notwithstanding estimated 3.6% and 2.5% declines in its estimated received silver and gold prices, respectively, we are forecasting a 14.9% quarter-on-quarter rise in Silver Wheaton Corp.'s EPS in Q3/14 (scheduled for release on Nov. 12), driven by a 22.8% recovery in gold production. . .the company's longer-term earnings trajectory remains intact and we forecast an essentially unchanged value per share of $36.63 (CA$40.93) in FY19, implying a 21.3% internal rate of return to investors buying shares at the current price. . .Silver Wheaton remains the cheapest of its royalty/streaming peer group and also frequently cheaper than precious metal mining peers, despite being associated with materially less risk."

The Gold Report Interview with David Morgan (10/8/14) "Silver Wheaton Corp. has significant organic growth taking place with Goldcorp Inc.'s Peñasquito silver mine in Mexico finally operating close to capacity. Plus, Vale's Salobo copper mine expansion in Brazil is ramping up. Add to that Goldcorp's San Dimas mine minimum threshold increasing from 3.5 Moz to 6 Moz. In addition, Hudbay Minerals' Constancia project in Peru should reach production in the fourth quarter. Silver Wheaton has just begun to see its next phase of growth." More >

Ash Guglani, Salman Partners (10/1/14) "Highlights of Silver Wheaton Corp.'s long-term growth potential include: Hudbay Minerals Inc.'s Constancia project. . .on track for initial production in Q4/14; Goldcorp Inc.'s Penasquito project which achieved record production in Q2/14. . .with throughput in 2015 also expected to increase by 5,000 tpd to 115,000 tpd; Hudbay's recently acquired Augusta Resource Corp. and its Rosemont project, currently waiting for the 404 water permit approval; and Vale S.A.'s Totten mine at the Sudbury operation expected to reach full production in 2016 at 2,200 tpd. . .Silver Wheaton remains one of the largest precious metals streaming companies with a robust organic growth pipeline."

Trefis (9/30/14) "HudBay Minerals Inc.'s Constancia project in Southern Peru. . .is expected to begin commercial production in 2015. . .Silver Wheaton Corp. entered into an agreement to acquire 100% of its life-of-mine silver production. . .and 50% of its life-of-mine gold production. . .even if we consider an inflationary adjustment of 1% on the purchase price under the deal, there is still scope for a profit. . .Silver Wheaton's streaming agreement for the Constancia mine looks like a good deal."

The Gold Report Interview with Charles Oliver (9/8/14) "Silver Wheaton Corp. has been one of the best performers over the last few years. Silver streamers do not run much risk of operating overruns and higher costs. It's a nice business when you know you're going to get a profit, and the only question is how big it will be." More >

Trefis (8/23/14) "Based upon its current agreements and forecasts for 2014, Silver Wheaton Corp.'s attributable production is expected to total 36 Moz silver equivalent, including 155 Koz gold; by 2018, this figure is anticipated to increase significantly to 48 Moz silver equivalent, including 250 Koz gold. Beyond the initial upfront payment, no ongoing capital expenditures are required to generate this growth."

Charles Gibson, Edison Investment Research (8/21/14) "Production of silver at Silver Wheaton Corp.'s Penasquito rose to a record as it continued to benefit from the mining of high-grade zones. . .production in Q3–Q4/14 is anticipated to be higher than in both Q1–Q2/14. . .the company remains the cheapest of its royalty/streaming peer group and is frequently cheaper than precious metal mining ‘peers,’ despite being associated with materially less risk."

John Bridges, J.P. Morgan (8/19/14) "Silver Wheaton Corp.'s Q3/14 sales will likely benefit from the Yaliyacu ounces that were delivered after its books were closed for Q2/14. . .higher production from the Sudbury mines from the ore and concentrates that were stockpiled during Q2/14 should also help the company's earnings in H2/14."

Canaccord Genuity's Morning Coffee (8/15/14) "Silver Wheaton Corp.'s Sudbury stream is expected to have a strong rebound in H2/14. . .gold production is also expected to be stronger in H2/14."

Dan Rollins, RBC Capital Markets (8/15/14) "Silver Wheaton Corp. is a preferred precious metal investment given its attractive growth prospects, underlying asset quality, free cash flow potential and organic optionality. With the company's key growth drivers on track, Silver Wheaton is well positioned to deliver shareholder value over the coming years. Given our favorable outlook on the company, we reiterate our Outperform rating."

Michael Gray, Macquarie Capital Markets (8/14/14) "We recommend buying Silver Wheaton Corp. on any potential share weakness on the back of a perceived modest miss in headline EPS. . .in our view, the company's fundamentals remain unchanged, and it continues to be the premier streaming/royalty player with a low flat $5.5/oz Ag all-in sustaining cost structure along with high exposure to expansion and exploration upside among its streaming assets (at virtually no capex)."

Andrew Kaip, BMO Capital Markets (8/13/14) "Silver Wheaton Corp.'s production guidance for 36 Moz silver equivalent in 2014 remains unchanged. . .the company trades at 1.9x the 10% nominal NPV estimate at spot metal prices, well below senior silver producer peers at 2.7x. Silver Wheaton is rated Outperform with a $32 target price."

John Bridges, J.P. Morgan (8/13/14) "We expect H2/14 to be strong for Silver Wheaton Corp. . .the company is expecting attributable production of 26.7 Moz silver and 155 Koz gold in 2014."

John Bridges, J.P. Morgan (7/29/14) "Silver Wheaton Corp. amended the terms of its streaming agreement with Alexco Resource Corp., making that company's Keno Hill mine more likely to be developed. . .we believe Silver Wheaton's royalty streaming model is a very attractive way for investors to gain exposure to silver and is particularly interesting now as lower silver prices threaten to close some higher-cost pure silver mines."

Ash Guglani, Salman Partners (7/10/14) "So far this year, Silver Wheaton Corp. has benefited from expansions at Vale S.A.'s Salobo mine and Primero Mining Corp.'s San Dimas mine, as well as the commencement of production from the Totten mine at Vale's Sudbury operation. . .given the prospects for growth and the company's ability to enter into new silver offtake agreements in the current environment, we upgrade our recommendation on Silver Wheaton to a Top Pick in the precious metals space, from Buy previously."

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