Home Page of SLW www.silverwheaton.com
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AN ATTRACTIVELY VALUED PURE PLAY SILVER COMPANY
Business Summary
Silver Wheaton is a new type of silver company with a unique business plan that makes it the only pure silver company with 100% of its revenue from silver sales. The Company does not own or operate mines. Instead, contracts are put in place with the operators of as a by-product from what are, usually, base metal or gold mines.
Silver Wheaton Corp. currently has three contracts in place to purchase silver production. The Company purchases 100% of the silver produced by Luismin mines in Mexico and the Zinkgruvan Mine, in Sweden. Silver Wheaton also has a contract to purchase 4.75 million ounces of silver from the Yauliyacu Mine in Peru.
Luismin Mines, Mexico: Operated by Goldcorp Inc.
Luismin's operations are comprised of several mines in the San Dimas district, on the borderline of the states of Durango and Sinaloa.
The San Dimas District is located in the Sierra Madre Occidental Silver-Gold District. It is comprised of over 100 epithermal Bonanza type mineralized gold-silver veins trending in WNW direction. There are currently three mines from which ore is extracted and one mill located near the town of Tayoltita.
The mines are underground operations using primarily mechanized cut and fill mining methods. After milling, cyanidation, precipitation and smelting, doré bars are poured and then transported for refining to Salt Lake City, Utah.
Over the substantial operating life to date, the Luismin operating team in Mexico has been able to develop a low cost, steady state mining operation that has consistently converted resources into reserves. The mining operations have produced approximately 95 million ounces of silver since 1991.
Luismin has proven and probable silver reserves of 45 million ounces. In addition, Lusimin's inferred silver resources total 188 million ounces. Luismin has historically converted resources to reserves at a rate of 90% which would result in a mine life of over 17 years.
The Luismin operation expects to increase its silver production of 9.5 million ounces in 2006 growing to 13 million ounces from 2009 onwards.
Figure above: The yellow bars along the top show the reserves that have existed at San Dimas at the end of each year since 1982. The red bars show the cumulative production of silver in the same time period. Notice that even though San Dimas has produced over 100 million ounces of silver since 1982, reserves have continually grown peaking at 44 million at the end of 2005.
Zinkgruvan Mine, Sweden: Operated by Lundin Mining
Zinkgruvan is a zinc-lead-silver mine near Akersund on Sweden's Lake Vattern, Zinkgruvan started underground mining in 1857.
In the early 1990s, new technology and careful management cut mining and milling costs by about 50%, converting a high-cost operation to the sixth-lowest-cost zinc producer in the Western world by 1993.
Historically, Zinkgruvan has been very successful at converting inferred resources into indicated and measured resources and subsequently into mineral reserves. Between 1982 and 2003 total proven and probable mineral reserves have remained almost constant despite a gradual increase in throughput over that period.
Silver Wheaton is confident that assuming reasonable economic conditions, this historical success in replacing mineral reserves will continue and that the life of mine plan projecting production through to 2022 is a viable one.
Zinkgruvan has proven and probable silver reserves of 26 million ounces, measured & indicated resource of 6.8 million ounces and an inferred resource of 29 million ounces of silver.
The Zinkgruvan operation expects to produce 1.9 million ounces of silver annually.
Yauliyacu Mine - Peru
Fundamental Considerations
Technical Considerations
Those who like silver will also like Silver Wheaton as a pure silver play with million of ounces in resources, low cash costs, growing cash flow and exploration potential.
Peter Zihlmann
www.pzim.com
investment@pzim.com
invest@pzim.ch
May 25, 2006
Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company's share price. Disclaimer: The author's objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.