Silver Wheaton is the largest precious metal streaming company in the world. The company has entered into a number of agreements where, in excha...
Silver Wheaton is the largest precious metal streaming company in the world. The company has entered into a number of agreements where, in exchange for an upfront payment, it has the right to purchase, at a low fixed cost, all or a portion of the silver and/or gold production from several high-quality mines located in politically stable regions around the globe. Silver Wheaton currently has streaming agreements for 19 operating mines and five development stage projects. The company’s growth profile is driven by a portfolio of world-class assets, including precious metal and gold streams on Hudbay’s Constancia project and Vale’s Salobo and Sudbury mines.
Precious metals streaming allows Silver Wheaton to purchase, in exchange for an upfront payment, the by-product silver or gold production of a mine that it does not own or operate. The operating costs that Silver Wheaton pays for future production are pre-determined in the agreements, typically between US$4 to US$6 per ounce of silver and US$400 per ounce of gold produced, with a small inflationary adjustment in most contracts. This amount offsets our partners’ typical cost to produce an ounce of silver or gold.
Fixed costs reduce our shareholders’ downside risk while at the same time providing the upside to increases in the precious metals price. As well, other than the initial upfront cash payment, Silver Wheaton typically does not contribute to future capital expenditures or exploration costs invested by the mine; yet it benefits from the production and exploration growth that results from these expenditures. This business model often translates into significant value creation for Silver Wheaton shareholders.