Silver Wheaton boosts reserves 9% (April 11, 2011)

The timing of Silver Wheaton‘s (SLW-T, SLW-N) announcement on March 23 that it had boosted attributable reserves more than 9% in 2010 couldn’t have been better, as silver hit a fresh 31-year peak in futures markets on that day, with silver contracts for March delivery settling at US$37.20 per oz., the highest level since mid-February in 1980.

Last year was the sixth consecutive year that Silver Wheaton increased its silver reserves, from 16 operating mines and three development-stage assets, the company said.

Reserves reached a record 954 million silver-eq. oz. by the end of 2010, with the addition of 80 million oz. silver and 23,000 oz. gold during the year. 

Attributable measured and indicated resources during the same period rose 1% to 377 million silver-eq. oz., while inferred resources jumped 22% to 497 million silver-eq. oz. 

Silver Wheaton said 7% of the hike in reserves was due to its acquisition of 100% of the life-of-mine silver and gold production from the Rosemont copper-silver project in Arizona.

The world’s largest silver streaming company also forecast attributable production in 2011, based on its current agreements, will reach 27 million to 28 million silver-eq. oz., including 15,000 oz. gold. By 2015, it anticipates annual attributable production will surge to 43 million silver-eq. oz., including 35,000 oz. of gold.

“On a per share basis, Silver Wheaton’s silver reserve and total resource growth continues to impress,” Dan Rollins, a UBS Investment Research analyst, wrote in a note to clients on March 25. “Since Silver Wheaton’s inception in 2004, silver reserves on a per share basis have grown to 2.67 oz. per share from 0.42 oz. per share, representing an annualized growth rate of 36% with total per share resource growth of 23%. Over the same period, silver reserves have grown from 70 million oz. to 942 million oz., representing an annualized growth rate of 54%.”

Rollins, who has a 12-month target price on the stock of US$45
per share, added that “not only has Silver Wheaton shown its ability to consummate accretive deals but also reap the benefits of exploration success at the assets underlying its streams without incurring any of the costs.”

At presstime Silver Wheaton was trading at US$42.94 and $41.91 per share in New York and Tor-onto, respectively.