"We like the overall business model and believe the company is well positioned through the cycle," research analysts Jorge Beristain and Chris Terry write in a Sept. 9 research report on Silver Wheaton Corp. (SLW:TSX; SLW:NYSE). "Silver Wheaton has a diverse asset base, proven management team and has access to long-term precious metals streams."
The analysts make note of the company's large portfolio, which includes 22 precious metals assets and includes streams from San Dimas (Primero Mining [P:TSX; PPP:NYSE]) and Salobo (Vale S.A. [VALE:NYSE]). In addition, the company has "a further 8 development projects in the portfolio." Silver Wheaton lists the San Dimas, Peñasquito and Salobo mines, among others, as "cornerstone assets."
"We forecast silver equivalent production of 54.7m oz in 2016 and 57m oz in 2017 which then has the potential to increase in forward years through deals and/or project development with minimal additional overhead," the report states.
Deutsche Bank also notes that "Silver Wheaton has EBITDA margins of ~70%, long-life assets with potential for exploration upside and the ability to invest counter-cyclically versus traditional miners."
In addition, the analysts view Silver Wheaton "as much lower risk alternative than mining company equities given the lack of cost movements and the ability to expand the portfolio with minimal additional corporate overhead. Against ETFs, Silver Wheaton offers the ability to share in exploration upside with mining companies and a growing dividend return."
Commenting on the company's performance over time, the analysts wrote, "Silver Wheaton has consistently outperformed the silver and gold price and silver equity indices as the company has continued to grow cashflow through the cycle and has completed deals counter-cyclical to the rest of the industry."
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