A Monumental Score for Silver Wheaton Corp. (SLW)

The biggest name in in the ultra-successful business of precious metals streaming just got a whole lot bigger, adding a huge gold deal to an expanding portfolio with its largest mining company partner to date. Do you see what I’m trying to convey here? It’s big! It’s huge! It’s downright monumental!

By partnering with diversified mining giant Vale SA (ADR) (NYSE:VALE) for a pair of key gold stream transactions, Silver Wheaton Corp. (USA) (NYSE:SLW) has provided investors with grand-slam evidence of the unmistakable success of the underlying business model. Of course, some might have considered the stock’s 1,370% gain since I highlighted a unique buying opportunity back in 2008 as sufficient confirmation that this company is truly something special.

Silver Wheaton Corp. (USA) (NYSE:SLW)

For upfront cash consideration of $1.33 billion, Silver Wheaton will receive 25% of gold production from Vale’s Salobo copper/gold mine in Brazil — for a per-ounce purchase price of $400 (subject to minor inflation adjustments) — over the life of that mine. Vale is presently doubling the throughput capacity at Salobo, and Silver Wheaton projects average annual attributable production of 60,000 ounces of gold over the first 20 years of production. With epic mineral reserves already in place, and robust opportunities for further resource expansion through exploration, Salobo will almost certainly outlive every other mine in Silver Wheaton’s impressive long-term portfolio.

In addition, Silver Wheaton will lay claim to 70% of gold production from six of the operating mines (plus one key development project) within Vale’s world-class complex of nickel-heavy polymetallic mines in Canada known as the Sudbury mines. This particular stream carries a 20-year term, a fixed purchase price of $400 per ounce, and an up-front cash payment to Vale of $570 million. Over the 20-year term, the stream is projected to supply 50,000 ounces of attributable gold annually. Connected with the transactions, Vale will also receive 10 million Silver Wheaton warrants with a strike price of $65. Taken together, these gold streams will bolster Silver Wheaton’s production profile by an average of 5.9 million silver-equivalent ounces per year, and place a Foolish punctuation mark after my previous discussion of “How Silver Wheaton Will Surpass 50 Million Ounces.”

Silver Wheaton has, rather famously, bagged the big deals before. In Goldcorp Inc. (USA) (NYSE:GG)‘s Peñasquito mine in Mexico, and Barrick Gold Corporation (USA) (NYSE:ABX)‘s Pascua-Lama project on the border between Chile and Argentina, Silver Wheaton had already scored landmark streaming deals that secured the company’s position as the unstoppable leader of the precious metal streaming and royalty world. Last summer, the company generated 5 million new reasons to love the stock through a $750 million deal with HudBay Minerals Inc Ord Shs (NYSE:HBM) . With each big stream that Silver Wheaton acquires — and forthcoming deals are certainly in the cards after the company secured $2.5 billion in debt financing in conjunction with the Vale streams — frankly my long-term price objective of $100 per share grows more conservative-looking with each passing year.

The article A Monumental Score for Silver Wheaton originally appeared on Fool.com and is written by Christopher Barker.

Fool contributor Christopher Barker owns shares of Goldcorp (USA) and Silver Wheaton (USA). The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!